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On the causal nexus of remittances and poverty reduction in Bangladesh

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  • Abdulnasser Hatemi-J
  • Gazi Salah Uddin

Abstract

The aim of this article is to investigate the causal relationship between remittances and poverty reduction in Bangladesh over the period 1976 to 2010. This issue is of fundamental importance for the developing economy of Bangladesh. We apply newly developed methods by Hacker and Hatemi-J (2006, 2012) that are based on simulations and are robust to the violation of statistical assumptions especially when the sample size is small, as is the case in this article. Our estimation results reveal that causality nexus of poverty and remittances is bi-directional. We also find that the causal impact of poverty reduction on remittance is stronger than the reverse impact. This finding implies that Bangladeshi policy-makers can influence remittances through poverty reduction in the long run.

Suggested Citation

  • Abdulnasser Hatemi-J & Gazi Salah Uddin, 2014. "On the causal nexus of remittances and poverty reduction in Bangladesh," Applied Economics, Taylor & Francis Journals, vol. 46(4), pages 374-382, February.
    • Handle: RePEc:taf:applec:v:46:y:2014:i:4:p:374-382
    DOI: 10.1080/00036846.2013.844331
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    1. Valerie Koechlin & Gianmarco Leon, 2007. "International Remittances and Income Inequality: An Empirical Investigation," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 10(2), pages 123-141.
    2. Ralph Chami & Connel Fullenkamp & Samir Jahjah, 2005. "Are Immigrant Remittance Flows a Source of Capital for Development?," IMF Staff Papers, Palgrave Macmillan, vol. 52(1), pages 55-81, April.
    3. Valerie Koechlin & Gianmarco Leon, 2007. "International Remittances and Income Inequality: An Empirical Investigation," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 10(2), pages 123-141.
    4. Richard P.C. Brown & Eliana Jimenez, 2008. "Estimating the net effects of migration and remittances on poverty and inequality: comparison of Fiji and Tonga," Journal of International Development, John Wiley & Sons, Ltd., vol. 20(4), pages 547-571.
    5. Juthathip Jongwanich, 2007. "Workers’ Remittances, Economic Growth and Poverty in Developing Asia and the Pacific Countries," MPDD Working Paper Series WP/07/01, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
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    Cited by:

    1. Anupam Das & Murshed Chowdhury, 2019. "Macroeconomic impacts of remittances in Bangladesh: The role of reverse flows," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 48(3), November.
    2. Khan, Adnan, 2020. "A Bibliography Search on International Migration and Remittances Literature during the period of 1971-2020: A Case of Bangladesh," MPRA Paper 108143, University Library of Munich, Germany, revised 2020.
    3. Bezon Kumar, 2019. "The Impact of International Remittances on Poverty Alleviation in Bangladesh," Remittances Review, Remittances Review, vol. 4(1), pages 67-86, May.
    4. Alfonso Carfora & Renato Passaro & Giuseppe Scandurra & Antonio Thomas, 2022. "The Casual Nexus between Income and Energy Poverty in EU Member States," Energies, MDPI, vol. 15(8), pages 1-16, April.
    5. Joseph Siani, 2020. "International remittances, poverty and growth into WAEMU countries: evidence from panel cointegration approach," Economics Bulletin, AccessEcon, vol. 40(2), pages 1446-1456.
    6. Hossain, Sharif M. & Hosoe, Nobuhiro, 2020. "Welfare and equity impacts of cross-border factor mobility in Bangladesh: A general equilibrium analysis," Economic Modelling, Elsevier, vol. 87(C), pages 172-184.
    7. Sarker Masud & Islam Shahidul, 2018. "Impacts of International Migration on Socio-Economic Development in Bangladesh," European Review of Applied Sociology, Sciendo, vol. 11(16), pages 27-35, June.
    8. Mehdi Chowdhury & Dragana Radicic, 2019. "Remittances and Asset Accumulation in Bangladesh: A Study Using Generalised Propensity Score," Journal of International Development, John Wiley & Sons, Ltd., vol. 31(6), pages 475-494, August.
    9. Mehdi Chowdhury, 2014. "Households' Characteristics and the Modes of Remittances in Bangladesh," Discussion Papers 14/05, University of Nottingham, CREDIT.
    10. N. Abiodun LAWAL & Emmanuel Aderinola ADEGUN & Timothy Ayomitunde ADEREMI & Risikat O.S. DAUDA, 2022. "Migrant Remittances, Growth and Poverty Reduction: ARDL- Bounds Test and Granger Causality Approach," Business & Management Compass, University of Economics Varna, issue 1-2, pages 74-90.
    11. Akhter U. Ahmed & Salauddin Tauseef, 2022. "Climbing up the Ladder and Watching Out for the Fall: Poverty Dynamics in Rural Bangladesh," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 160(1), pages 309-340, February.
    12. Abdulnasser Hatemi-J & Mrittika Shamsuddin, 2016. "The causal interaction between financial development and human development in Bangladesh," Applied Economics Letters, Taylor & Francis Journals, vol. 23(14), pages 995-998, September.
    13. Khan, Adnan & Mrs, Sultana, 2021. "International Remittances Literature: A Study in Bangladesh during the period of 1971-2020," MPRA Paper 108290, University Library of Munich, Germany, revised 2021.
    14. Musakwa, Mercy T & Odhiambo, Nicholas M, 2019. "Remittance and poverty nexus in Botswana: A multivariate approach," Working Papers 25749, University of South Africa, Department of Economics.
    15. Fagbemi, Fisayo & Olufolahan, Toyin, 2019. "Capital inflows, financial development and poverty reduction in Nigeria," MPRA Paper 112784, University Library of Munich, Germany, revised 04 Apr 2019.

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