Growth Effect of Migrant Remittances and Human Capital: Panel Evidence from Sub-Saharan African Countries

Abstract

Purpose: The aim of this study is to examine the growth effect of migrant remittances and human capital in sub-Saharan Africa (SSA) economies.
 
 Theoretical Framework: The study adopts the Cobb-Douglas production function of the AK model to examine the growth effect of migrant remittances and human capital in sub-Saharan Africa (SSA) economies.
 
 Design/Methodology: Data from 27 SSA countries for the period 2000-2020 was obtained from the World Development Indicator, a publication of the World Bank. The study variables include, real per capita income, migrant remittances, human capital, domestic investment, trade openness and inflation. The panel fully modified ordinary least square (PFMOLS) technique was deployed to analyse the study model.
 Findings: The study’s outcome showed that migrant remittances positively influence and cause growth while human capital has not contributed to growth in the SSA region.
 
 Research, Practical & Social Implication: From the study findings, it is recommended that regional government should encourage the continuous inflow of migrant remittances to their countries and make conscious efforts in developing the level of human capital in their country via constant training, reducing or eradicating the number of school drop-out at all levels (primary, secondary, and tertiary).
 
 Originality/Value: In this study, the issue of migrant remittances, human capital and growth is re-examined by (i) considering a panel of similar economies, (ii) estimating Cobb-Douglas production function for the effect of migrant remittances via technology and human capital, (iii) adopting a robust technique (PFMOLS) that relax the assumption of homogeneity among parameters across economies and the exogeneity of migrant remittances.