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COVID-19 and the Role of Remittances on Sustainable Development: Insights from Sub-Saharan Africa

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Abstract

The role of remittances has received considerable attentions at various national and regional economies due to their significant influence on growth and development indicators. Because of COVID-19, however, re-examining this relationship is necessary given the realities to trade and investment occasioned by the pandemic. Also, the extant literature has largely measured the effects of this variable on economic growth and development without expansion into sustainable development. Observing this relationship is, thus, considered appropriate due to the global outcry on climate change and the environment, which sustainable development better captures. Given these, this research measures the impact of COVID-19 on the nexus between remittances and sustainable development in SSA. Based on both static and dynamic estimators on a panel data from thirty-eight SSA countries, the empirical findings suggest that remittances raise sustainable development, though a negative effect sets in where remittances exceed 0.388 percent of the SSA region’s adjusted net savings. More so, the sign of the coefficient of COVID-19 is negative and the magnitude shows a severe impact. Finally, the interaction effect of remittances with COVID-19 is such that COVID-19 reduces the positive effect of remittances on sustainable development. The appropriate polices are discussed based on the findings of the study.

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  • Waliu O. Shittu & Gazi M. Hassan & Frank G. Scrimgeour, 2023. "COVID-19 and the Role of Remittances on Sustainable Development: Insights from Sub-Saharan Africa," Working Papers in Economics 23/05, University of Waikato.
    • Handle: RePEc:wai:econwp:23/05
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    More about this item

    Keywords

    Remittances; COVID-19; sustainable development; instrumental variables; Sub-Saharan Africa;
    All these keywords.

    JEL classification:

    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • G01 - Financial Economics - - General - - - Financial Crises
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

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