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Impact of Overseas Remittances on Economic Growth: Evidences from Bangladesh

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  • Wadood, Syed Naimul
  • Hossain, Md. Amzad

Abstract

Overseas remittance earnings have become a major source of financial inflow for Bangladesh economy in recent years. However, the advantages of this huge remittance inflow may not be effectively channeled to the economic development via investment and/or efficiency effect. Therefore, the objective of this study is to investigate the nexus between remittances and economic growth in Bangladesh. Using time series data over a 40 year period 1972-2013, this paper investigates the causal link between overseas remittances and economic growth in Bangladesh by employing a number of econometric techniques namely Johansen Cointegration approach, Vector Error Correction (VEC) Model and the Granger Causality test. The cointegration test suggests that there exists a long-run relationship between remittance and economic growth in Bangladesh. Further, the result of Granger Causality shows that remittances do lead to economic growth in Bangladesh. The statistically significant relationship between remittances and economic growth may inspire the policy makers to consider remittances as an alternative policy instrument to motivate the growth of Bangladesh economy.

Suggested Citation

  • Wadood, Syed Naimul & Hossain, Md. Amzad, 2015. "Impact of Overseas Remittances on Economic Growth: Evidences from Bangladesh," MPRA Paper 81657, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:81657
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    Cited by:

    1. Emon Kalyan Chowdhury & Bablu Kumar Dhar & Md.Abu Issa Gazi, 2023. "Impact of Remittance on Economic Progress: Evidence from Low-Income Asian Frontier Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(1), pages 382-407, March.
    2. Mohammed Anam Akhtar & Imran Khan & and Khurram Ajaz Khan, 2023. "Linking Financial Capability, Advice, Anxiety, Social Security, and Residential Status with Outward Remittances: Evidence from the UAE," Contemporary Review of the Middle East, , vol. 10(4), pages 386-407, December.

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    More about this item

    Keywords

    Overseas Remittance; Co-integration; Vector Error Correction Model; Johansen test for cointegration; Granger causality test; ECM Stability test;
    All these keywords.

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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