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What Drives Remittance Inflows to Sub-Saharan Africa? A Dynamic Panel Approach

  • Francis Kemegue

    (Department of Economics, University of Pretoria)

  • Emmanuel Owusu-Sekyere

    ()

    (Department of Economics, University of Pretoria)

  • Renee van Eyden

    ()

    (Department of Economics, University of Pretoria)

This paper investigates the factors that drive and constrain remittance inflows into SubSaharan Africa (SSA) using annual data for 35 SSA countries from 1980 to 2008, generalised method of moments by Arellano and Bover (1995) and LSDV with Driscoll and Kraay (1998) corrected standard errors. We find that when cross-sectional dependence of the error term and individual effects are controlled for, host country economic conditions override home country income in driving remittances to SSA The quality of financial service delivery and investment opportunities in the home country and exchange rate considerations are also significant to remittance inflows to SSA. This is more consistent with self interest motives for remittance inflows than altruism. However there are country level differences.

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Paper provided by University of Pretoria, Department of Economics in its series Working Papers with number 201128.

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Length: 21 pages
Date of creation: Nov 2011
Date of revision:
Handle: RePEc:pre:wpaper:201128
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