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The effects of remittances on economic growth in sub-Saharan Africa

M.Comm. / The subject of the growth effects of remittances is characterised by different and conflicting perspectives. While migration optimists believe in positive growth effects of remittances, migration pessimists, on the other hand, challenge this position and claim that remittances have either a negative or statistically insignificant effect on economic growth. Those for remittances argue that remittances have a positive effect on economic growth mainly through subsequent increases in investment capital and human capital. Migration pessimists, however, stress that remittances negatively impact economic growth, mainly, because of inflationary pressures and moral hazards that result in reduced labour supply. Given such contrasting literature, this study makes an attempt to contribute to the existing literature by assessing the growth-effects of remittances in twenty-nine Sub-Saharan Africa countries over the period 1980-2008. The Arellano-Bover/Blundell-Bond GMM one-step estimator is used in the assessment. Empirical results from the study reveal evidence supporting for statistically significant positive growth effects of remittances in Sub-Saharan Africa. The study further reveals that these positive growth effects of remittances in Sub-Saharan Africa happen through the human capital channel. Even when heterogeneity of sub-regions is taken into account, there is still evidence showing positive growth effects of remittances in Sub-Saharan Africa. Results, however, reveal that in West Africa, remittances have a low positive effect on economic growth.

Identiferoai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:uj/uj:10402
Date16 October 2012
Source SetsSouth African National ETD Portal
Detected LanguageEnglish
TypeThesis

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