Financial Inflows and Welfare: A Comparative Panel Analysis of Remittances and FDI in Latin America
Year: 2026
Type: article
Abstract: This study evaluates the comparative impact of personal remittances and Foreign Direct Investment (FDI) on the Human Development Index (HDI) across Latin American countries over a 33-year period (1990–2023). Using a robust panel data econometric framework, the research tests the hypothesis that different external financial flows yield divergent outcomes for social welfare and human capital accumulation. The findings indicate that while both inflows contribute positively to development, remittances show a more direct correlation with immediate poverty reduction and household-level human capital investment (education and health), whereas FDI serves as a long-term driver of macroeconomic growth and structural transformation. The results highlight a regional "development duality" where remittance-dependent economies achieve different social milestones compared to FDI-driven ones. The study provides critical policy implications for Latin American governments, emphasising the need for structural reforms to improve productive absorption of remittances and social spillover effects of foreign capital.Copyright© 2026 The Author(s). This article is distributed under the terms of the license CC-BY 4.0., which permits any further distribution in any medium, provided the original work is properly cited.Article’s history: Received 30th of November, 2025; Revised 19th of February, 2026; Accepted 1st of March, 2026; Available online: 15th of March, 2026. Published as article in the Volume XXI, Special Issue 1(91), 2026.
Authors: Ludmila BARTOKOVA, Viktoria KOVESDIOVA
Language: English
Topic: Migration and Labor Dynamics
Subfield: Sociology and Political Science
Field: Social Sciences
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W7136069856