Inflow of Remittances and its Impact on Economic Growth of Bangladesh

Abstract

In general, it is ruminated that workers’ remittance is one of a major source for external finance and economic growth for developing countries like Bangladesh. This study pinpoints the influence of workers’ remittances (WRs) on the economic growth of Bangladesh by analyzing time series data of 43 years from 1976 to 2018 drawn out from the World Bank database. Using ARDL, we have tried to investigate the relationship of gross domestic product (GDP) with remittances and some other variables such as gross capital formation (a proxy of capital stock) and employed labor force. The study finds that 1% increase of remittance earning induces to increase GDP by 0.37%. It can be concluded from the regression results that there exists a significant positive relationship between WRs and economic growth in Bangladesh. However, there are some fluctuations of remittance flow in Bangladesh in recent years. Hence, this study acclaims that Bangladesh should take suitable initiatives for keeping an increasing trend of remittances in the coming years and make pragmatic policies that inspire and stimulate the inflow of remittances through proper channel for economic growth and development.

Keywords: Remittances; Economic Growth; Productivity; Panel Data Analysis; Bangladesh

Australian Academy of Business and Economics Review, vol 5, issue 2, July 2019, pp 74-88