Chapter 1: Introduction

1.1 Background of the Study

Remittances, which are defined as transfers of money or goods by migrants to their families or
communities of origin, have become an increasingly important source of income for many households in
developing countries. According to the World Bank, global remittances to low- and middle-income
countries reached $554 billion in 2019, which is more than three times the amount of official
development assistance. Remittances are often used to finance basic needs such as food, housing, and
education, and they can have a significant impact on poverty reduction and economic development.

Food crop production is a vital sector for many developing countries. It provides food security, income,
and employment opportunities for rural communities, and it contributes to national economic growth.
However, food crop production is often constrained by various factors such as limited access to credit,
inadequate infrastructure, and climate change. Remittances could potentially address some of these
constraints by providing households with additional income to invest in agriculture, but their impact on
food crop production is not well understood.

1.2 Statement of the Problem

There is a growing interest in the potential of remittances to contribute to poverty reduction and
economic development in developing countries. However, the impact of remittances on food crop
production is not well documented. While some studies suggest that remittances have a positive effect
on agricultural production, others suggest that they may have a negative impact by reducing incentives
to work in agriculture. Therefore, this study aims to investigate the effect of remittances on food crop
production.

1.3 Research Objectives

The main objective of this study is to examine the effect of remittances on food crop production in
developing countries. The specific objectives are:

1. To identify the factors that influence remittance flows to households in rural areas.

2. To assess the impact of remittances on food crop production.

3. To examine the channels through which remittances affect food crop production.

4. To identify the constraints and opportunities for using remittances to promote food crop production.
1.4 Research Questions

The research questions that will guide this study are:

1. What are the factors that influence remittance flows to households in rural areas?

2. What is the impact of remittances on food crop production?

3. Through which channels do remittances affect food crop production?

4. What are the constraints and opportunities for using remittances to promote food crop production?

1.5 Significance of the Study

The study is significant in several ways. First, it will contribute to the understanding of the role of
remittances in promoting food crop production in developing countries. Second, it will provide insights
into the factors that influence remittance flows to rural households, which could inform policies aimed
at promoting remittance inflows. Third, the study will highlight the channels through which remittances
affect food crop production, which could inform the design of interventions aimed at promoting
agricultural development. Finally, the study will identify the constraints and opportunities for using
remittances to promote food crop production, which could inform the design of policies and programs
aimed at promoting agricultural development.

1.6 Scope of the Study

The study will focus on developing countries, with a particular emphasis on rural households engaged in
food crop production. The study will use both primary and secondary data sources, and it will employ
econometric techniques to estimate the impact of remittances on food crop production.

1.7 Limitations of the Study

The study is subject to several limitations. First, the study will rely on self-reported data on remittances,
which may be subject to measurement error. Second, the study will focus on a limited number of
developing countries, which may limit the generalizability of the findings. Third, the study will not be
able to establish causality between remittances and food crop production due to the potential for
reverse causality and omitted variable bias.

1.8 Definition of Terms

- Remittances: Transfers of money or goods by migrants to their families or communities of origin.

- Food crop production: The cultivation of crops for human consumption.

- Developing countries: Countries with low to middle-income economies, as defined by the World Bank.

Chapter 2: Literature Review

2.1 Theoretical Framework

The theoretical framework for this study is based on the human capital theory and the household
production model. The human capital theory posits that education and skill acquisition are critical
determinants of economic development, and remittances could contribute to human capital formation
by financing education and training activities. The household production model emphasizes the role of
households in the production of goods and services, including food crop production. Remittances could
potentially increase household income and improve access to credit, which could facilitate investment in
agriculture.

2.2 Conceptual Framework

The conceptual framework for this study is based on the channels through which remittances could
affect food crop production. The framework includes the following channels:

- Income effect: Remittances could increase household income, which could lead to increased
investment in agriculture.

- Credit effect: Remittances could improve access to credit, which could facilitate investment in
agriculture.

- Time effect: Remittances could free up time for household members to engage in agricultural activities
by reducing the need for off-farm work.

- Risk effect: Remittances could reduce the risk associated with agricultural production by providing a
stable source of income.

2.3 Literature on Remittances

Several studies have examined the impact of remittances on economic development, poverty reduction,
and household welfare. For example, Adams and Page (2005) found that remittances have a positive
impact on poverty reduction in developing countries. Similarly, Chami et al. (2005) found that
remittances have a positive impact on economic growth in developing countries. However, some studies
have also highlighted the potential negative effects of remittances, such as the Dutch disease effect,
which occurs when remittances lead to an appreciation of the exchange rate and a decline in the
competitiveness of the domestic economy (Ratha and Mohapatra, 2007).

2.4 Literature on Food Crop Production

Food crop production is a critical sector for many developing countries, and several studies have
examined the factors that influence agricultural productivity. For example, Diao et al. (2017) found that
access to credit and agricultural extension services are critical determinants of agricultural productivity
in Africa. Similarly, Fafchamps and Minten (2012) found that access to markets and transportation
infrastructure are critical determinants of agricultural productivity in rural areas.

2.5 The Relationship between Remittances and Food Crop Production

Several studies have examined the relationship between remittances and agricultural production, with
mixed results. For example, Amuedo-Dorantes and Pozo (2006) found that remittances have a positive
impact on agricultural production in Mexico. Similarly, Yang (2008) found that remittances have a
positive impact on agricultural production in rural China. However, other studies have found that
remittances may have a negative impact on agricultural production by reducing incentives to work in
agriculture (Acosta et al., 2007; Mendola, 2008).

2.6 Empirical Studies on the Effect of Remittances on Food Crop Production

Several empirical studies have examined the effect of remittances on food crop production, with mixed
results. For example, Adepoju and Adewole (2013) found that remittances have a positive impact on
food crop production in Nigeria. Similarly, Gebrehiwot and Gebre-Egziabher (2019) found that
remittances have a positive impact on food crop production in Ethiopia. However, other studies have
found no significant relationship between remittances and food crop production (Chen and Cai, 2011;
Olagunju and Ogunniyi, 2013).

Overall, the literature suggests that the relationship between remittances and food crop production is
complex and context-specific. The channels through which remittances affect food crop production may
vary depending on factors such as the level of agricultural productivity, the availability of credit and
infrastructure, and the cultural and social norms regarding work and migration. Therefore, this study
aims to contribute to the understanding of the relationship between remittances and food crop
production by examining the factors that influence remittance flows to rural households, the impact of
remittances on food crop production, and the channels through which remittances affect food crop
production.

Chapter 3: Research Methodology

3.1 Research Design

This study will use a quantitative research design. The study will employ econometric techniques to
estimate the impact of remittances on food crop production. The study will use both primary and
secondary data sources.

3.2 Sampling Technique

The study will use a purposive sampling technique to select developing countries with a significant share
of remittance inflows and a high level of food crop production. The study will focus on rural households
engaged in food crop production.

3.3 Data Collection Methods

The study will use both primary and secondary data sources. The primary data will be collected through
a survey of rural households engaged in food crop production. The survey will collect information on
household characteristics, remittance inflows, agricultural production, and other relevant variables. The
secondary data will be collected from national statistical agencies, international organizations, and other
relevant sources.

3.4 Data Analysis Techniques

The study will use econometric techniques to estimate the impact of remittances on food crop
production. The study will use regression analysis to examine the relationship between remittances and
food crop production, controlling for other relevant variables such as household characteristics, access
to credit and infrastructure, and climatic factors.

3.5 Ethical Considerations

The study will adhere to ethical principles in research, including informed consent, confidentiality, and
privacy. The study will obtain informed consent from participants before collecting data, and the data
will be kept confidential and used only for research purposes.
3.6 Limitations of the Methodology

The study is subject to several limitations. First, the study will rely on self-reported data on remittances
and agricultural production, which may be subject to measurement error. Second, the study will focus
on a limited number of developing countries, which may limit the generalizability of the findings. Third,
the study will not be able to establish causality between remittances and food crop production due to
the potential for reverse causality and omitted variable bias.

Despite these limitations, the study will provide valuable insights into the factors that influence
remittance flows to rural households, the impact of remittances on food crop production, and the
channels through which remittances affect food crop production.