Impact of official development assistance and migrant remittances on economic growth and income inequality in Senegal

Lassana Toure (), M Diagne and M Sagbo ()
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Lassana Toure: University of Segou

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Abstract: This paper is a comparative analysis of the direct and indirect effects of official development assistance (ODA) and migrant remittances (MRT) on economic growth and income inequality in Senegal. Using the instrumental variables method to address the endogeneity problem, the econometric results obtained show a very significant positive impact of MRT on economic growth (13 points increase in the economic growth rate in the long run). Income inequalities should decrease by 12% if the average level of migrant transfers as a % of GDP over the long term increases by 1%. Income gaps are also reduced thanks to price stabilisation (Gini coefficient falls by 7% as a result of price control). Following a 1% increase in the share of ODA in GDP, the economic growth rate would decrease by 2 points while income inequality would increase significantly by 27%.

Keywords: economic growth; income inequality; foreign aid; migrant remittances; instrumental variables. (search for similar items in EconPapers)
Date: 2021-11-11
New Economics Papers: this item is included in nep-fdg and nep-int
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Published in Revue Française d'Economie et de Gestion , 2021

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03511579

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