Impact of Remittances on Economic Growth: Evidence from Nigeria, Ghana and Kenya

Abstract

The literature has presented opposing findings on the impact of remittances on economic growth thereby creating a research gap to be filled. In this study, the impact of remittances on economic growth of Nigeria, Ghana and Kenya for the period 1990 to 2020 has been explored. The methodology of the research follows the panel autoregressive distributed lag model and the causality test. Findings of the study revealed that there is a long-run relationship between remittances and economic growth in Nigeria, Ghana and Kenya. Meanwhile, the result indicated that remittance has a negative but insignificant effect on economic growth both in the short-run and in the long-run; while the Pairwise (Stacked) Granger Causality Tests and Pairwise Dumitrescu-Hurlin Panel Causality Tests results indicated that there is no causality between remittances and economic growth. The policy implications for Nigeria, Ghana, and Kenya might be that it is critical not just to attract more remittances, but also to give additional incentives for these inflows to be spent on productive investments that contribute to economic growth.

Key Words: Remittances; Foreign Direct Investment; Economic Growth; Consumption; Investment.

JEL Classification: E21; E22; F22; F24; F43; O47

DOI: 10.7176/JESD/15-3-04

Publication date: February 28^th 2024