How Robust is Worker Remittance-Inclusive Growth Connection in Sub-Saharan Africa?
Keywords:
Worker remittance, inclusive growth, sub-Saharan Africa
Abstract
This study examines the robustness of worker remittance-inclusive growth connection in 32 sub-Saharan African countries. Based on the Solow growth model, a theoretical model has been developed, which shows that worker remittance can stimulate inclusive growth if it is effectively used for augmenting productive capacity. This research derived inclusive growth based on the adjusted human development index. Comparing the results from panel least square, Arellano and Bond, and Blundell and Bond estimation techniques, this study found that Blundell and Bond estimation techniques were best robust. The study concluded that worker remittance-inclusive growth connection, although positive, lacked robustness in the sampled subregion. This implies that, dollar for naira, the income remitted by workers from abroad can only robustly be a good predictor of equilibrium inclusive growth if it were more systematically conditioned on policies that are directly linked with improving education, life expectancy and health in SSA.
References
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Ali, I. and Son, H.H. (2007). Measuring inclusive growth. Asian Development Review , 24(1): 11-18.
Anderson, T.W. and Hsiao, C. (1982). Formulation and estimation of dynamic models using panel data. Journal of Econometrics, 18: 47-82.
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Dollar, D. and Kraay, A. (2002). Growth is good for the poor. Journal of Economic Growth, 7(3): 195–225.
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UNDP (2011). Sustainability and Equity: A Better Future for All . New York: Palgrave Macmillan.
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United Nations Department of Economic and Social Affairs, Financing for Development Office.
World Bank (2014). Outlook for remittances flows 200-2017: Remittances expected to fall by 7-10 percent in 2009. In: D. Ratha, S. Mohapatra and A. Silwal (eds),
Migration and Development Brief 10: Development Prospects Group. Washington, DC; World Bank.
World Bank (2014). World Development Report, 2000/01. Washington DC; World Bank.
Anand, R., Mishra, S. and Spatafora, N. (2013). Structural transformation and the sophistication of production. IMF Working Paper No. 12/59. Washington DC.
Agenor, P.R and Montiel, P.J. (2008). Development Macroeconomics. 3rd edition. Princeton University Press.
Ahortor, C.R.K. and Adenutsi, D.E. (2009). The impact of remittances on economic growth in small-open developing countries. Journal of Applied Sciences, 9(18): 3275-3286.
Aggarwal, R., Demirguc-Kunt, R. and Montiel, P.J. (2006). Do workers’ remittances promote financial development? World Bank Policy Research Working Paper No. 3957. Washington: World Bank.
Anyanwu, J.C. and Erhijakpor, A.E.O. (2009). Do international remittances affect poverty in Africa?
Arellano, M. and Bover, O. (1995). Another look at the instrumental variables estimation of error-component models. Journal of Econometrics, 68: 29-52.
Arellano, M. and Bond, S.R. (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. Review of Economic Studies, 58(2): 277–297.
Ali, I. and Son, H.H. (2007). Measuring inclusive growth. Asian Development Review , 24(1): 11-18.
Anderson, T.W. and Hsiao, C. (1982). Formulation and estimation of dynamic models using panel data. Journal of Econometrics, 18: 47-82.
Baltagi, B.H. (1998). Econometric Analysis of Panel Data . 3rd edition. West Sussex, England; John Wiley and Sons.
Berg, A. and Ostry, J.D. (2011). Equality and efficiency. Finance and Development, 48(3).
Blundell, R. and Bond, S. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 87: 115-143.
Dollar, D. and Kraay, A. (2002). Growth is good for the poor. Journal of Economic Growth, 7(3): 195–225.
European Commission (2010). Europe 2020: A strategy for smart, sustainable and inclusive growth. EC document COM(2010) 2020. Brussels. Available at www.ec.europa.eu.
Fashola, M.A. (1998). Macroeconomic Theory Highlights and Policy Extensions for Less Developed Economies: Concept Publications, Lagos.
Fosu, A.K. (2011). Terms of trade and growth of resource economies: A tale of two countries. Working Paper No.2011/28, UNU-WIDER.
Habito, C.F. (2009). Patterns of inclusive growth in developing Asia: Insights from an enhanced growth-poverty elasticity analysis. ADBI Working Paper Series 145. Tokyo: Asian Development Bank Institute.
Huang, Y. and Quibria, M.G (2013). The global partnership for inclusive growth. WIDER Working Paper No. 2013/059, United Nations University, World Institute
for Development Economics Research.
Ianchovichina, E. and Gable, S. (2012). What is inclusive growth? In: R. Arezki et al. (eds), Commodity Price Volatility and Inclusive Growth in Low-Income Countries. Washington, DC: IMF. 147–60.
Ianchovichina, E. and Lundström, S. (2009). Inclusive growth analytics: Framework and application. WB Policy Research Working Paper 4851. Washington, DC: World Bank.
International Monetary Fund (2005). Two current issues facing developing countries. In: World Economic Outlook, April (Washington).
Kagochi, J.M., Kebede, E. and Summers, D. (2010). Are remittances a source of development capital? The case of sub-Saharan Africa. Journal of Finance and Economics 47, 1450-2887.
Klasen, S. (2010). Measuring and monitoring inclusive growth: Multiple definitions, open questions, and some constructive proposals. ADB Sustainable Development Working Paper Series 12. Manila: Asian Development Bank.
Kraay, A. (2004). When is growth pro-poor? Cross-country evidence. IMF Working Paper, No. 4-47. Washington DC; International Monetary Fund.
Kure, E. and Nwosu, C.P. (2008). Worker’s remittances and economic growth evidences from Nigeria. Paper at the Young Statisticians Conference, Saint George Hotel, 1- 3 July, Pretoria, South Africa.
Levine, R., Loayza N. and Beck T. (2000). Financial intermediation and growth: Causality and causes. Journal of Monetary Economics, 31-77.
McKinley, T. (2010). Inclusive growth criteria and indicators: An inclusive growth index for diagnosis of country progress. ADB Working Paper No.14. Mandaluyong City, Philippines, Asian Development Bank.
Mehlum, H., Moene, K. and Torvik, R. (2006). Institutions and the resource curse. Economic Journal, 116: 1–20.
Obstfeld, M. (1994). Capital mobility and devaluation in an optimizing model with rational expectations. American Economic Review, 71 (May): 217–221.
OECD/DAC (2006). Final data on ODA for 2005. Journal of Economics. 50(2): 65-94.
Ozurumba, B.A. (2013). Migrant’s remittances and economic growth in sub-Saharan Africa: Evidence from Nigeria, Ghana and South Africa. Interdisciplinary Journal of Contemporary Research in Business 4(10): 534-557.
Ramos, R.A., Ranieri, R. and Lammens, J.W. (2013). Mapping inclusive growth in developing countries. IPC-IG Working Paper No.105. Brasília, International Policy
Centre for Inclusive Growth.
Ratha, D. (2005). Enhancing the Development Effect of Remittance to Developing Countries. Washington DC; World Bank.
Sachs, J.D., McArthur J., Schmidt-Traub G., Kruk M., Bahadur C., Faye M. and McCord G. (2004). Ending Africa’s poverty trap. Brookings Papers on Economic
Activity, 35(1): 117–216.
Siddiqui, O. and Kemal, J. (2006). Remittances, trade liberalization, and poverty in Pakistan: The role of excluded variables in poverty change analysis. PIDE WP
No.1. Pakistan.
UNDP (2011). Sustainability and Equity: A Better Future for All . New York: Palgrave Macmillan.
United Nations (2002). Monetary Consensus on Financing for Development. New York:
United Nations Department of Economic and Social Affairs, Financing for Development Office.
World Bank (2014). Outlook for remittances flows 200-2017: Remittances expected to fall by 7-10 percent in 2009. In: D. Ratha, S. Mohapatra and A. Silwal (eds),
Migration and Development Brief 10: Development Prospects Group. Washington, DC; World Bank.
World Bank (2014). World Development Report, 2000/01. Washington DC; World Bank.
Published
2017-09-01
Section
Articles
