Despite the increasing importance of remittances in total international capital flows, the relationship between remittances and stock of capital formation has not been adequately studied. This paper studies one of the links between remittances and fixed capital formation, in particular how local financial sector development influences a country's capacity to take advantage of remittances. Using time series data for the period 1977-2010, the study employed the ADF and Philip-Perron modified unit root tests and based its analysis on a Dynamic Ordinary Least Squares-two-stage Instrumental Variable [2SIV] approach to control for the endogeneity problem that arises from utilization of lag independent variables. We find that remittances boost stock of physical investment in Nigeria countries with positive relationship with developed financial systems by providing complementarities to finance investment in a developed financial system. Substantial government allocation on social services is equally important in accelerating capital formation. The findings of this study strongly suggest that for Nigeria to benefit from international transfers, Nigeria financial sector should be fine-tuned to complement remittances potential capital formation.

The paper examines the existence and the stability of Phillips relations for Nigeria, using time series data from 1970 to 2010. Graphical, Augmented Dickey Fuller and Philip Peron unit root tests were employed to check for stationarity. ARDL and DOLS general to specific approaches to cointegration have been used to explore the Philips relations and ECM to understand short run dynamics. The estimates shows that relation between the change in inflation rate and the unemployment rate is theoretically negative in the short run-a low unemployment rate leads to an increase in the inflation rate and therefore an acceleration of the price levelhowever, the relation became non existence in the long run with positive relationship between inflation and unemployment signifying stagflation. Meanwhile, recursive residual, CUSUM and CUSUMsq tests confirm a stable Philips relation.

This study examines the impact of workers' remittances on financial development in 32 Sub-Sahara Africa countries. In this paper we employ dynamic panel GMM model to study the potential effect of remittances on financial development with emphasis on financial intermediation. While the study depends on credit to private sector as a measure of financial development, past level of financial development, inflation, globalisation, FDI, size of government economic growth and worker remittances were controlled for. Employing data from 1996 -2010, the study discovers that workers' remittances affect financial development in a positive and significant way. This positive relationship suggests that remittances complements financial intermediation in SSA countries as exemplified by "endogenous growth" literature and the canonical intermediating model with the insights that remittances savings behaviour will generally influence equilibrium financial growth rates.

Based on the Salter-Swan-Corden-Dornbusch framework, which argues that capital inflows may appreciate the official exchange rate by aggravating the effects of any previously existing domestic distortions, this paper examines the claim that workers' remittances cause the Dutch disease in sub-Saharan Africa (SSA). Specifically, the study investigates whether remittances cause financial overheating and spending effects. The study adopts the dynamic panel instrumental variable system generalized method of moment (IVSGMM). This study finds that although workers' remittances cause financial overheating, they neither increase general spending nor appreciate the real exchange rate, thereby implying that workers' remittances do not cause the Dutch disease in SSA from 1996 to 2013. These findings suggest that governments should establish diaspora incentive schemes so as to encourage remitters and recipient households' to invest productively. Government efforts should be integral at improving the financial education for remitters and the recipient households so as to avoiding channelling overheating effects to spending effects and to the Dutch disease.

Diaspora remittance flows to Nigeria have been increasing over time. However, the effect of this increase on theperformanceof SMEs has not been adequately studied. Many researchers have contended that if diaspora remittances are well invested, they could contribute immensely to bridging the SMEs financing gap of N617. 3 billionannually. Thus, this study uses time series data on Nigeria from the World Bank’s World Indicators Database for a period to examine the effect of diaspora remittances on SMEs. The study employs robust ordinary least squares (ROLS) to handle issues of outliers. The results show that diaspora remittances have a positive and significant effect on SMEs' performance in all the examined models. Hence, due to their positive effect on theperformance of SMEs in Nigeria, the government should formulate policies to leverage the increase of diaspora remittances, which would provide an alternative window forfinancing SMEs. JEL Classification: C22, E51, F24, L29

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IntroductionMigration of people across national borders and continents is crucial for peace, stability and development at the national, sub-regional and regional levels. The potential for migrants to help transform their native countries has captured the imagination of national and local authorities; international institutions and the private sector. There is an emerging consensus that countries can cooperate to create triple wins --for migrants, for their countries of origin and for the societies that receive them (Economic Commission for Africa (ECA), 2006). The Asian experience is well documented, and a number of recent studies point to the role of exports in growth accelerations. Jones and Olken (2008) identify growth accelerations, and show that these are associated with an average 13 percentage point increase in the share of trade in income (over a five-year period) as well as an acceleration of the rate of transfer of labour into manufacturing. Pattillo et al (2005) pointed to the association between growth accelerations and trade in Sub-Saharan Africa (see also Hausmann et al., 2005).Economists have long argued that exposure to trade leads to increased competition and efficiency, resulting in greater specialization in production, and a wider and cheaper range of goods available to consumers (Dani, 1999 andSalimono, 1999). Likewise, mobility of productive factors (labour and capital) and the reduction of transaction costs are seen as essential to the smooth functioning of markets. In the case of trade, the General Agreements for Tariff and Trade (GATT)/World Trade Organisation (WTO) regime was constructed through a multilateral process with most favoured nation status (MFN), non-discrimination, and reciprocity as the organizing principles. In the case of international finance, exchange rate stability has been pursued unilaterally (by the U.S. during the early Bretton Woods period) and multilaterally through the IMF and World Bank. Both institutions have worked to solve problems of liquidity and adjustment as they arise. In each case, the international community seems to have accepted these goals/goods as indivisible, and herculean political efforts have been made to maintain openness and to solve free rider problems (Hollifield, 2006).Several factors have played an important role in the recent expansion of trade, the growing integration of economies, and the increasing contribution of trade to development. These include the liberalization of tariffs and other barriers to trade; foreign direct investment through trade and investment negotiations and agreements; autonomous unilateral structural reforms; technological innovations in transport and communications; international solidarity through supportive measures (like trade preferences); and the strategic use of policies, experimentation and innovation.The links between trade and factor movements are of increasing importance in a globalizing environment. The two classic papers in this literature are Mundell (1957) andMarkusen (1983). While Mundell used th...