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Remittances and Value Added Across Economic Sub-Sectors in Sub-Saharan Africa

Author

Listed:
  • Simplice A. Asongu
  • Nicholas M. Odhiambo

Abstract

This research assesses the relevance of enhancing remittances on value added across economic sectors in sub-Saharan Africa for the period 1980 to 2014 using the Generalised Method of Moments. First, no significant net effects on added value to the agricultural sector are apparent. Second, enhancing remittances engenders a positive net effect on added value to the manufacturing sector. Third, there are negative net effects on added value to the service sector. Given that the unfavourable net incidence of remittances to the service sector is associated with a positive marginal or conditional effect, the analysis is extended by computing thresholds at which remittances induce net positive effects on added value to the service sector. The extended analysis shows that a remittance threshold of 48.5% of GDP is the critical mass needed for further enhancement of remittances to engender positive net effects on value added to the service sector.

Suggested Citation

  • Simplice A. Asongu & Nicholas M. Odhiambo, 2021. "Remittances and Value Added Across Economic Sub-Sectors in Sub-Saharan Africa," Working Papers 2103, African Economic and Social Research Institute (AESRI).
    • Handle: RePEc:afa:wpaper:2103
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    File URL: https://aesri.org/RePEc/afa/afa-wpaper/AESRIWP03.pdf
    File Function: Revised version, 2022
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    More about this item

    Keywords

    Economic Output; Remitances; Sub-Saharan Africa;
    All these keywords.

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • F30 - International Economics - - International Finance - - - General
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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