MetaTOC stay on top of your field, easily

Remittances, Human Capital, and Industrialization in Sub‐Saharan Africa

,

Review of Development Economics

Published online on

Abstract

["Review of Development Economics, EarlyView. ", "\nABSTRACT\nIndustrialization remains a crucial strategy for structural transformation in Sub‐Saharan Africa (SSA), yet progress has been hindered by persistent constraints. This paper evaluates the effects of remittances and human capital on industrialization across 35 SSA countries over the period 2010–2021. We employ the Feasible Generalized Least Squares (FGLS) and Driscoll–Kraay Standard Errors (DKSE) estimators to account for interdependence and serial correlation; the System Generalized Method of Moments (System GMM) to mitigate reverse causality; and Method of Moments Quantile Regression (MMQR) to assess effects across the spectrum of industrial development. The results robustly show that remittances and human capital are both individually significant drivers of industrialization and are complementary. Remittances supply the financial capital needed for investment and expansion, while human capital provides the skilled labor essential for operating and managing modern industrial systems. Their interaction is positive and statistically significant across all estimation techniques, indicating that the industrializing effect of remittances is amplified in environments with higher human capital and vice versa. These findings suggest the need to devise strategies to bolster remittances and invest massively in human capital for improved industrial development in SSA.\n"]