Linkage Between Remittances and Economic Growth: Empirical Evidence from The Gambia

Abstract

This study empirically investigates the linkage between remittance inflows and economic growth in The Gambia. This study uses annual data from 1996 to 2019 to estimate a vector error correction model to examine the causal linkage between remittance inflows and economic growth. The results indicate that remittances have a positive and significant impact on economic growth. Further results show significant causality both in the short-run and long-run as evidenced from the VECM and Granger causality tests. In view of these findings, proper regulations and incentives for remittance inflows through formal channels should be put in place, and the government should make receiving money in The Gambia easier by reducing the transaction cost.