Migration, Remittances and Real Exchange Rate in Nigeria: A Two-fold Analysis

Abstract

Despite huge empirical research examining the impact of international migration on real exchange rates, few studies have isolated and analysed the effects of emigration and remittances. In view of this, we examine how these factors contribute to long-run changes of real exchange rate in migrants’ country of origin. Using time-series data from 1990-2023 of alternate measures of real exchange rates from Nigeria and Dynamic Ordinary Least Square (DOLS) estimation technique, our results indicate that a percentage point increase in emigration and remittances appreciate the long-run real exchange rate in Nigeria by 2.4% and 0.5% respectively. This suggest that increase in both emigration and remittances appreciate the real exchange rate in the long run, which erodes export competitiveness of the country. A further analysis of sectoral impacts of emigration and remittances in the long run show that both factors lead to inefficient reallocation of resources against growth of agricultural sector.