IDEAS home Printed from https://ideas.repec.org/a/jda/journl/vol.54year2020issue4pp75-88.html
   My bibliography  Save this article

Migrant Workers' Remittances And Economic Growth: A Time Series Analysis

Author

Listed:
  • Oluwasheyi S. Oladipo

    (State University of New York at Old Westbury, USA)

Abstract

Remittances are a critical source of foreign exchange for developing countries. As the volume of remittance transfers to many countries surpasses that of foreign private capital and official development assistance (ODA), there is a consensus that remittances have been a key stimulant of economic growth in many developing nations. With data from 1970q1 to 2017q4, this paper analyzes the impact of remittances on Nigeria's economic growth. Remittances from Nigerians are estimated to reach $24.3 billion in 2018, ranking second only to oil exports as a source of foreign exchange. To determine the responsiveness of output growth to remittances (REM), the empirical model draws on Giuliano and Ruiz-Arranz (2009) and other studies which use gross fixed capital formation as a proxy for investment in physical and human capital, external sources of capital represented by foreign aid, FDI, and openness of the economy as measured by the ratio of the sum of imports and exports to GDP. For this study, the model is modified to include a vector of other control variables that affect real GDP [used as proxy for economic growth]. These variables include domestic investment (INV); openness (OPN), measured as the ratio of exports plus imports to GDP; FDI; and exchange rate (EXCH). Unit root tests were conducted on all the variables of interest and showed that the variables were nonstationary in their levels but stationary after their first difference at the 5% level of significance. Next, the appropriate lag length was determined, and an error correction model was estimated to account for the dynamics of the model. The variables included were four lags each of ?????????, ?????????, ?????????, ?????????, ???????????, and ?????????. The study finds that worker remittances have a positive impact on economic growth in Nigeria, with a 1% increase in ?????? increasing ???????? by 0.0238%. Remittances in the short and long run are statistically significant and cointegrated with economic growth, but with low elasticities of 0.02 and 0.03, respectively. To fully harness the benefits of remittance inflows, the Nigerian government should reduce the costs of receiving funds sent by Nigerian emigrants overseas and also provide an environment conducive to investment.

Suggested Citation

  • Oluwasheyi S. Oladipo, 2020. "Migrant Workers' Remittances And Economic Growth: A Time Series Analysis," Journal of Developing Areas, Tennessee State University, College of Business, vol. 54(4), pages 75-88, October-D.
    • Handle: RePEc:jda:journl:vol.54:year:2020:issue4:pp:75-88
    as

    Download full text from publisher

    File URL: https://muse.jhu.edu/article/738662/pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Yang Dean, 2008. "Coping with Disaster: The Impact of Hurricanes on International Financial Flows, 1970-2002," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-45, June.
    2. Emmanuel K. K. Lartey & Federico S. Mandelman & Pablo A. Acosta, 2012. "Remittances, Exchange Rate Regimes and the Dutch Disease: A Panel Data Analysis," Review of International Economics, Wiley Blackwell, vol. 20(2), pages 377-395, May.
    3. John Anyanwu & Andrew E. O. Erhijakpor, 2010. "Do International Remittances Affect Poverty in Africa?," African Development Review, African Development Bank, vol. 22(1), pages 51-91.
    4. World Bank, 2017. "World Development Indicators 2017," World Bank Publications - Books, The World Bank Group, number 26447, April.
    5. Aggarwal, Reena & Demirgüç-Kunt, Asli & Pería, Maria Soledad Martínez, 2011. "Do remittances promote financial development?," Journal of Development Economics, Elsevier, vol. 96(2), pages 255-264, November.
    6. Catalina Amuedo-Dorantes & Susan Pozo & Carlos Vargas-Silva, 2010. "Remittances in Small Island Developing States," Journal of Development Studies, Taylor & Francis Journals, vol. 46(5), pages 941-960.
    7. Sanket Mohapatra & Dilip Ratha & Ani Silwa, 2010. "Outlook for Remittance Flows 2011-12 : Recovery After the Crisis, But Risks Lie Ahead," World Bank Publications - Reports 10907, The World Bank Group.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ugwoegbu, Ihechukwu Victor & Okoro, Ruth Chikwado & Obijiaku, Chimamkpa Promise, 2024. "Immigration and Economic Growth of Nigeria: A study of Awka Youths, Anambra State," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(10), pages 494-505, October.
    2. Muhammed Ashiq Villanthenkodath & Mohd Arshad Ansari, 2024. "Nexus Between Indian Economic Growth and Remittance Inflows: A Non-linear ARDL Approach," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 31(3), pages 473-495, September.
    3. Ololade Periola & Monsurat Foluke Salami, 2024. "Remittance outflow, financial development and macroeconomic indicators: evidence from the UK," Future Business Journal, Springer, vol. 10(1), pages 1-12, December.
    4. Ziauddin Ahmed & Anchana NaRanong, 2023. "The Effects of ICT/e-Government on Migrant Workers' Remittance Inflows in Bangladesh: An Empirical Study," Journal of Sustainable Development, Canadian Center of Science and Education, vol. 16(1), pages 1-53, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Anupam Das & Murshed Chowdhury, 2019. "Macroeconomic impacts of remittances in Bangladesh: The role of reverse flows," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 48(3), November.
    2. Efobi, Uchenna & Asongu, Simplice & Okafor, Chinelo & Tchamyou, Vanessa & Tanankem, Belmondo, 2016. "Diaspora Remittance Inflow, Financial Development and the Industrialisation of Africa," MPRA Paper 76121, University Library of Munich, Germany.
    3. Abdoul’ Ganiou Mijiyawa & Djoulassi K. Oloufade, 2023. "Effect of Remittance Inflows on External Debt in Developing Countries," Open Economies Review, Springer, vol. 34(2), pages 437-470, April.
    4. Richard P.C. Brown & Fabrizio Carmignani, 2015. "Revisiting the Effects of Remittances on Bank Credit: A Macro Perspective," Scottish Journal of Political Economy, Scottish Economic Society, vol. 62(5), pages 454-485, November.
    5. Timo Baas & Silvia Maja Melzer, 2012. "The Macroeconomic Impact of Remittances: A sending country perspective," Norface Discussion Paper Series 2012021, Norface Research Programme on Migration, Department of Economics, University College London.
    6. Simplice A. Asongu & Nicholas M. Odhiambo, 2020. "Remittances, the diffusion of information and industrialisation in Africa," Contemporary Social Science, Taylor & Francis Journals, vol. 15(1), pages 98-117, January.
    7. Efobi, Uchenna & Asongu, Simplice & Okafor, Chinelo & Tchamyou, Vanessa & Tanankem, Belmondo, 2019. "Remittances, finance and industrialisation in Africa," Journal of Multinational Financial Management, Elsevier, vol. 49(C), pages 54-66.
    8. Bettin, Giulia & Jallow, Amadou & Zazzaro, Alberto, 2025. "Responding to natural disasters: What do monthly remittance data tell us?," Journal of Development Economics, Elsevier, vol. 174(C).
    9. Sena Kimm Gnangnon, 2019. "Remittances Inflows and Trade Policy," Remittances Review, Remittances Review, vol. 4(2), pages 117-142, October.
    10. Combes, Jean-Louis & Ebeke, Christian, 2011. "Remittances and Household Consumption Instability in Developing Countries," World Development, Elsevier, vol. 39(7), pages 1076-1089, July.
    11. Farroukh, Arafet & Mazioued, Manel & Pédussel Wu, Jennifer, 2024. "Revisiting the linkage between remittances inflow and economic growth: A semi-parametric estimation with panel data," IPE Working Papers 238/2024, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    12. Syed Jawad Hussain SHAHZAD & Noureen ADNAN & Sajid ALI & Naveed RAZA, 2014. "Impact Of Remittances On Financial Development In South Asia," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 14, pages 11-29, December.
    13. Quy Ta & Yothin Jinjarak & Ilan Noy, 2022. "“How Do Shocks Affect International Reserves? A Quasi-Experiment of Earthquakes”," Open Economies Review, Springer, vol. 33(5), pages 945-971, November.
    14. Le Thanh Tung, 2018. "The Impact Of Remittances On Domestic Investment In Developing Countries: Fresh Evidence From The Asia-Pacific Region," Organizations and Markets in Emerging Economies, Faculty of Economics, Vilnius University, vol. 9(2).
    15. Kevin Williams, 2016. "Remittances and Financial Development: Evidence from Sub-Saharan Africa," African Development Review, African Development Bank, vol. 28(3), pages 357-367, September.
    16. Simplice Asongu & Nicholas Biekpe & Vanessa Tchamyou, 2019. "Remittances, ICT and doing business in Sub-Saharan Africa," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 46(1), pages 35-54, January.
    17. Barajas, Adolfo & Chami, Ralph & Ebeke, Christian & Oeking, Anne, 2018. "What's different about monetary policy transmission in remittance-dependent countries?," Journal of Development Economics, Elsevier, vol. 134(C), pages 272-288.
    18. Karmaker, Shamal Chandra & Barai, Munim Kumar & Sen, Kanchan Kumar & Saha, Bidyut Baran, 2023. "Effects of remittances on renewable energy consumption: Evidence from instrumental variable estimation with panel data," Utilities Policy, Elsevier, vol. 83(C).
    19. Ait Benhamou, Zouhair & Cassin, Lesly, 2021. "The impact of remittances on savings, capital and economic growth in small emerging countries," Economic Modelling, Elsevier, vol. 94(C), pages 789-803.
    20. Nadia Eldemerdash & Steven T. Landis, 2023. "The Divergent Effects of Remittance Transfers for Post-Disaster States," Economics of Disasters and Climate Change, Springer, vol. 7(3), pages 483-501, November.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jda:journl:vol.54:year:2020:issue4:pp:75-88. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Abu N.M. Wahid (email available below). General contact details of provider: https://edirc.repec.org/data/cbtnsus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.