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Remittances and Economic Growth: Empirical Evidence from Bangladesh, India and Sri Lanka

Listed author(s):
  • Abu Siddique
  • E. A. Selvanathan
  • Saroja Selvanathan

In many developing countries, remittance payments from migrant workers are increasingly becoming a significant source of export income. This article investigates the causal link between remittances and economic growth in three countries, Bangladesh, India and Sri Lanka, by employing the Granger causality test under a Vector Autoregression (VAR) framework (Granger, C.W.J. (1988) Some recent developments in the concept of causality. Journal of Econometrics , 39, pp. 199--211). Using time series data over a 25-year period, we found that growth in remittances does lead to economic growth in Bangladesh. In India, there seems to be no causal relationship between growth in remittances and economic growth; but in Sri Lanka, a two-way directional causality is found; namely economic growth influences growth in remittances and vice-versa. The article also discusses a number of policy issues arising from the causality results.

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Article provided by Taylor & Francis Journals in its journal Journal of Development Studies.

Volume (Year): 48 (2011)
Issue (Month): 8 (October)
Pages: 1045-1062

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Handle: RePEc:taf:jdevst:v:48:y:2012:i:8:p:1045-1062
DOI: 10.1080/00220388.2012.663904
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  1. Gyan Pradhan & Mukti Upadhyay & Kamal Upadhyaya, 2008. "Remittances and economic growth in developing countries," The European Journal of Development Research, Taylor and Francis Journals, vol. 20(3), pages 497-506.
  2. Matiur Rahman & Muhammad Mustafa & Anisul Islam & Kishor Kumar Guru-Gharana, 2006. "Growth and employment empirics of Bangladesh," Journal of Developing Areas, Tennessee State University, College of Business, vol. 40(1), pages 99-114, September.
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