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Trade, Remittances and Economic Growth in Nigeria: Any Causal Relationship?

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  • Ebenezer Adesoji Olubiyi

Abstract

This study examined the causal relationships among GDP, export, imports and remittances. The study, among others, investigated the validity of export‐led and remittances‐led growth hypotheses. Specifically, the study investigated the causal relationship between remittances and GDP, remittances and export and remittances and imports. Employing a VECM Granger Causality for data spanning between 1980 and 2012, imports and remittances significantly Granger‐caused GDP in the short run. Also, there were reverse causalities running from GDP to export and imports. This implies that export‐led growth hypothesis holds in Nigeria. Furthermore, there was a unidirectional causation running from remittances to GDP, implying that remittances matter for economic growth. But since the effect was more from the demand side, it could lead to inflationary pressure. The policy recommendation is that the authorities should intensify efforts on the export base of the economy. The monetary authorities should implement necessary policy to cool the pressure arising from conspicuous spending of remittances.

Suggested Citation

  • Ebenezer Adesoji Olubiyi, 2014. "Trade, Remittances and Economic Growth in Nigeria: Any Causal Relationship?," African Development Review, African Development Bank, vol. 26(2), pages 274-285, June.
    • Handle: RePEc:bla:afrdev:v:26:y:2014:i:2:p:274-285
    DOI: 10.1111/1467-8268.12081
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