INTERACTIVE EFFECTS OF MIGRANT REMITTANCES AND GROSS FIXED CAPITAL FORMATION ON ECONOMIC GROWTH IN NIGERIA
Abstract
The previous studies in the relationship between inflows of migrant remittances, gross fixed capital formation, and economic growth in the literature have increased the mixed empirical outcomes in the field of economics. However, very little attention has been given to the interactive effect of migrant remittances and gross fixed capital formation on economic growth, especially in the case of Nigeria. As such, this study mainly examined the long-run interactive effect of migrant remittances and gross fixed capital formation on the economic growth in Nigeria over the period of 1990 to 2023 in a multivariate framework. To avoid spurious results, the study tested the stationarity properties of the variables with the Autoregressive Dickey Fuller (ADF) and Phillips Perron (PP) methods that allow for more complex models in the regression equation. Next, the Autoregressive Distributed Lags Model (ARDL) bounds co-integration test was used to examine the extent of the long-run relationship among the variables used in the study. Also, the econometric technique of Fully Modified Ordinary Least Squares (FMOLS) was used to investigate the coefficients of the explanatory variables on economic growth. Findings show that both migrant remittances and gross fixed capital formation promote the economic growth of Nigeria.
JEL: O40, O49, F30
Article visualizations:
Keywords
Full Text:
PDFReferences
Abdulkarim, Y. (2023). A systematic review of investment indicators and economic growth in Nigeria. Humanities and Social Sciences Communications, 10(1), 1-13. http://dx.doi.org/10.1057/s41599-023-02009-x
Achar, P. N., Luther, O. O., Ochieng, O. H., & Odhiambo, O. M. (2024). Gross Fixed Capital Formation and Economic Growth in East African Community States. African Development Finance Journal, 7(6), 29-49. Retrieved from https://uonjournals.uonbi.ac.ke/ojs/index.php/adfj/article/view/2343
Aslan, A., & Altinoz, B. (2021). The impact of natural resources and gross capital formation on economic growth in the context of globalization: evidence from developing countries on the continents of Europe, Asia, Africa, and America. Environmental Science and Pollution Research, 28, 33794-33805. Retrieved from https://link.springer.com/article/10.1007/s11356-021-12979-7
Aren, M. L. F. (2024). Exploring minimal indirect digital economy taxation as a post-COVID-19 economic recovery strategy for African revenue mobilisation. Journal of Sustainable Development Law and Policy (The), 15(1), 238-262. Retrieved from https://jsdlp.ogeesinstitute.edu.ng/index.php/jsdlp/article/view/106
Azam, A., Ateeq, M., Shafique, M., Rafiq, M., & Yuan, J. (2023). Primary energy consumption-growth nexus: The role of natural resources, quality of government, and fixed capital formation. Energy, 263. https://doi.org/10.1016/j.energy.2022.125570
Benhamou, Z. A., & Cassin, L. (2021). The impact of remittances on savings, capital and economic growth in small emerging countries. Economic Modelling, 94, 789-803. Retrieved from https://doi.org/10.1016/j.econmod.2020.02.019
Bhaskara Rao, B., & Takirua, T. B. (2010). The effects of exports, aid and remittances on output: the case of Kiribati. Applied Economics, 42(11), 1387-1396. http://dx.doi.org/10.1080/00036840701721331
Bird, G., & Choi, Y. (2020). The effects of remittances, foreign direct investment, and foreign aid on economic growth: An empirical analysis. Review of Development Economics, 24(1), 1-30. https://doi.org/10.1111/rode.12630
Cazachevici, A., Havranek, T., & Horvath, R. (2020). Remittances and economic growth: A meta-analysis. World Development, 134, https://doi.org/10.1016/j.worlddev.2020.105021.
Chijioke, M. I. (2024). Does Remittance Inflow and Foreign Direct Investment Spur Economic Development in Developing Countries? Insights from Nigeria. Theoretical and Practical Research in Economic Fields, 15(1), 127-135. https://doi.org/10.14505/tpref.v15.1(29).12
Dinh Su, T., & Phuc Nguyen, C. (2022). Foreign financial flows, human capital and economic growth in African developing countries. International Journal of Finance & Economics, 27(3), 3010-3031. https://doi.org/10.1002/ijfe.2310
Edeh, C. N., Nwannediuto, I. O., & Njeze, A. V. (2023). Remittance-domestic investment nexus in Nigeria. International Journal of Economics and Financial Management (IJEFM), 8(2), 92-103. Retrieved from https://www.researchgate.net/profile/Edeh-Nonyelum/publication/369908026_Remittance-Domestic_Investment_Nexus_in_Nigeria/links/64330430ad9b6d17dc46c838/Remittance-Domestic-Investment-Nexus-in-Nigeria.pdf
Emeka, E. T., Nwodo, I. P., Omeje, A. N., Ogbuabor, J. E., & Rena, R. (2024). Remittance Inflow, Investment, and Economic Growth in Africa amidst the COVID-19 Pandemic. Journal of Asian and African Studies, https://doi.org/10.1177/00219096241275426.
Ehigiamusoe, K. U., & Samsurijan, M. S. (2021). What matters for finance‐growth nexus? A critical survey of macroeconomic stability, institutions, financial and economic development. International Journal of Finance & Economics, 26(4), 5302-5320. Retrieved from https://doi.org/10.1002/ijfe.2066
Griffith-Jones, S. (2016). Achieving financial stability and growth in Africa. In Financial Liberalisation: Past, Present and Future (pp. 133-175). Cham: Springer International Publishing. Retrieved from https://www.routledge.com/Achieving-Financial-Stability-and-Growth-in-Africa/Griffith-Jones-Gottschalk/p/book/9780367875657?srsltid=AfmBOoq7KbyxrOh-F1OcijeXqFlASpHfCuaLOrDelRhg-DNUJZgj6wNU
Golder, U., Rumaly, N., Hossain, M. K., & Nigar, M. (2023). Financial progress, inward remittances, and economic growth in Bangladesh: Is the nexus asymmetric?. Heliyon, 9(3). Retrieved from https://doi.org/10.1016/j.heliyon.2023.e14454
Islam, K. S., & Biswas, G. K. (2023). Do foreign grants and capital formation indeed impact economic growth? An Empirical Evidence from Bangladesh. European Journal of Development Studies, 3(3), 139-146. Retrieved from https://www.ej-develop.org/index.php/ejdevelop/article/view/280
Jahanger, A., Usman, M., Murshed, M., Mahmood, H., & Balsalobre-Lorente, D. (2022). The linkages between natural resources, human capital, globalization, economic growth, financial development, and ecological footprint: The moderating role of technological innovations. Resources Policy, 76, https://doi.org/10.1016/j.resourpol.2022.102569.
Jushi, E., Hysa, E., Cela, A., Panait, M., & Voica, M. C. (2021). Financing growth through remittances and foreign direct investment: Evidences from Balkan Countries. Journal of Risk and Financial Management, 14(3), 117. https://doi.org/10.3390/jrfm14030117
Kheifets, I. L., & Phillips, P. C. (2023). Fully modified least squares cointegrating parameter estimation in multicointegrated systems. Journal of Econometrics, 232(2), 300-319. https://doi.org/10.1016/j.jeconom.2021.07.002
Koskei, N. S. I., Buigut, K., & Kibet, J. (2013). Impact of openness, foreign direct investment, gross capital formation on economic growth in Kenya. Journal of Economics and Sustainable Development, 4(14), 130-135. Retrieved from https://core.ac.uk/download/pdf/234646068.pdf
Khan, M. A. (2024). The impact of migrant remittances on economic development: empirical evidence from the developing world. Journal of Social and Economic Development, 1-29. Retrieved from https://link.springer.com/article/10.1007/s40847-024-00329-5
Kiyala, J. C. K., & Dianzenza, D. K. (2024). Sustainable Development in South Africa in the Anthropocene in the Post-COVID-19 Era. In Climate Change and Socio-political Violence in Sub-Saharan Africa in the Anthropocene: Perspectives from Peace Ecology and Sustainable Development (pp. 263-295). Cham: Springer Nature Switzerland. Retrieved from https://link.springer.com/chapter/10.1007/978-3-031-48375-2_13
Mamun, A., & Kabir, M. H. M. (2023). The remittance, foreign direct investment, export, and economic growth in Bangladesh: A time series analysis. Arab Economic and Business Journal, 15(1), 4. Retrieved from https://journals.usek.edu.lb/cgi/viewcontent.cgi?article=1022&context=aebj
Meyer, D., & Shera, A. (2017). The impact of remittances on economic growth: An econometric model. Economia, 18(2), 147-155. Retrieved from https://doi.org/10.1016/j.econ.2016.06.001
Nyasha, S., & Odhiambo, N. M. (2022). The impact of remittances on economic growth: empirical evidence from South Africa. International Journal of Trade and Global Markets, 15(2), 254-272. Retrieved from https://ideas.repec.org/a/ids/ijtrgm/v15y2022i2p254-272.html
Ngong, C. A., Onyejiaku, C. C., Kum, F. V., & Onwumere, J. U. (2024). Remittances inflow and economic growth nexus: evidence from emerging African economies in a post-COVID-19. Journal of Social and Economic Development 27, Retrieved from https://link.springer.com/article/10.1007/s40847-024-00323-x
Nwodo, I. P., Omeje, A. N., & Okereke, C. U. (2023). Remittance flows and welfare implications: the Nigerian experience. International Journal of Emerging Markets. https://doi.org/10.1108/IJOEM-03-2022-0348
Opadeji, A. S., Olaniyi, O., Adekanmbi, A. M., & Olubitan, J. O. (2023). Gross Capital Formation, Infrastructure and Economic Development in Nigeria. EuroEconomica, 42(2), 64-73. https://doi.org/10.9734/ajeba/2023/v23i221152.
Oshota, S. O., & Badejo, A. A. (2015). Impact of remittances on economic growth in Nigeria: Further evidence. Economics Bulletin, 35(1), 247-258. Retrieved from https://ideas.repec.org/a/ebl/ecbull/eb-14-00659.html
Pal, S. (2024). The International Capital Flows and Domestic Savings–domestic Investment Nexus: A Comparative Evidence Between Heterogeneous Developing Regions. South Asian Journal of Macroeconomics and Public Finance, https://doi.org/10.1177/22779787241245779.
Qamruzzaman, M. (2023). Does financial innovation foster financial inclusion in the Arab world? examining the nexus between financial innovation, FDI, remittances, trade openness, and gross capital formation. Plos one, 18(6), e0287475. https://doi.org/10.1371/journal.pone.0287475
Qamruzzaman, M., & Kler, R. (2021). The role of remittances on financial development through capital formation and FDI channels: A symmetric and asymmetric investigation for selected South Asian countries. Universal Journal of Accounting and Finance, 9(6), 1433-1453. http://dx.doi.org/10.13189/ujaf.2021.090621
Rao, B. B. (2010). Time-series econometrics of growth-models: A guide for applied economists. Applied Economics, 42(1), 73-86. Retrieved from https://mpra.ub.uni-muenchen.de/3372/1/MPRA_paper_3372.pdf
Rao, B. B., & Hassan, G. M. (2012). An analysis of the determinants of the long-run growth rate of Bangladesh. Applied Economics, 44(5), 565-580. https://doi.org/10.1080/00036846.2010.510466
Solow, R. M. (1996). Growth theory. In A guide to modern economics (pp. 229-247). Routledge. Retrieved from https://www.taylorfrancis.com/chapters/edit/10.4324/9780203979778-19/growth-theory-robert-solow
Tan, Y., Qamruzzaman, M., & Karim, S. (2023). An investigation of financial openness, trade openness, gross capital formation, urbanization, financial development, education and energy nexus in BRI: Evidence from the symmetric and asymmetric framework. Plos one, 18(12), Retrieved from https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0290121.
Ur Rehman, N., & Hysa, E. (2021). The effect of financial development and remittances on economic growth. Cogent Economics & Finance, 9(1), https://doi.org/10.1080/23322039.2021.1932060.
Xia, C., Qamruzzaman, M., & Adow, A. H. (2022). An asymmetric nexus: remittance-led human capital development in the top 10 remittance-receiving countries: are FDI and gross capital formation critical for a road to sustainability?. Sustainability, 14(6), 3703. Retrieved from https://ideas.repec.org/a/gam/jsusta/v14y2022i6p3703-d776264.html
Xu, C., Han, M., Dossou, T. A. M., & Bekun, F. V. (2021). Trade openness, FDI, and income inequality: Evidence from sub‐Saharan Africa. African Development Review, 33(1), 193-203. Retrieved from https://onlinelibrary.wiley.com/doi/epdf/10.1111/1467-8268.12511
DOI: http://dx.doi.org/10.46827/ejefr.v9i2.1968
Refbacks
- There are currently no refbacks.
Copyright (c) 2025 Olabode Eric Olabisi, Kemi Funlayo Akeju
This work is licensed under a Creative Commons Attribution 4.0 International License.
The research works published in this journal are free to be accessed. They can be shared (copied and redistributed in any medium or format) and\or adapted (remixed, transformed, and built upon the material for any purpose, commercially and\or not commercially) under the following terms: attribution (appropriate credit must be given indicating original authors, research work name and publication name mentioning if changes were made) and without adding additional restrictions (without restricting others from doing anything the actual license permits). Authors retain the full copyright of their published research works and cannot revoke these freedoms as long as the license terms are followed.
Copyright © 2016 - 2026. European Journal of Economic and Financial Research (ISSN 2501-9430) is a registered trademark of Open Access Publishing Group. All rights reserved.
This journal is a serial publication uniquely identified by an International Standard Serial Number (ISSN) serial number certificate issued by Romanian National Library. All the research works are uniquely identified by a CrossRef DOI digital object identifier supplied by indexing and repository platforms. All the research works published on this journal are meeting the Open Access Publishing requirements and standards formulated by Budapest Open Access Initiative (2002), the Bethesda Statement on Open Access Publishing (2003) and Berlin Declaration on Open Access to Knowledge in the Sciences and Humanities (2003) and can be freely accessed, shared, modified, distributed and used in educational, commercial and non-commercial purposes under a Creative Commons Attribution 4.0 International License. Copyrights of the published research works are retained by authors.
