Remittances and Growth in Sub‐saharan African Countries: Evidence From a Panel Causality Test

Abstract This paper examines the causality between remittances and economic growth in Sub‐Saharan African (SSA) countries. We employ the panel Granger causality testing approach that is based on seemingly unrelated regressions systems and Wald tests with country‐specific bootstrap critical values. Using annual data over the period 1980–2007 for 20 SSA countries, we find that in any SSA country, there is no causality between remittances and growth. An explanation of why remittances do not increase growth in SSA countries is given by the causality test that shows that remittances do not increase physical capital investment. Copyright © 2012 John Wiley & Sons, Ltd.