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

Listed author(s):
  • Abu Siddique

    (Business School, The University of Western Australia)

  • E A Selvanathan

    (Griffith Business School, Griffith University Queensland)

  • Saroja Selvanathan

    (Griffith Business School, Griffith University Queensland)

In many developing countries, remittance payments from migrant workers are increasingly becoming a significant source of export income. This paper 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 VAR framework (Granger 1988). 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 remittences and vice-versa. The paper also discusses a number of policy issues arising from the results of the analysis in relation to remittances in association with liberalisation of financial institutions, gender issues, regulation and enforcement, investment and savings schemes, and promotion and education.

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Paper provided by The University of Western Australia, Department of Economics in its series Economics Discussion / Working Papers with number 10-27.

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Length: 26 pages
Date of creation: 2010
Handle: RePEc:uwa:wpaper:10-27
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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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