Relationship between Remittances and Economic Growth in Bangladesh: An Econometric Study

Abstract

In Bangladesh, remittances have increased sharply over the last 20 years and amount since 2008 to over 10 percent of GDP. While remittances can foster growth and development as well as prevent balance of payment crises, they can also have a negative impact on growth if used for conspicuous consumption or unproductively. Recipients of remittance can become highly dependent on the easy money, causing them to reduce their efforts and or their participation in the labor market, which would affect economic growth negatively. In this paper an attempt is made to analyze the impact of remittances on economic growth in the Bangladeshi economy, using time series econometric techniques, specifically, the auto regressive distributed lag (ARDL) framework.

Keywords: remittances, growth, Bangladesh, ARDL, ECM

JEL Classification: F24, O15, O53