PANEL DATA ANALYSIS ON THE RELATIONSHIP BETWEEN REMITTANCES AND ECONOMIC GROWTH IN SUB-SAHARAN AFRICAN COUNTRIES

The main purpose of this study is to investigate the link between remittances and economic growth for 23 selected African countries by using panel data within 1985-2015 periods. In this study, we used the Panel Fixed/Random Effects model in order to investigate the relationship between personal remittances, gross fixed capital and GDP per capita variables. We also performed the panel cointegration test in order to examine the long-run cointegration between the variables. The panel fixed/random effects estimation results indicate that there is negative and significant relationship between remittances and economic growth. Louise & Clovis (2012), Deisting, et al. (2015), Chami, et al. (2003), Coiffard (2011) and Ahoure (2008) also found a negative effect of remittance on economic growth. In other hands, there is positive link between capital formation and economic growth. The panel cointegration result shows that there is significant long-run cointegration relationship between remittances and economic growth. In other word, this study found that remittances do not contribute to the development of these 23 African countries and suggest that government of each country must apply investment policies that can promote advantage to domestic labor and investors.