The Impact of Remittance on Economic Growth and Unemployment in Nigeria: Does Remittance Contribute to Dutch Disease Effects?

This study examines the impact of remittances on economic growth and unemployment in Nigeria, with a particular focus on potential Dutch Disease effects. Using an Autoregressive Distributed Lag (ARDL) model and time series data from 1980 to 2022, we investigate the short-run and long-run relationships between remittances and key economic indicators. Our findings reveal that remittances have a negative relationship with GDP growth and a positive relationship with unemployment in both the short and long run, contrary to some existing literature. We also find evidence of Dutch Disease effects, with remittances contributing to real exchange rate appreciation. The study shows that while domestic investment and trade openness positively influence GDP growth, foreign direct investment (FDI) has a negative relationship with unemployment. These results suggest that while remittances provide crucial support to many Nigerian households, they may have unintended negative macroeconomic consequences. The study contributes to a more nuanced understanding of remittances' role in Nigeria's economic development and highlights the need for targeted policies to maximize their benefits while mitigating potential drawbacks. Our findings have important implications for policymakers seeking to harness remittances for sustainable economic growth in Nigeria and similar developing economies.