Diaspora Remittances, Human Capital Investment and Economic Growth in Kenya
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Date
2016-07
Authors
Mang'eli, Mary Mutindi
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
An increasing interest in the topic of Diaspora remittances has developed over the past few years
on the part of academicians, donors, international financial institutions, commercial banks, money
transfer operators, microfinance institutions, and policy makers. This is because in many
developing countries, remittance payments from migrant workers and businesses are increasingly
becoming a significant source of external finance. Between 2007 and 20 II, Kenya's annual
remittances increased by fifty five percent from USD 574 million in 2007 to USD 891 million in
2011. This study aimed to establish the effect of Diaspora remittances and human capital
investment on Kenya's economic growth and to establish the causality between Diaspora
remittances, human capital investment and economic growth in Kenya. The study used time series
data from 1980 to 2013. The data used was collected from the World Bank's African Development
Indicators. The ordinary least squares method was used to establish the effect of diaspora
remittances and human capital investment on economic growth. Granger causality test was used
to determine the direction of causality between economic growth and human capital investment
and also between economic growth and Diaspora remittances. The study recommended that the
government should promote policies that favor the inflow of Diaspora remittances to Kenya and
also improve on human capital investment in the country so as to realize increased economic
growth.
Description
A Research Project Submitted to the Department of Econometrics and Statistics in the School of Economics in Partial Fulfillment of the Requirements of Masters of Economics (Econometrics) Degree of' Kenyatta University, July 2016