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DETERMINANTS AND IMPACT OF REMITTANCES ON THE NIGERIAN ECONOMY: 1996-2009
Abstract:
Remittances, over the years have become a topical issue globally because of its phenomenal volume and its potential to serve as an alternative source of development finance in a nation’s economy. The growing importance of remittances as a source of foreign exchange is reflected in the fact that they have outpaced foreign direct investment and official development assistance to Nigeria in recent years. In order to investigate the impact of remittances on economic growth in Nigeria and its macroeconomic determinants, the Regression and VEC models were used in carrying out the analysis using quarterly data from 1996-2009. Variables included in the Regression model are GDP, remittance, foreign aid, investment in physical and human capital, portfolio investments, degree of openness, FDI and institutions, while for the VAR, remittances, real agricultural GDP, exchange rate and inflation were used. We found remittances have a positive and significant impact on economic growth and real agricultural GDP, exchange rate and inflation determine remittances inflow in Nigeria. Finally we found that Nigerians in diaspora are motivated to remit for investment and altruism motives. The main policy implications from this study are that Nigeria can improve her economic growth performance by strategically harnessing the contributions of remittances for economic development.
DETERMINANTS AND IMPACT OF REMITTANCES ON THE NIGERIAN ECONOMY: 1996-2009
