Can Remittance Inflow Fosters Economic Growth? What Matters? Evidence from Sub-Sahara African Countries

Abstract

This study investigates the impact of remittance inflow on the economic growth of sub-Saharan African countries by considering the role of financial sector development, institutional quality, and economic freedom. The study includes 26 sub-Sahara African countries over the period 2010–2019. By employing the two-step system GMM, the finding shows remittance alone hurts economic growth. When remittance interacts with financial sector development, institutional quality, and economic growth, the coefficient of the interaction term is positive. The study concludes that a well-developed financial sector, better institutional quality, and economic freedom mitigates the negative impact of remittance inflow on economic growth.

Keywords:

• Remittances
• economic growth
• financial sector development
• institutional quality
• economic freedom

Acknowledgment

The author received no funding for this research.

Disclosure statement

No potential conflict of interest was reported by the author(s).