Remittances, economic growth and poverty: A case of african OIC member countries

Nasim Shah Shirazi, Sajid Amin Javed, Dawood Ashraf

Research output: Contribution to journalArticlepeer-review

9 Citations (Scopus)

Abstract

This paper investigates the impact of remittance inflows on economic growth and poverty reduction for seven African countries using annual data from 1992-2010. By using the depth of hunger as a proxy for poverty in a Simultaneous Equation Model (SEM), we find that remittances have statistically significant growth enhancing and poverty reducing impact. Drawing on our estimates, we conclude that financial development level significantly increases the remittances inflows and strengthens poverty alleviating impact of remittances. Results of our study further show a signficant interactive imapct of remittances and finacial develpment on economic growth, suggesting the substitutability between remittance inflows and financial development. We further find that 3 percentage point increase in credit provision to the private sector (financial development) can help eliminate the severe depth of hunger in the region. Remittances, serving an alternative source of private credit, can be effective in this regard.

Original languageEnglish
Pages (from-to)121-143
Number of pages23
JournalPakistan Development Review
Volume57
Issue number2
DOIs
Publication statusPublished - 2018

Keywords

  • Financial development
  • Poverty alleviation
  • Remittance inflow
  • Simultaneous equation model

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