HOUSEHOLD INWARD REMITTANCES AND PRODUCTIVE INVESTMENT IN NIGERIA: A MULTIDIMENSIONAL ANALYSIS
DOI:
https://doi.org/10.14738/assrj.416.3546Keywords:
inward remittances, investment, consumption GMM, NigeriaAbstract
There has been an unprecedented inflow of household inward remittances into the Nigerian economy over the recent years however there are concerns about the use of inward remittances for productive investment or consumption of imported goods. This study sought to empirically examine the effect of household inward remittances on productive investments in Nigeria. Generalized Method of Moment (GMM) estimator was used to analyze time series data sourced from World Development Indicators (WDI) 2015 edition. Results showed that; (i) inward remittances have negative and significant impact on productive investment in Nigeria, (ή= -0.0617; p=0.0279) (ii) inward remittances have positive and significant impact on consumption (Ώ=0.0330; p=0.0365), (iii) Consumption exert positive and significant impact on imported goods ( λ=1.018; p=0.0241). The study therefore concluded that inward remittances discourage productive investment and boost consumption of imported goods. This could be attributed to the seeming resource transfer to consumption of imports arising from price differentials between locally manufactured goods to foreign imports. To plug this leakage, it becomes imperative for Nigerian government to dismantle all bureaucratic bottlenecks that make cost of production high. It is recommended that Nigerian government should begin to build infrastructure and subsidize production as against subsidizing consumption such as proposed school feeding and fuel SubsidyReferences
Abdih, Y., Chami, R. Dagher, J., & Montiel, P. (2012). Remittnaces and institutions. Are remittances a curse? World Development, 40(4), 657-666.
Adams, R.H. (2005). International migration, remittances and the brain drain: A study of 24 labour-exporting countries. Policy Research Working Paper No. 2972. Washington, D.C: World Bank.
Adams, R.H., & Page, J. (2005). Do international migration and remittances reduce poverty in developing countries? World Development, 33(10), 1645-1669.
Adams, R.H., Cuecuecha, A., & Page, J. (2009). The impact of remittances on poverty and inequality in Ghana. World Bank, Policy Research Working Paper 4732.
Aggarwal, R., Asli, D.K., Peria, M., & Soledad, M. P. (2006). Do workers’ remittnaces promote financial development? World Bank Policy Research Working Paper No. 3957. Washington DC: World Bank. Retreived from http://ssrn.com/absract=923264
Agu, C. (2009). Remittances for growth: A two fold analysis of feedback between remittances, financial flows and the real economy in Nigeria. A paper Presented at the Econometric Society Conference July 8 – 10, 2009, Sheraton Hotel, Abuja.
Aseh, B.J. (1994). Emigration and its effects on the sending country: Available from george vernez. The rand corporation 1700 Main Street, Santa Monica. California.
Burney, M. (1989). A macro –economic analysis of the impact of workers remittances in Pakistan’s economy in Rashid Amjad (Ed.) To the gulf and back: studies on The Economic Impact of Asian Labour Migration ILO Geneva.
Catrinesseu, N., Leon-Ledesina, M., Piracha. M., & Quillin, B. (2006). Remittances, institutions, and economic growth. Discussion paper No.2139
Catteneo, C. (2008). International migration and poverty: A cross–country analysis. Available at:http://www.daglino.unimi.it/media/cataneo: Cristina.pdf
CBN, (2014). Annual reports and statement of acoounts. www.cbn.gov.ng
Chami, R. A., Barajas, T., Cosimano, C., Fullenkamp, C., Gapen, M., & Montiel, P. (2008). Macroeconomic consequences of remittances. IMF Occasional Paper, No. 259.(Washington: International Monetary Fund)
Chilokwu, I.D.O; Olise, M.C., & Ewuim, N.C. (2011). Protecting human rights of Nigerian migrants: The case of migrants’ remittances enterprise for sustainable development in Nigeria. Kuwait Chapter of Arabian Journal of Business and Management Review. 1(1), 40-50.
Craig, J.C. (1982). More efficient estimation in the presence of heteroscedasticity of unknown form. Econometrica, 51(3), 751-63.
De Haas, H. (2007a). Impact of international migration on social and ecoomics development in Moroceans Sending regions: A review of the empirical literature. International Migration Institute, University of Oxford, Oxford.
Fayissa, B., & Nsiah, C. (2008). The impact of remittances on economic growth and development in Africa. Department of economics and finance, working paper series, available online at:http: ideas.repec.org./p/ints/wpaper/2000802.html.
Giuliano, P., & Ruiz-Arranz, M., (2009). Remittances, financial development and growth. Journal of Development Economics, 90(1), 144-152.
Glytsos, N.P (2002a). A macroeconometric model of the effects of migrant remittances in Mediterrean countries. In Isirageldm (ed.). Human Capital Population Economics in the Middle East, Cairo. Egypt: An Economic Research Forum Edition, the American University in Cairo Press. 300-325.
Glytsos, N.P (2002b). Dynamic effects of migrant remittances on growth: An Econometric Model with an application to Mediterrean countries. Discussion paper, No. 74 0505014, Labour and Demography. Economics Working Paper Archive at Washington University in St. Louis.
Glytsos, N.P. (2002c). A model of remittance determination applied to Middle East and North African countries. Discussion Paper, No. 730505016, Labour and Demography. Economics Working paper Achieve at Washington University in St. Louis.
Gupta, S., Pattillo., C., & Wagh, S. (2009). Effect of remittances on poverty and financial development in Sub-Saharan Africa. World Development, 37(1), 104-115.
Habib, A., (1985). Economic cnsequences of international migration for sending countries: Review of evidence from Bangledesh. (Doctoral dissertation, University of Newcastle, Australia).
Hansen, L.P. (1982). Large sample properties of generalized method of moment estimators Econometrica, 50(4), 1029-1054.
Hatemi, J.A. (2008). Tests for co integration with two unknown regime shifts with an application to financial market integration. Empirical Economics. 35, 497-505.
Hrushikesh, M. (2008). Do remittances impact the economy? Some empirical evidences from a developing economy. Available on www.cds.edu.
Kalim, R., & Shahbaz, M. (2009). Remittances and poverty nexus: Evidence from Pakistan. International Research Journal of Financial Economics, 10(3), 46-59.
Kenedy, P.A. (2003). A Guide to Econometrics. The MIT Press Combridge, Masschusetts.
Kim, S. (1983). Economic analysis of Korean manpower migration. Sogang University Journal of Economics and Business. 3 – 6.
Kim, S. (1986). Labour migration from Korea to the Middle East: Its trends and impact on the Korean economy. In Arnold F. and Nasra M. (Eds), Asian labour migrations. Pipeline to the middle east, westview, boulder, 163 -176
Newey, W.K., & West, K.D. (1987). A simple positive semi-definie, heteroscedasticity and autocorrelation consistent covariance matrix. Econometrica, 55(3), 703-08.
Ojapinwa, T.V. & Odekunle, L.A. (2013). Workers’ remittance and their effect on the level of investment in Nigeria: An empirical analysis. International Journal of Economics and Finance. 5(4),89-99.
Okodua, H. (2010). Workers’ remittances and economic growth in selected Sub-Saharan African countries. A PhD Thesis Submitted to the Department of Economics. Covenant University, Ota.
Olowa, O.W., Awoyemi, T.T., Shittu, M.A., & Olowa, O.A. (2013). Effects of remittances on poverty among rural households in Nigeria. European Journal of sustainable Development 2(4), 263-284.
Olubiyi, E.A. (2013). Workers’ remittances, governance institution and private investment in Nigeria. The Review of Finance and Banking 6(1), 63-81.
Sami M., & Mohamed B.M I. (2012). Through which channels can remittances spur economic growth in MENA Countries? International Journal of Economic Perspectives, 6(1), 55-81.
Stark, O. (1991). The migration of labour. Cambridge. Cambridge University Press.
Stark, O., & Bloom, D.E. (1985). The new economics of labour migration. American Economic Review, 75(2), 173-178.
Stock, J.H., & Watson, M.W. (2007). Introduction to econometrics. New York. Pearson.
Tansel, A., & Yasar, P. (2010). Macroeconomic impact of remittances on output growth: Evidence from Turkey. Migration Letters. 7(2), 132-143.
Taylor, J.E. (1999). The new economics of labour migration and the role of remittances in the migration process. International Migration, 37(1), 63-88.
Thanh, L. (2008). Trade, remittnaces, institutions and economic growth. Macro Economics Research Group.
White, H. (1984). Asymptotic theory for econometrics. Orlando Fla. Academic Press.
World Bank, (2015). World Development Indicators 2014. Washington, D.C.: World Bank, Washington D.C. USA.
World Bank, (2012). World Development Indicators 2012. Washington, D.C. World Bank.
World Bank, (2013). World Development Indicators (WDI): online Database, The World Bank, Washington, D.C. USA.
Ziesemer, T. (2007). Workers remittances and growth: The phyiscal and human capital channels. United Nations University Working paper Series.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2017 Advances in Social Sciences Research Journal
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors wishing to include figures, tables, or text passages that have already been published elsewhere are required to obtain permission from the copyright owner(s) for both the print and online format and to include evidence that such permission has been granted when submitting their papers. Any material received without such evidence will be assumed to originate from the authors.
