REMITTANCES INFLOW AND ECONOMIC GROWTH IN AN OIL DEPENDENT ECONOMY

ABSTRACT

Using cointegration and ECM techniques, this study looked at the effects of remittance inflows on economic growth in Nigeria from 1995 to 2019. To do this, a theoretical model was created, which was then estimated. The predicted output from ECM demonstrated that remittances and capital stock had a positive and significant impact on economic growth after conducting preliminary tests such descriptive analysis, unit root test, and cointegration tests. Additionally, it was discovered that foreign direct investment had a favorable and considerable impact on economic growth, whereas secondary school enrollment rate had a negative impact (though it was also not statistically significant).With a speed of adjustment of roughly 53%, the error correction term was statistically significant and negatively signed. Using cumulative sum of recursive residuals (CUSUM) and cumulative sum of recursive residuals squares, the model's structural stability was confirmed (CUSUM of Squares). The implementation of remittance-attracting policies and the development of an environment that facilitates investment in the local sector were suggested. Keyword: Remittances, Economic Growth, Nigeria, Developing Country.