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Do Remittances Improve the Economic Growth of Africa?

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  • Vukenkeng Andrew Wujung
  • Ongo Nkoa B. Emmanuel

Abstract

This paper assesses the effect of remittance money amongst other variables on the economic growth of Africa through the experiences of Cameroon, Kenya, Lesotho, Morocco and Nigeria which are situated in different sub-regions, and sub-regional schemes and are representative of the classification table of remittances into Africa. Data for the study is collected from the World Bank Development Indicators, covering a period of 31 years from 1980 to 2010. The estimation technique used for this study is the two stages least square method. The analyses (both descriptive and empirical) showed that remittance money has a positive and significant effect on economic growth in both the aggregate model and disaggregated models. The paper concludes that these findings are important and should be taken into consideration in the design of prgrammes and policies relating to remittances in Africa. In fact, the behavior of this variable should be incorporated in the approaches, programmes and policies of remittances in the different sub-regions and economic groupings in Africa. Really, an important conclusion is that ways should be explored to increasingly channel remittance money to productive investments.

Suggested Citation

  • Vukenkeng Andrew Wujung & Ongo Nkoa B. Emmanuel, 2013. "Do Remittances Improve the Economic Growth of Africa?," International Journal of Financial Economics, Research Academy of Social Sciences, vol. 1(4), pages 119-132.
  • Handle: RePEc:rss:jnljfe:v1i4p3
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    References listed on IDEAS

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    1. Lucas, Robert E B & Stark, Oded, 1985. "Motivations to Remit: Evidence from Botswana," Journal of Political Economy, University of Chicago Press, vol. 93(5), pages 901-918, October.
    2. Lopez, Humberto & Molina, Luis & Bussolo, Maurizio, 2007. "Remittances and the real exchange rate," Policy Research Working Paper Series 4213, The World Bank.
    3. Michael T. Gapen & Ralph Chami & Peter J Montiel & Adolfo Barajas & Connel Fullenkamp, 2009. "Do Workers’ Remittances Promote Economic Growth?," IMF Working Papers 09/153, International Monetary Fund.
    4. repec:idb:brikps:8527 is not listed on IDEAS
    5. Alejandra Cox Edwards & Manuelita Ureta, 2003. "International Migration, Remittances, and Schooling: Evidence from El Salvador," NBER Working Papers 9766, National Bureau of Economic Research, Inc.
    6. Stark, Oded & Taylor, J. Edward & Yitzhaki, Shlomo, 1988. "Migration, remittances and inequality : A sensitivity analysis using the extended Gini index," Journal of Development Economics, Elsevier, vol. 28(3), pages 309-322, May.
    7. Edwards, Alejandra Cox & Ureta, Manuelita, 2003. "International migration, remittances, and schooling: evidence from El Salvador," Journal of Development Economics, Elsevier, vol. 72(2), pages 429-461, December.
    8. Amuedo-Dorantes, Catalina & Pozo, Susan, 2004. "Workers' Remittances and the Real Exchange Rate: A Paradox of Gifts," World Development, Elsevier, vol. 32(8), pages 1407-1417, August.
    9. Chenery, Hollis B & Carter, Nicholas G, 1973. "Foreign Assistance and Development Performance, 1960-1970," American Economic Review, American Economic Association, vol. 63(2), pages 459-468, May.
    10. Bichaka Fayissa & Christian Nsiah, 2010. "Can Remittances Spur Economic Growth and Development? Evidence from Latin American Countries (LACs)," Working Papers 201006, Middle Tennessee State University, Department of Economics and Finance.
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    Keywords

    Effect; Remittances; Economic growth; Africa;

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