Impact of Private Remittance Inflows on East African Economies

Private remittance inflows to developing countries including the East African region have increased tremendously, a development attributed to increasing number of migrants and their subsequent integration into the economies of developed countries. The significant amount of these financial transfers has attracted debates among both policy makers and researchers. Particularly, there are two issues of concerns namely: knowing their macro-economic effects in recipient economies and how to harness their development potential. In this book, a prais-winsten regression, Correlated Panels Corrected Standard Errors with panel specific, AR(1) model is used on time series to test for the impact of remittance receipts on domestic economies. The results revealed that migrant remittance decisions are dominated by investment motives rather than mere altruism and that these remittances contribute capital for economic development. The analysis used in the book enables the reader to understand the application of fixed effects models for control of underlying country specific effects in the estimation of coefficients using panel data.