Page 13 - CITN 2017 Journal

many jurisdictions. Since the accumulated remittances have been established to have
positive impact on financial deepening and development, a link is created for funds to be
accumulated, invested in social infrastructure which has been established to be a driver of
development. Even when migrant remittances are spent on conspicuous and other
household consumption, such expenditure still create markets for goods and services
which are produced by the real sector. Such demand drives investment, greater
productivity and by extension, economic development.

3.2 Model Specification
The objective of this study is to determine the macroeconomic impact of migrant
remittances on Nigeria's development in the thirty six-year period spanning 1980-2015.
Development which is epitomized by sustained growth in GDP and visible improvement in
the standard of living of the people is mirrored here by government expenditure on social
infrastructure whose components are education (Educ) and health (He) of the citizenry.
Government expenditure on social Infrastructure, which may also be called human capital
development, is the chief driver of development here and it is expected to change directly
with inflows of migrant remittances. Investment in human capital development means
government expenditure on education and health and it is denoted as GEH and as the
dependent variable. Indeed, Education and health are the two dominant social
infrastructures which can have profound effect on economic development of any nation.
Hence, they are basic objectives of development. Their dual role as both inputs and outputs
gives health and education their central importance in economic development (Todaro and
Smith, 2011).

In aggregate, therefore if social infrastructure is improving, the productive capacity of the
people would rise, wealth would be created and gross domestic product would rise with
pervasive positive impact on the people.

In the model below, we have also used foreign direct investments (FDI), export of goods
and services (EGS) and foreign exchange rate (FX) as control variables in the multiple
regression analysis. Changes in GEH or development are expected to be directly related to
the inflow of FDI, EGS and FX. The error term represents all other exogenous variable that
may account for changes in GEH. The variables are all annual values expressed in the local
currency, the Naira. The model is as follows:

GEH=f(MREM,FDI,EGS,FX) (1)
(2)

Where,
LnGEH = The log of aggregate Government expenditure on education and health services
LnMREM= The log of cumulative migrant remittances for the period
t
LnFDI = The log of cumulative foreign direct investments for period
t
LnEGS = The log of remittance from export of goods and services
t
LnFX = The log of foreign exchange rate
t
tm= Error term
Based on a 36-year data, this study set out to conduct a multiple regression analysis to
determine the relationship between the dependent variable, GEH, and the independent or
explanatory variables-migrant remittances (MREM), remittances from foreign direct
investment (FDI) and foreign exchange rate (FX). All the variables were expressed in log
form in order to aid the interpretation of the model in elasticity.

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