Remittances, institutions and human development in Sub-Saharan Africa

Abstract

PurposeThe purpose of this paper is to examine the relationship between remittances, institutions and human development (HD) in Sub-Saharan African (SSA) countries using data from 2004 to 2018. The study attempts to answer two critical questions: Do the increasing remittances inflow to the region have any effect on human capital development? and does the effect of remittances on human development vary depending on the level of institutional quality?Design/methodology/approachThe analysis uses a dynamic model; system Generalized Method of Moments (Sys-GMM) as this approach controls for the endogeneity of the lagged dependent variable; thus, when there is a correlation between the explanatory variable and the error term, which is normally associated with remittances, it also controls for omitted variable bias, unobserved panel heterogeneity and measurement errors in the estimation.FindingsThe findings indicate a positive and significant impact of remittances on HD in SSA. The results further reveal a substitutional relationship between institutions and remittances in stimulating HD. The estimations mean that remittances promote HD in countries with a weak institutional environment. The findings also establish that the marginal significance of remittances as a source of capital for HD falls in countries with well-developed institutions.Originality/valueMost empirical research on the impact of remittances on HD does not tackle the problem of endogeneity associated with remittances. This study, however, provides empirical evidence by using Sys-GMM that solves the problem. The current study also is the first work to examine the relationship between remittances, institutions and HD in SSA and provides a new guide for future research on the remittance and HD nexus.

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, 2012;Amakom and Iheoma, 2014;Mohammed, 2022), while others have looked at remittances and poverty (Adams and Cuecuecha, 2013). However, most of these studies have solely focused on the direct effect of remittances and have not considered the indirect effect.…”

Applying the stimulus-organism-response theory to investigate determinants of students’ social entrepreneurship: moderation role of perceived university support

“…support systems and financial funding) for helping less fortunate people. Previous studies that adopted the TPB in the social entrepreneurship context also found that perceived behavioral control (a construct similar to entrepreneurial self-efficacy) and descriptive norms (a construct similar to perceived social support) predicted social entrepreneurial intention better than attitude and injunctive norms (a construct similar to moral obligation) (Zaremohzzabieh et al , 2019; Ahuja et al , 2019; Mohammed, 2021).…”

Role of Foreign Remittances, Foreign Aid and Financial Development in Determining Human Development of Selected Asian Countries

“…It was shown that remittances have increased human development and investment. Mohammed (2022) focused on how remittance institutions affect the human development of Sub-Saharan African economies. The data was drawn from 2004 to 2018.…”