EXAMINING THE IMPACT OF REMITTANCES ON HUMAN CAPITAL DEVELOPMENT

EVIDENCE FROM THE ECOWAS

Abstract

Remittances have become one of the veritable sources of revenue, especially for developing
countries that usually face revenue shortfalls. In this study, the focus is to examine the impact of remittances on human capital development in the ECOWAS region. Shifting from the limited existing studies in West Africa, the study employed an advanced panel econometric methodology such as the dynamic panel data technique under the framework of the Generalized Method of Moments (GMM), using annual time series data that spanned the period from 1996 to 2022. Findings of the study revealed that remittances exerted a positive and significant influence on human capital development within the ECOWAS region. Also, while migration impacted positively and significantly on human capital development, the impact of net migration was negative and significant. The study thus concludes that remittances serve as a vehicle through which human capital development can be enhanced through the migration channel. Consequently, the study recommends that policies meant to attract remittances should be implemented in the ECOWAS countries such as encouraging the development of rural banking culture.