International Remittances, Private Domestic Investment and Economic Growth in Nigeria

Izuchukwu Chetachukwu. Okeke and Chukwudi Chukelu
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Izuchukwu Chetachukwu. Okeke: Department of Economics, Chukwuemeka Odumegwu Ojukwu University, Igbariam, Nigeria
Chukwudi Chukelu: Department of Economics, Chukwuemeka Odumegwu Ojukwu University, Igbariam, Nigeria

International Journal of Research and Innovation in Social Science, 2024, vol. 8, issue 10, 3234-3248

Abstract: Investment is a key factor that determines economic progress in both developed and developing economies. Nigeria, a developing country characterized by low income and savings requires substantial investment in promoting and enhancing economic activities that guarantee better living conditions for the Nigerians. International remittances serve as development or foreign finance needed to bridge the gap between the available resources and what is required for their advancement. This study examined the role of international remittances on economic growth-private domestic investment nexus in Nigeria using quarterly time series data from 1981 to 2022. The Two Stage Least Squares (TSLS) and Granger Causality Test were employed as methods of estimation. Findings reveal that international remittances are positively related to economic growth through the channels of private domestic investment and there exists a unidirectional causal relationship between Economic growth and Private domestic investment without feedback. Therefore, remittances should go beyond just transfer payments and social security to help family members and serve as investments to spur economic growth. Moreover, international trade should be strengthened by revamping the industrial sector by shifting production from primary products such as crude oil and agricultural produce to secondary products such as refined petroleum and industrial products.

Date: 2024
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