THE ROLE OF REMITTANCES IN THE ECONOMIC GROWTH OF NIGERIA

ABSTRACT

Remittances constitute a portion of international migrant workers earnings sent back from the country of employment to the country of origin.While the rates and levels of officially recorded remittances to developing countries has increased enormously over the last decade, academic and policy-oriented research has not come to a consensus over whether remittances contribute to longer-term growth (Nnaemeka, 2007).This study focuses on the role of remittances in the economic growth of Nigeria. The following variables were identified as the most relevant for the purpose of this study: Real Gross Domestic Product, Workers Remittances and Compensation, Net private capital flows and Effective Exchange Rate. Using data set from 1980 to 2010, with the aid of Econometric views (E views), the model is estimated using ordinary least square technique of estimation to estimate relationship between the selected variables. We find that Workers’ Remittances and compensation received has a positive impact on economic growth in the country over the period considered. It was recommended that Government needs to put up policy schemes that aims to enhance the amount of remittances coming through formal channels thus making it possible for remittances to be put to investment means that can boost economic growth.

TABLE OF CONTENTS

Title Page……………………………………………………………………………................i

Certification…………………………………………………………………………………...ii

Dedication…………………………………………………………………………………….iii

Acknowledgements……………………………………………………………………….…..iv

Table of Contents………………………………………………………………………….….vi

List of Tables and Figures……………………………………………………………….......viii

Abstract…………………………………………………………………………………….....ix

CHAPTER ONE: INTRODUCTION

1.1        Background to the Study……………………………………………………….…......1

1.2        Statement of the Problem………………………………………………………….......3

1.3  Objectives of the Study…………………………………………………………..........3

1.4  Hypothesis …………………………………………………………………….............4

1.5  Significance of the Study…………………………………………………………..….4

1.6        Scope of Study……………………………………………………………………..….4

1.7  Sources and Coverage of Data ………………......……………………………….…...5

1.8  Brief Methodology.........................................................................................................5

1.9   Organization of Study....................................................................................................5

1.10          Operational Definition of Terms………………………………………………............6

CHAPTER TWO:LITERATURE REVIEW

2.1  Introduction....................................................................................................................7

2.2  The Review................................ ....................................................................................7

2.2.1 The Concept of Remittances............................................................................................7

2.2.2 The Nigerian Remittance Market.....................................................................................9

2.2.3 Economic Growth: An Overview....................................................................................13

2.2.4 Remittance and Economic Growth..................................................................................16

2.2.5Economic, Political and Social effects of remittances.....................................................20

2.3Summary.........................................................................................................................21

CHAPTER THREE: THEORETICAL FRAMEWORK AND RESEARCH   METHODOLOGY  

3.1Introduction .......................................................................................................................24

3.2Theoretical Framework.......................................................................................................24

3.3Research Methodology.......................................................................................................25

3.3.1Model Specification.........................................................................................................26

3.4Estimation Technique..........................................................................................................27

3.5Data Source.........................................................................................................................27

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS OF FINDINGS

4.1Introduction.........................................................................................................................28

4.2Analysis of Remittances Trend...........................................................................................28

4.3Statistical Tests andPresentation of Regression Results...................................................30

CHAPTER FIVE: SUMMARY, RECOMMENDATIONS AND CONCUSION

5.1Summary.............................................................................................................................38

5.2Recommendations...............................................................................................................39

5.3Conclusion...........................................................................................................................42

REFERENCES.......................................................................................................................44

APPENDICES........................................................................................................................48

LIST OF TABLES AND FIGURES

TABLES

Table 4.2 Workers Remittances and Compensation................................................................29

FIGURES

Figure 2.1 Mechanisms Involved in the Formal Remittance Market.......................................11

Figure 4.1 Remittance Trends in Nigeria (1990-2010)............................................................28

Figure 4.2 Remittances alongside ODA and FDI...................................................................30