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Trade, Remittances and Economic Growth in Nigeria: Any Causal Relationship?

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  • Ebenezer Adesoji Olubiyi

Abstract

This study examined the causal relationships among GDP, export, imports and remittances. The study, among others, investigated the validity of export‐led and remittances‐led growth hypotheses. Specifically, the study investigated the causal relationship between remittances and GDP, remittances and export and remittances and imports. Employing a VECM Granger Causality for data spanning between 1980 and 2012, imports and remittances significantly Granger‐caused GDP in the short run. Also, there were reverse causalities running from GDP to export and imports. This implies that export‐led growth hypothesis holds in Nigeria. Furthermore, there was a unidirectional causation running from remittances to GDP, implying that remittances matter for economic growth. But since the effect was more from the demand side, it could lead to inflationary pressure. The policy recommendation is that the authorities should intensify efforts on the export base of the economy. The monetary authorities should implement necessary policy to cool the pressure arising from conspicuous spending of remittances.

Suggested Citation

  • Ebenezer Adesoji Olubiyi, 2014. "Trade, Remittances and Economic Growth in Nigeria: Any Causal Relationship?," African Development Review, African Development Bank, vol. 26(2), pages 274-285, June.
    • Handle: RePEc:bla:afrdev:v:26:y:2014:i:2:p:274-285
    DOI: 10.1111/1467-8268.12081
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    Cited by:

    1. Kevin Williams, 2016. "Remittances and Financial Development: Evidence from Sub-Saharan Africa," African Development Review, African Development Bank, vol. 28(3), pages 357-367, September.
    2. T. V. Ojapinwa & N. I. Nwokoma, 2018. "Workers’ Remittances and the Dutch‐Disease Argument: Investigating the Relationship in Sub‐Saharan Africa," African Development Review, African Development Bank, vol. 30(3), pages 316-324, September.
    3. Cynthia TABET & Michel ROCCA & Bachir EL MURR, 2022. "Transferts de fonds et effet boomerang : le cas du Liban (1990-2016)," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 55, pages 133-148.
    4. Njangang, Henri & Nembot Ndeffo, Luc & Noubissi Domguia, Edmond & Fosto Koyeu, Prevost, 2018. "The long-run and short-run effects of foreign direct investment, foreign aid and remittances on economic growth in African countries," MPRA Paper 89747, University Library of Munich, Germany.
    5. K. Bello Ajide & Ibrahim Dolapo Raheem, 2016. "The Institutional Quality Impact on Remittances in the ECOWAS Sub†Region," African Development Review, African Development Bank, vol. 28(4), pages 462-481, December.
    6. Isaac K. Ofori & Emmanuel Gbolonyo & Marcel A. T. Dossou & Richard K. Nkrumah, 2022. "Remittances and Income Inequality in Africa: Financial Development Thresholds for Economic Policy," Working Papers 22/035, European Xtramile Centre of African Studies (EXCAS).
    7. Ibrahim A. Adekunle & Tolulope O. Williams & Olatunde J. Omokanmi & Serifat O. Onayemi, 2020. "Mediating roles of institutions in the remittance-growth relationship: evidence from Nigeria," Working Papers 20/063, European Xtramile Centre of African Studies (EXCAS).
    8. Kristina Matuzeviciute & Mindaugas Butkus, 2016. "Remittances, Development Level, and Long-Run Economic Growth," Economies, MDPI, vol. 4(4), pages 1-20, December.
    9. Lukman A. Olorogun, 2024. "Modelling Financial Development in the Private Sector, FDI, and Sustainable Economic Growth in sub-Saharan Africa: ARDL Bound Test-FMOLS, DOLS Robust Analysis," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 8416-8434, June.
    10. Ebele Stella Nwokoye & Clement Izuchukwu Igbanugo & Stephen Kelechi Dimnwobi, 2020. "International migrant remittances and labour force participation in Nigeria," African Development Review, African Development Bank, vol. 32(2), pages 125-137, June.
    11. Chinedu Obi & Fabio Bartolini & Marijke D’Haese, 2020. "International migration, remittance and food security during food crises: the case study of Nigeria," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 12(1), pages 207-220, February.
    12. Bakari, Sayef & El Weriemmi, Malek & Mabrouki, Mohamed, 2022. "The Impact of Digitalization and Trade Openness on Economic Growth: New Evidence from Richest Asian Countries," MPRA Paper 113816, University Library of Munich, Germany.
    13. Abdullah Bin Zafar, 2024. "Impact of Selected Factors on International Trade of Bangladesh: An Empirical Analysis," International Journal of Science and Business, IJSAB International, vol. 35(1), pages 30-47.
    14. Kingsley Ikechukwu Okere & Obumneke Bob Muoneke & Favour Chidinma Onuoha & Philip C. Omoke, 2022. "Tripartite relationship between FDI, trade openness and economic growth amidst global economic crisis in Nigeria: application of combined cointegration and augmented ARDL analysis," Future Business Journal, Springer, vol. 8(1), pages 1-23, December.
    15. Joseph Siani, 2022. "The impact of remittances on human development in developing countries: an empirical evidence from cross-sectionally dependent heterogeneous panel data with structural breaks," Economics Bulletin, AccessEcon, vol. 42(4), pages 2135-2149.
    16. Ibrahim A. Adekunle & Tolulope O. Williams & Olatunde J. Omokanmi & Serifat O. Onayemi, 2020. "Mediating roles of institutions in the remittance-growth relationship: evidence from Nigeria," Research Africa Network Working Papers 20/063, Research Africa Network (RAN).
    17. Ibrahim A. Adekunle & Tolulope O. Williams & Olatunde J. Omokanmi & Serifat O. Onayemi, 2020. "Mediating roles of institutions in the remittance-growth relationship: evidence from Nigeria," Working Papers of the African Governance and Development Institute. 20/063, African Governance and Development Institute..
    18. Njangang, Henri, 2018. "Does the size of the informal economy impede the impact of remittances on economic growth? Evidence from Sub-Saharan African countries," MPRA Paper 90187, University Library of Munich, Germany.
    19. Ali, Amjad & Khokhar, Bilal & Sulehri, Fiaz Ahmad, 2023. "Financial Dimensions of Inflationary Pressure in Developing Countries: An In-depth Analysis of Policy Mix," MPRA Paper 119364, University Library of Munich, Germany.
    20. Joseph Siani, 2020. "International remittances, poverty and growth into WAEMU countries: evidence from panel cointegration approach," Economics Bulletin, AccessEcon, vol. 40(2), pages 1446-1456.
    21. Shakirudeen Taiwo & Josine Uwilingiye, 2023. "New evidence on sources of macroeconomic fluctuations in sub‐Saharan African countries," African Development Review, African Development Bank, vol. 35(2), pages 181-197, June.
    22. Udi Joshua & Oladimeji M. Salami & Andrew A. Alola, 2020. "Toward the path of Economic Expansion in Nigeria: The Role of Trade Globalization," Working Papers 20/009, European Xtramile Centre of African Studies (EXCAS).
    23. Lukman Ayinde Olorogun, 2022. "Revisiting the Nexus of FDI-Led Growth Hypothesis and Economic Development in Rwanda: a Johansen-ARDL Approach to Cointegration," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(4), pages 2695-2717, December.
    24. Ibrahim Ayoade Adekunle & Tolulope Oyakhilome Williams & Olatunde Julius Omokanmi & Serifat Olukorede Onayemi, 2020. "The Mediating Role Of Institutions In The Remittance–Growth Relationship: Evidence From Nigeria," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 65(227), pages 7-30, October –.

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