International Remittances and Economic Growth in Some Selected Sub-Saharan African Countries: Evidence from Panel Co-integration Approach

Abstract

Remittances is now the largest international flow to Africa. In Sub-Sahara Africa,it grew by 10 percent to $46 billion in 2018, accounting forabout 3 percent of the GDP of the subcontinent.This studyanalyzes the long run relationship of remittances and economic growth in some selected SSA countries,namely, Nigeria, Ghana, Kenya and Senegal, using annual panel data for the period of 1980-2018. The studyemployed LLC and IPS panel unit root test, Pedroni and Kao co-integration test to investigate structural and causal relationship between variables. From the long run cointegrating parameter estimates,the results suggest that an increase in remittances, foreign direct investment, trade openness and domestic investment, increases economic growth of SSA countries. Therefore, the study recommends that there is the need for SSA to design policies, programs as well as the institutional reform that will encourage the productiveuse of remittances.

Effect of Remittance Inflow on Economic Growth of Nigeria

“…However, there has been a growing recognition of the need of channeling these inflows into productive or investment routes, which eventually leads to a significant positive influence in the long run. These findings are consistent with those of prior studies, such as Saidu and Salisu (2020), which found that remittances had a favorable long-run influence on economic growth. Furthermore, the findings of this study are congruent with those of Nahar, Adha, and Azizurrohman (2018), Katsushi, Bilal, and Fabrizio (2017), Wiseman, James, and Kunofiwa (2019, and other researchers in the field.…”

“…Jinghan (2007) defines economic growth as a sustained increase in a country's per capita income, accompanied by an increase in consumption, labor force, and trade volume, among other things. As a result, various measures such as GDP, GDP per capita, and GDP growth rate (whether nominal or real) have been developed and used in empirical research to capture economic growth prospects (Maqsood, Muhammad, & Chaudhary, 2016;Saidu & Salisu, 2020;Akinpelu & Ogunbi, 2013;Nyasha & Odhiambo, 2020;Nahar, Adha, & Azizurrhoman, 2018). The gross domestic product, or GDP, is the value of goods and services produced in a country in a given year, expressed per person, whereas the growth rate shows the rate of change in GDP between two consecutive years.…”

“…An ARDL co-integration and the Granger causality test were used, and the results demonstrated that there is no causal association between remittance inflows and economic growth. Likewise, Saidu and Salisu (2020) investigated the link between overseas remittances and economic growth in Sub-Saharan African countries. From 1980 to 2017, panel data on GDP, remittance, openness, FDI, and domestic investment were used in the study.…”

Remittances, institutional quality and investment in Sub-Saharan Africa

“…The impact of remittances on economic growth has been the subject of empirical studies at the macroeconomic level (Faini, 2005; Saidu and Salisu, 2020). Certain studies have investigated remittances and human capital (Zhunio et al.…”

“…The impact of remittances on economic growth has been the subject of empirical studies at the macroeconomic level (Faini, 2005;Saidu and Salisu, 2020). Certain studies have investigated remittances and human capital (Zhunio et al, 2012;Amakom and Iheoma, 2014;Mohammed, 2022), while others have looked at remittances and poverty (Adams and Cuecuecha, 2013).…”