Governance Quality and Remittances in Nigeria: An Empirical Investigation

Abstract

This research delved into an examination of the impact of governance quality on remittances in Nigeria, considering both short-term and long-term dynamics. The research was grounded in the New Economics of Labour Theory, which posits that migrants are driven to seek opportunities in economically more prosperous countries. A comprehensive analysis encompassing macroeconomic and governance quality variables spanning the period from 1990 to 2022 was conducted to gain insights into this phenomenon. The study used ADF and ARDL bound tests to determine the order of integration and long-run relationship among the variables respectively. The study also employed the Error Correction Model (ECM) technique to derive regression estimates. The findings of the analysis unveiled that governance quality variables - political stability, rule of law, and government effectiveness display significance impacts on remittances in the long run. Thus, enhancing governance quality through measures like increased transparency and reduced transaction costs can foster trust and further augment remittances. By addressing these influential factors, Nigeria can harness the full potential of remittances to promote economic development and enhance overall welfare.