Relationship between Remittance and Economic Growth: Evidence from Bangladesh

Md. Sujahangir Kabir Sarkar, Md. Zillur Rahman, Mohammad Muzahidul Islam, Md. Mehedi Hasan Sikdar and Abul Basher Khan
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Md. Sujahangir Kabir Sarkar: Associate Professor, Department of Economics and Sociology, Patuakhali Science and Technology University, Patuakhali, BANGLADESH
Md. Zillur Rahman: Associate Professor, Department of Language and Communication, Patuakhali Science and Technology University, Patuakhali, BANGLADESH
Mohammad Muzahidul Islam: Associate Professor, Department of Management Studies, Patuakhali Science and Technology University, Patuakhali, BANGLADESH
Md. Mehedi Hasan Sikdar: Associate Professor, Department of Statistics, Patuakhali Science and Technology University, Patuakhali, BANGLADESH
Abul Basher Khan: Associate Professor, Department of Economics and Sociology, Patuakhali Science and Technology University, Patuakhali, BANGLADESH

American Journal of Trade and Policy, 2018, vol. 5, issue 3, 93-98

Abstract: Remittance is one of the significant sources of capital, especially for developing countries like Bangladesh. This study explores the relationship between remittance and economic growth in Bangladesh. Time series data from 1995-2016 extracted from the World Bank database and Bangladesh Bank statistics were used to measure the relationship of remittance and gross domestic product (GDP) with other variables such as gross capital formation, gross domestic saving, and household final consumption expenditure. Pearson’s correlation coefficient is estimated between the variables. Moreover, the annual growth (%) of remittance earnings by Bangladesh has been calculated and compared with the GDP growth of Bangladesh. The study has found that, on average, the remittance of Bangladesh has increased by 10.85% from 1995-2016, which is higher than the average growth of the country’s GDP. It has been revealed that there is a positive relationship between remittance with the GDP, gross capital formation, domestic saving, and household final consumption expenditure in the case of Bangladesh. However, there has been a frequent fluctuation of remittance flow in Bangladesh in recent years. Thus, this study recommends that Bangladesh take proper initiatives to maintain an increasing trend of remittance in the coming years, which would be helpful for the socio-economic development of the country.

Keywords: Remittance; Economic Growth; Bangladesh (search for similar items in EconPapers)
JEL-codes: F43 (search for similar items in EconPapers)
Date: 2018
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