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The Impact of Remittances on Economic Growth in Nigeria: an Error Correction Modeling Approach

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  • Sebil Olalekan Oshota Abdulazeez Adeniyi Badejo

    (Department of Economics, Southwestern University, Nigeria, Okun-Owa, Ogun State, Nigeria Department of Economics, University of Ibadan, Ibadan,Nigeria)

Abstract

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, foreign direct investment and trade, but also by strategically harnessing the contribution of remittances by ensuring their effi cient and reliable transfers. JEL Classification: F24, F43

Suggested Citation

  • Sebil Olalekan Oshota Abdulazeez Adeniyi Badejo, 2014. "The Impact of Remittances on Economic Growth in Nigeria: an Error Correction Modeling Approach," Zagreb International Review of Economics and Business, Faculty of Economics and Business, University of Zagreb, vol. 17(2), pages 21-43, November.
    • Handle: RePEc:zag:zirebs:v:17:y:2014:i:2:p:21-43
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    Citations

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    Cited by:

    1. Debelo Bedada Yadeta & Fetene Bogale Hunegnaw, 2022. "Effect of International Remittance on Economic Growth: Empirical Evidence from Ethiopia," Journal of International Migration and Integration, Springer, vol. 23(2), pages 383-402, June.
    2. Soma Rani Sutradhar, 2020. "The impact of remittances on economic growth in Bangladesh, India, Pakistan and Sri Lanka," International Journal of Economic Policy Studies, Springer, vol. 14(1), pages 275-295, February.
    3. Chopra, Ritika & Magazzino, Cosimo & Shah, Muhammad Ibrahim & Sharma, Gagan Deep & Rao, Amar & Shahzad, Umer, 2022. "The role of renewable energy and natural resources for sustainable agriculture in ASEAN countries: Do carbon emissions and deforestation affect agriculture productivity?," Resources Policy, Elsevier, vol. 76(C).
    4. Ibrahim Ayoade Adekunle & Tolulope Oyakhilome Williams & Olatunde Julius Omokanmi & Serifat Olukorede Onayemi, 2020. "The Mediating Role Of Institutions In The Remittance–Growth Relationship: Evidence From Nigeria," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 65(227), pages 7-30, October –.
    5. Mathew Ekundayo Rotimi & Mishelle Doorasamy & Udi Joshua & Grace Gift Rotimi & Confort Omolayo Rotimi & Gabriel Samuel & Gbenga Adeyemi & Ayodele Solomon Alemayo & Alfred Kimea, 2022. "ARDL Analysis of Remittance and Per Capita Growth Nexus in Oil Dependent Economy: The Nigeria’s Experience," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 15(3), pages 38-51, December.
    6. Emon Kalyan Chowdhury & Bablu Kumar Dhar & Md.Abu Issa Gazi, 2023. "Impact of Remittance on Economic Progress: Evidence from Low-Income Asian Frontier Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(1), pages 382-407, March.
    7. Ummya Salma & Md. Fazlul Huq Khan & Md. Masum Billah, 2023. "Foreign Capital and Economic Growth: Evidence from Bangladesh," Papers 2312.04695, arXiv.org.

    More about this item

    Keywords

    Remittance; Economic growth; Error Correction Modeling; Nigeria;
    All these 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

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