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Remittances, Economic Growth and Poverty: A Case of African OIC Member Countries

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  • Nasim Shah Shirazi

    (College of Islamic Studies, Hamad Bin Khalifa University, Doha, Qatar.)

  • Sajid Amin Javed

    (Sustainable Development Institute (SDPI), Islamabad.)

  • Dawood Ashraf

    (Islamic Research and Training Institute (A member of Islamic Development Bank Group), Jeddah, Kingdom of Saudi Arabia.)

Abstract

This paper investigates the impact of remittance inflows on economic growth and poverty reduction for seven African countries using annual data from 1992-2010. By using the depth of hunger as a proxy for poverty in a Simultaneous Equation Model (SEM), we find that remittances have statistically significant growth enhancing and poverty reducing impact. Drawing on our estimates, we conclude that financial development level significantly increases the remittances inflows and strengthens poverty alleviating impact of remittances. Results of our study further show a signficant interactive imapct of remittances and finacial develpment on economic growth, suggesting the substitutability between remittance inflows and financial development. We further find that 3 percentage point increase in credit provision to the private sector (financial development) can help eliminate the severe depth of hunger in the region. Remittances, serving an alternative source of private credit, can be effective in this regard.

Suggested Citation

  • Nasim Shah Shirazi & Sajid Amin Javed & Dawood Ashraf, 2018. "Remittances, Economic Growth and Poverty: A Case of African OIC Member Countries," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 57(2), pages 121-143.
    • Handle: RePEc:pid:journl:v:57:y:2018:i:2:p:121-143
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