Remittance Inflows and Nigeria's Gross Domestic Product Per-Capita Income

ABSTRACT: This study examines the impact of remittance inflows on economic development in Nigeria between 1986 and 2022, using GDP per capita income as the primary indicator of economic welfare. Specifically, it investigates the effects of remittances, exchange rate, and foreign direct investment (FDI) on per capita income. Secondary time-series data were obtained from the World Development Indicators and the Central Bank of Nigeria Statistical Bulletin. The study employed the Autoregressive Distributed Lag (ARDL) model to estimate both short-run and long-run relationships among the variables. Empirical findings revealed that remittance inflows have a positive but statistically insignificant effect on per capita income at the 5% level, indicating that remittances largely support consumption rather than productive investment. Conversely, exchange rate depreciation has a significant negative impact on per capita income, suggesting that currency instability reduces real income and purchasing power. FDI, however, exerts a positive and significant effect, implying that foreign capital inflows stimulate long-term economic growth through investment and technology transfer. The study concludes that while remittances are an important financial inflow, stable exchange rates and sustained FDI inflows are more crucial for achieving sustainable economic development in Nigeria. It therefore recommends policies that enhance the productive use of remittances, promote exchange rate stability, and strengthen the investment climate to attract more FDI.