THE IMPACT OF REMITTANCE ON ECONOMIC GROWTH IN ETHIOPIA

Abstract Remittances are a relatively new macroeconomic event and one of the most significant ways of making money in the world, characteristics such as size and economic impact. The general objective of this study was to examine the impact of remittance on economic growth in Ethiopia. ECM was used to see the short run dynamics of the variables, and Granger causality was adopted to analyze the causality between remittances on economic growth in Ethiopia over the sample period of 1991 to 2022. The Study found that Remittance, real effective exchange rate, investment and human capital have statistically significant effect on economic growth. In addition remittances on economic growth have long-run relationship and there are unidirectional relationships among the two variables form remittance to economic growth. The government must raise public awareness of the use of money in order to increase high savings and small businesses, which in turn increases investment over the long term, in order to close the information gap that causes moral hazard problems for both remittance senders and recipients through various media.