Remittance and economic development: Evidence from Bangladesh using unrestricted error correction model and Engle-Granger cointegration approach

Shafiun N. Shimul
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Shafiun N. Shimul: Institute of Health Economics, University of Dhaka, Bangladesh

Business and Economic Horizons (BEH), 2013, vol. 9, issue 1, 15-21

Abstract: Remittance is one of the popular issues in the development economics especially for the developing countries. This paper attempted at finding the relationship between remittance flow and economic development using time series data of 1976-2007. The two modern time series econometric approaches - bound testing Autoregressive Distributed Lag Models or Unrestricted Error Correction Model and Engle-Granger two step procedures for co-integration test - were executed and this study finds that remittance is not significant contributing factor for the GDP per capita both in the short and long run. However, the foreign direct investment is found significant factor in the short, though it is not significant factor in the long run. This study suggests adopting necessary actions to ensure that remittances work as a contributing factor of economic development.

Keywords: Remittance; economic development; Bangladesh; cointegration (search for similar items in EconPapers)
JEL-codes: C01 O10 (search for similar items in EconPapers)
Date: 2013
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