Effect of Diaspora Remittances on Economic Development in Kenya
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Date
2023
Authors
Fartun, Adan Issack
Nzai, Charles
Journal Title
Journal ISSN
Volume Title
Publisher
International Journal of Economic Policy
Abstract
Purpose: This study intended to establish the effects of remittances from Kenyans residing abroad
on the country's economic growth from 1988 to 2021. The study specifically calculated how
diaspora remittances would affect the country's absolute poverty from 1988 to 2021, as well as
how they would affect gross domestic product and gross national product.
Methodology: The study implored the error correction model to conduct the estimation due to the
stochastic nature of remittances. The modified Granger causality test by Toda and Yamamoto was
applied to examine the connections between GDP and remittances as well as the connections
between poverty and remittances. Using STATA software, an econometric estimation was
performed.
Findings: According to the study, remittances per capita had a significant impact on Kenya's GDP,
GNI, and degree of absolute poverty. It was discovered that GDP and GNI per capita were granger
causes of remittance per capita, but neither absolute poverty nor remittance per capita were granger
caused by absolute poverty.
Unique Contribution to Theory, Policy and Practice: The report recommends that, in order to
guarantee a steady stream of remittances into the country's economy, essential efforts be taken to
stabilize the currency rate and inflation.
Description
Article
Keywords
Diaspora, Remittances, Economic Development
Citation
Issack, F. A. ., & Nzai, . C. (2023). Effect of Diaspora Remittances on Economic Development in Kenya. International Journal of Economic Policy, 3(1), 48–74. https://doi.org/10.47941/ijecop.1415