The Impact of Diaspora Remittances on Trade Balance-Evidence From Kenya

Abstract

The study was motivated by the growing trade deficit due to overreliance on imports in Kenya, and the fact that there has been a growth in the Diaspora remittances as more people seek jobs abroad. This study sought to investigate how remittances affect the trade balance in the Kenyan economy. Annual time series data from the year 1980 to 2018 was used. The data was obtained from World Bank website. The estimation results revealed that diaspora remittances negatively affect trade balance. Therefore policies to tax the remittances should be embraced