The Impact of Remittances, Financial Infrastructure, Internet Usage, and Taxation on Gross Domestic Product

Abstract

All over the world, policymakers consider economic growth to be very important. This report examines how remittances, financial infrastructure, internet usage, and tax policies affect Gross Domestic Product differently in High-Income Countries and Upper-Middle-Income Countries. With panel regression analysis (Fixed Effects Model) and using robust standard errors, we study the data found in the World Bank’s World Development Indicators covering the years 1999 to 2023. Internet usage seems to have a consistent detrimental effect on both income groups. In both High-Income Countries and Upper-Middle-Income Countries, trade openness and foreign direct investment increase Gross Domestic Product, but other factors affect them differently; remittances and internet usage lower Gross Domestic Product in Upper-Middle-Income Countries, but bring about higher Gross Domestic Product in High-Income-Countries, while education and taxes have opposite effects on these economies. It appears that the observed outcomes go against a number of classic beliefs, underlining the significance of paying attention to different elements within policymaking. To better make the results robust in future studies, it is suggested to use institutional quality controls.