Remittances and Economic Growth: Empirical Evidence from Bangladesh

Md. Nisar Ahmed Shams


The objective of this paper has been to investigate the causal relationship between remittances and economic growth in Bangladesh over the period 1972/73 to 2014/15. A stable, long-run relationship is found between the two variables on the basis of cointegration test. Furthermore, a one-way causation from remittances to economic growth is also observed through the Error Correction Model (ECM). The analysis indicates a positive impact of remittances on economic growth. As a policy suggestion, an appropriate environment for investing the remitted money must be created. Besides, a reliable and rapid remittances transaction system should also be developed so that the emigrants are encouraged to send money through the ‘formal’ channel.

Keywords: Remittance, Economic Growth, Coitegration, Error Correction Model, Bangladesh.

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