ASYMMETRIC RELATIONSHIP BETWEEN REMITTANCES AND SUSTAINABLE DEVELOPMENT IN SUB-SAHARAN AFRICA
Keywords:
asymmetric, remittances, sustainable development, unequal, nonlinear, symmetricAbstract
The paper explored the asymmetric or nonlinear effects between remittances and sustainable development in Sub-Saharan Africa. The study used panel data from 30 selected Sub-Saharan African countries for the period spanning 2000 to 2022, which were obtained from the World Development Indicators (WDI) 2022 Database and the Sustainable Development Report 2023 Database. Panel Nonlinear Autoregressive Distributed Lag (PNARDL) methodology was employed for empirical analysis. The empirical results from panel NARDL approach on the asymmetric effects between remittances and sustainable development showed an asymmetric effect with a negative significant relationship between positive remittance shock and sustainable development ( ), while a positive significant link was established between negative remittance shock and sustainable development in the selected SSA countries ( ). Alternative estimations using adjusted net savings (ANS) as alternative proxy and measure of sustainable development besides the sustainable development goals index (SDGI) and the results were robust. The study demonstrated that there exists an asymmetric relationship between remittances and sustainable development in Sub-Saharan Africa. These findings imply that higher inflows of remittances may not necessarily spur sustainable development in the selected SSA countries, as the relationship is nonlinear. The study recommended that governments and policy makers in the subcontinent need to create mechanisms to fully harness remittance inflows so that substantial buffers can be built in periods of economic downturn to cater for shortfalls that may occur in periods of economic boom based on the countercyclicality nature of remittances.
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