Trade, Remittances and Economic Growth in Nigeria: Any Causal Relationship? (original) (raw)
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Remittances and Economic Growth Nexus: Empirical Evidence from Nigeria, Senegal and Togo
Remittances inflow is one of the major sources of capital flows in the world. Though developing countries and especially Sub-Saharan Africa does not have a bigger share of this capital flow, remittances is noted to be very useful in promoting household welfare and health in developing countries. What is not certain is whether or not remittances lead to economic growth. Set out to investigate the causal link between remittances and economic growth in three of the leading remittances recipients in West Africa i.e. Nigeria, Senegal and Togo, the study used Granger-causality and co-integration tests under the Vector Autoregressive Regression (VAR) framework. The time series data used here is made of an annual data from 1980-2012. It is realized from the study that there is a unidirectional causal link in Nigeria and Senegal. Remittances are found to lead to economic growth while economic growth does not lead to remittances inflows. There is however no causal link between remittances and economic growth in Togo. Key Words: Remittances, Economic Growth, Granger Causality and Vector Auto Regression
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AE-FUNAI JOURNAL OF ACCOUNTING, BUSINESS AND FINANCE(FJABAF), 2020
The paper investigated the effect of international remittances on the economic growth of Nigeria for the period covering 1986 to 2017. In analyzing the data collected the ARDL approach to cointegration and VECM was adopted to determine the long run and short-run relationships among economic growth, remittances, gross domestic investment, Interest rate, and inflation rate. Findings indicated that in the long run remittances, human capital, and inflation rate had a positive effect while GDI and interest rate had a negative effect on the economic growth of Nigeria. In the short run remittances, human capital, GDI, and inflation rate had a positive effect while interest rate had a negative effect on the economic growth of Nigeria. In view of the findings the study amongst others recommend that Government should put in place facilities and incentives that will make remittances cheaper using the formal channel, also the introduction of new savings instruments as well as providing information on investible opportunities available in Nigeria will ensure remittance are put into productive use. The creation and functioning of the Migrants and Diaspora Office domiciled in the Ministry of Foreign Affairs will serve as a fulcrum in stepping up remittances.
Effect of Remittance Inflow on Economic Growth of Nigeria
Journal of applied and theoretical social sciences :, 2024
This study examines the effect of remittance inflows on Nigeria economy as proxy with gross domestic product (GDP). The research specifically focuses on 41 years from 1981 to 2021, analyzing data from the Central Bank of Nigeria's statistical bulletin and the World Development Index. Through correlation analysis, unit root and co-integration tests, as well as error correction model estimation, the study investigates the relationship between remittance inflows and GDP growth. The results demonstrates that, in the short term, remittance inflows had an insignificant negative effect on Nigeria's GDP growth (-0.337970, p > 0.05). However, in the long run, remittance inflows shows a significant positive impact on the GDP growth rate (1.973835, p < 0.05). These findings highlight the importance of channeling remittances into productive activities within the home country. While short-term inflows may not contribute significantly to economic growth, sustained and increasing remittance inflows can play a crucial role in driving Nigeria's economic expansion. The study recommends the implementation of policies, programs, and systemic reforms to encourage the productive utilization of remittances. It emphasizes the need to ensure that remittances are utilized in ways that contribute to longterm economic growth and development. Furthermore, the study calls for the establishment of measures to prevent brain drain, protecting Nigeria's valuable human capital from being solely driven by financial incentives, which may not be evenly distributed for productive purposes in the short and medium term. These measures will help foster a balanced approach to leveraging remittance inflows for sustainable economic progress in Nigeria.
Macroeconomic Drivers of Remittances and the Implication for Economic Growth in Nigeria
Applied Economics and Finance, 2018
Remittances have been one of the officially recorded sources of international flows, especially, to developing economies like Nigeria, hence the need to encourage its consistent flow as well as defining ways and means of redeploying it for an improved economy. Following this line of reasoning, an attempt was made in this study, to see whether the macroeconomic environment in the domestic economy can actually play a role in stimulating international remittance inflows. To achieve this, average remittance data were tested against that of per capita income, real exchange rate, trade openness, government expenditure, inflation rate and the demographic variable (population density), and the data were all from secondary sources (WDI and CBN Bulletin, 2017/2018). Drawing from the type of gravity model suggested by Greenwood (1975) and Borjas (1987, 1989) ¨C as modified - for analyzing international migration, and exploring the two approaches to international remittances analysis ¨C altruis...
International Remmitance Inflow And Economic Growth In Nigeria
The broad objective of the study is to determine empirically the impact of international remittances inflows to domestic economy, using Nigeria as a case study between 1980 and 2015. The specific objectives are to determine to what extent international remittance inflows impact on the growth of domestic economy; to investigate if there is significant casual relationship between international remittance inflows and the growth of domestic economy in Nigeria and to compare the influence of oversea development assistance and international remittance inflows to the growth of domestic product in Nigeria. In the model specified, real gross domestic product (RGDP) is a function of the growth international remittance inflows (IRIGWT), oversea development assistance, (ODAGNI), balance of trade (BOT), and inflation (INFL). The study used co-integration, vector error correction mechanism and granger causality for estimation of specified models. The results of estimation depict a negative significant relationship between IRIGWT and RGDP. Also ODAGNI has positive significant correlation with RGDP, BOT has positive significant relationship while INFL exhibit positive insignificant relation with RGDP. Granger causality results report that causality exist between IRIGWT and RGDP. The study recommends that Federal Government of Nigeria should adopt strict policy measures to regulate remittances and also to encourage international remittances passing through official channel by reducing
The Impact of Remittances on Economic Growth in Nigeria: an Error Correction Modeling Approach
Zagreb International Review of Economics and Business, 2014
This paper investigated the relationship between remittances and economic growth in Nigeria, using an error correction modeling approach for the period 1981 to 2011. Our result revealed that in the long run, remittances impact positively on the economic growth of Nigeria. However, remittances show a signifi cant negative relationship with output in the short run. Also, while foreign aid as an external source of capital have both short and long term signifi cant infl uence on economic growth in Nigeria, its counterpart FDI can only exert positive impact on RGDP in the short run. Our result also affi rmed the significant positive role of trade in promoting economic growth, suggesting that the more open the economy, the more stimuli it has on RGDP both in short run and long run. A policy implication which may be drawn from this study is that Nigeria can improve its economic growth performance, not only by investing on the traditional sources of growth such as investment in physical, fo...
International Journal of Human Resource Studies, 2021
This study empirically investigated the impact of inflation rate, exchange rate and remittances inflows on the economic performance of Nigeria using time series data from 1960 to 2018. The study employed econometric techniques such as the Augmented Dickey Fuller (ADF) unit root test, correlation statistics, granger causality testand the ordinary least squares multivariate regression methods to analyze the data. The study finding showed that remittances inflows are a major driver of economic activities and growth in the Nigeria clime. Exchange rate exerted a positive impact on gross domestic product per capita growth in Nigeria. Both remittances inflows and exchange rate maintained a bi-directional causality with the performance of economy of Nigeria. The study concludes that remittances inflows have a correlation with monetary policy transmission mechanisms towards enhancing the performance of the economy of Nigeria. It is therefore recommended that the government needs to create in...
The effect of remittances on the Nigerian economy
This study analyzed the effect of remittances on the Nigerian economy. The study employed secondary data covering the period 1980-2008. Data sources included official publications of the World Bank, Central Bank of Nigeria, National Bureau of Statistics, Journals and other relevant publications. Data collected were analyzed using trend and regression analysis. Results of data analysis revealed that remittance inflow has been on the increase over the past two decades. Also, remittances, per capita income, investment and time were the positive and significant factors influencing output while consumer price index significantly influenced output negatively. It was recommended that remittance receiving countries should provide a friendly economic environment through sound macroeconomic policies, including stable exchange rates, basic physical infrastructure, improved market integration, reliable financial and other institutions, transparent legal system and good governance – in essence, conditions that can prime the economy for development and equip it adequately to benefit from this external stimulus.
Remittances and Economic Growth: Empirical Evidence from Ghana
European Journal of Business and Management, 2014
This study investigated the link between remittances and economic growth in Ghana. The inflow of remittances into Ghana specifically and into Sub-Saharan Africa in general is very insignificant compared to other parts of the developing world. The study used the Granger-causality and Cointegration tests under the Vector Autoregression (VAR) framework. The results showed a unidirectional link between remittances and economic growth in Ghana. They showed that remittances lead to economic growth marginally but economic growth does not lead to remittances. They also established that remittances have been very useful in promoting household welfare and health.
International Journal of Management, Economics and Social Sciences, 2019
The purpose of the study was to examine the relationship between remittances, financial sector development, and economic growth in Nigeria over the period 1981 to 2017. The study used the autoregressive distributed lag (ARDL) model to analyze the long-run and short-run relationships between the variables. The outcome of the study revealed that the variables are bound together in the long-run. The results also showed that remittances have a negative and significant effect on economic growth both in the long-run and short-run. The study also established that financial sector development has a negative and significant impact on economic growth both in the long-run and short-run. Further, the study confirmed the existence of complementarity between remittances and financial sector development in influencing economic growth. In addition, study revealed that inflation has a negative and significant effect on economic growth both in the long-run and short-run. The findings of the study showed that trade openness, government expenditure, and population growth have no significant impact on economic growth both in the long-run and short-run.