Inward Worker Remittances and Economic Growth: The Case of Bangladesh

Md Ali Emam, Tinggui Chen and Markus Leibrecht (markus@shou.edu.cn)
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Md Ali Emam: College of Economics and Management, Shanghai Ocean University, China
Tinggui Chen: College of Economics and Management, Shanghai Ocean University, China
Markus Leibrecht: College of Economics and Management, Shanghai Ocean University, China, Postal: 999 Hucheng Ring Rd, Pudong, Shanghai, China

Asian Journal of Applied Economics/ Applied Economics Journal, 2021, vol. 28, issue 2, 43-62

Abstract: It is commonly believed that for development economies, inward worker remittances are an important financial instrument to boost economic growth. This study investigates the relationship between inward worker remittances and economic growth for the case of Bangladesh. The study applies an Autoregressive Distributed Lags (ARDL) bounds testing approach based on 28 years of World Bank and IMF data. The paper adds to the literature by considering Foreign Direct Investment (FDI) and Official Development Aid as additional foreign sources of economic growth. In contrast to common belief and most prior results, the findings of this study indicate that worker remittances do not have a significant impact on economic growth. Rather, economic growth is mainly spurred by changes in Bangladesh’s capital stock and by FDI inflows. Thus, while worker remittances are certainly important for receiving families, their impact on economic growth needs to be enhanced by incentivizing a more growth-conducive use of remitted funds.

Keywords: worker remittances; economic growth; Bangladesh; ARDL bounds testing (search for similar items in EconPapers)
JEL-codes: E22 E23 F21 F63 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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