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Diaspora Remittance Inflow, Financial Development and the Industrialisation of Africa

Author

Listed:
  • Efobi Uchenna

    (Covenant University, Nigeria)

  • Simplice Asongu

    (Yaoundé/Cameroun)

  • Chinelo Okafor

    (Covenant University, Nigeria)

  • Vanessa Tchamyou

    (Yaoundé, Cameroon)

Abstract

The paper assesses how remittances directly and indirectly affect industrialisation in a panel of 49 African countries for the period 1980-2014. The indirect impact is assessed through financial development channels. The empirical evidence is based on three interactive and non-interactive simultaneity-robust estimation techniques, namely: (i) Instrumental Fixed Effects (FE) to control for the unobserved heterogeneity; (ii) Generalised Method of Moments (GMM) to control for persistence in industrialisation and (iii) Instrumental Quantile Regressions (QR) to account for initial levels of industrialisation. The non-interactive specification elucidates direct effects of remittances on industrialisation whereas interactive specifications explain indirect impacts. The findings broadly show that for certain initial levels of industrialisation, remittances can drive industrialisation through the financial development mechanism. Policy implications are discussed.

Suggested Citation

  • Efobi Uchenna & Simplice Asongu & Chinelo Okafor & Vanessa Tchamyou, 2016. "Diaspora Remittance Inflow, Financial Development and the Industrialisation of Africa," Working Papers of the African Governance and Development Institute. 16/037, African Governance and Development Institute..
  • Handle: RePEc:agd:wpaper:16/037
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Africa; Financial development; Industrialisation; Remittances;
    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
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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