DOES PERSONAL TRANSFERS INFLOW AFFECT ECONOMIC GROWTH? EVIDENCE FROM BOSNIA AND HERZEGOVINA

Abstract

The purpose of this research is to investigate the connection between the inflow of personal transfers of residents from abroad and the economic growth of Bosnia and Herzegovina. In order to examine the functional connection, the data was analyzed whether and in what way the inflow of personal transfers affects economic growth, on the example of a developing country (Bosnia and Herzegovina) that has significant external population migration. The research problem is sublimated by the question of whether variations of the inflow of personal transfer impact Bosnia and Herzegovina`s economic growth. The simple linear regression was conducted on a sample of analyzed country, in the period 2005-2023. The research results show the existence of a positive relationship between the inflow of personal transfers and economic growth, in the short term, ceteris paribus. In this way, research hypothesis was confirmed that the inflow of personal transfers has an impact on the compatible components of GDP, and thus on the economic growth of Bosnia and Herzegovina, in the short term, ceteris paribus. The limitation of the research is the length of the observation period. Compared to many other studies, the methodological approach was based on testing the direct connection between the inflow of personal transfers and variations in personal consumption, as the most important component of GDP. The mentioned approach provides a social contribution also, in the form of knowledge that enables taking proactive measures of demographic and economic policy in Bosnia and Herzegovina and other developing countries.