Remittances and Economic Growth Dynamics

Abstract

This study investigates the intricate connection between remittances, economic growth, and corruption in Sub-Saharan Africa (SSA) using data from 2006-2021. It aims to answer whether corruption is a catalyst or obstacle to the relationship between remittances and economic growth. The research employs a two-stage least squares (2SLS) estimator. The study reveals that remittances have a more beneficial and direct impact on economic growth in countries with low levels of corruption. Furthermore, this study identifies that robust and transparent institutions could mitigate the negative impact of corruption on the remittances-economic growth nexus. Based on the findings, policymakers are recommended to implement targeted policies to improve transparency, accountability, rule of law, and the effectiveness of remittance utilization, particularly in countries with high levels of corruption. By tackling corruption-related issues, governments can fully realize the benefit of remittances as a driver for long-term economic growth.