Migrant Remittance Inflow and Industrialization in Africa: What Role Does Financial Development Play?
The eruption of Global Financial Crises at the rear end of 2008 with its aftermath effect has shifted the focal point of financial-cum-capital reliance of most developing countries away from sources of finance induced externally. This, however, kick-start
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Abstract The eruption of Global Financial Crises at the rear end of 2008 with its aftermath effect has shifted the focal point of financial-cum-capital reliance of most developing countries away from sources of finance induced externally. This, however, kick-started research interest toward considering other ways of sourcing financial resources for development apart from the widely known sources like foreign portfolio investment (FPI), foreign direct investment (FDI) and official development assistance from overseas. This notwithstanding, migrants’ remittances imperatively remain a better source of finance as it is found to be more resilient, in times of macroeconomic shocks and other natural disturbances compared to other sources of capital flows. This uniqueness has made it a point of focus to African Development practitioners as a more reliable source for financing development in Africa. Thus, for any developing country to have a sustainable development it must transit from agricultural produce to industrialization as it is seen as the bedrock of development. This ignited our motivation for this study to assess how migrant remittances can directly and/or indirectly influence industrialization using a panel data of 46 African countries from 1980 to 2017. The direct effect is evaluated through financial development channels. The study used both interactive and non interactive empirical evidence methods for a more robust estimation; this includes (a) Fixed Effects techniques (FE) to rule out heterogeneity; (b) General Method of Moments (GMM) to rule out persistence in industrialization and (c) Instrumental Quantile Regressions (QR) to explain for the previous levels of industrialization. The non interactive stipulations will give account for the direct impact of migrant remittances on industrialization while the interactive stipulations will account for the indirect effect. The findings clearly show that personal remittance inflows can only drive industrialization through financial development at the early stage. B. W. Adeoye · C. I. Nwokolo (B) · N. I. Igboanugo Department of Economics, University of Lagos, Lagos, Nigeria e-mail: [email protected] B. W. Adeoye e-mail: [email protected] N. I. Igboanugo e-mail: [email protected] © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2020 D. Seck (ed.), Financing Africa’s Development, Advances in African Economic, Social and Political Development, https://doi.org/10.1007/978-3-030-46482-0_11
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Keywords Migrant remittances · Africa · Industrialization · Financial development JEL Classification O55 · F24 · G20 · F63
1 Introduction The eruption of Global Financial Crises at the rear end of 2008 with its aftermath effect has shifted the focal point of financial-cum-capital reliance of some developing countries away from sources of finance induced externally. This, however, kick-started research interest toward considering other ways of sourcing financial resources for de
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