South Asian Journal of Social Studies and Economics

Remittances have a potential effect on economic growth through the different transmission channels. This study examined the nexus of remittances on economic growth in Nigeria over 40 years from 1984 to 2023. The study adopted an ex post facto design method and the Autoregressive Distributed Lag Model as a basis for analysis. The study established evidence of long-term co-integration among the dependent variable economic growth and the independent variables. The error correction term ECM (-1)) is negative and statistically significant with a coefficient of -0.7878. This suggests that approximately 79% of any deviation from the long-run equilibrium is corrected within a year, indicating a strong and rapid adjustment process in response to macroeconomic shocks. The results of this study provided evidence that remittances have insignificant and positive effects on Nigeria's economic growth in the short run. In the long run, remittances negatively and significantly impact growth. This finding does not align with a priori expectations because of the increasing immigrant remittances to Nigeria over the years Furthermore, it contradicts the position of the Solow-Swan growth model, the theory of Tempered Altruism, and Prospect Theory, which are foundational theories in the study. Foreign direct investment significantly and positively affects Nigeria's economic growth in the long run. Inflation has a negative and significant impact on growth in the long run. The foreign exchange rate has a negative but not significant relationship with economic growth on economic growth in the short and long run. Based on the findings the shows that shows that in the long run, remittances negatively and significantly impact growth. This study recommends that policymakers in Nigeria should use suitable strategies to foster the use of remittances for investment in the productive sector of the local economy to boost growth. Necessary institutional and legal frameworks and backing should support these policies at both the federal and subnational levels to ensure remittances are deployed of for productive uses to promote growth.