Remittances and economic growth in ECOWAS: evidence from a dynamic panel GMM approach

Abstract

Sub-Saharan Africa (SSA), particularly the Economic Community of West African States (ECOWAS), has witnessed a rapid inflow of remittances in recent times. ECOWAS accounts for about 40% of remittances flown to SSA. Despite the huge inflow of remittances in the ECOWAS region, sustainable economic growth has remained a bane and mirage in the region. To this end, this study examines the effect of remittances on economic growth in ECOWAS, with an extension to country differences on value receipts (high and low recipients). The study employed differenced generalised method of moments (GMM) and fixed/random effect estimators between 2015 and 2022. The data for this study were accessed from the World Development Indicator (WDI) database of the World Bank. The results indicate that remittances are the main growth drivers in ECOWAS, such that remittances significantly improve economic growth. This, therefore, suggests that policy stakeholders are advised to eliminate or significantly reduce bottlenecks associated with remitting money from overseas by migrants. This will reduce the time it takes for monies send by migrants to reach the recipients.

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