CO-INTEGRATION ANALYSIS OF REMITTANCES, EXPORTS, AND GDP IN BANGLADESH: IMPLICATIONS FOR ECONOMIC DEVELOPMENT AND UNEMPLOYMENT REDUCTION
Abstract
Remittances and exports are significant sources of foreign exchange earnings for developing nations. This study explores the relationship between remittances, exports, and economic development in Bangladesh. Using the Johansen co-integration approach, the study finds evidence of co-integration among the variables. The results also show that remittances have a significant positive effect on the gross domestic product (GDP) of Bangladesh, while exports do not have a direct impact on GDP. Furthermore, the Granger causality test reveals that there is no significant and positive relationship between remittances and exports. The study suggests that remittances play a vital role in the economic development of Bangladesh by creating employment opportunities, increasing the level of reserves amount, making payments on imports, balancing the balance of payments, and developing other socio-economic aspects. This is especially important in a country where unemployment is a significant issue, and every day the rate of unemployment is increasing. Therefore, policymakers should take into consideration the potential risks and benefits of migration and remittances and adopt appropriate policies to mitigate any negative impacts. Overall, this study contributes to the literature on the impact of remittances and exports on economic development and provides important policy implications for reducing unemployment in Bangladesh.
JEL: F02; F14; F24
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DOI: http://dx.doi.org/10.46827/ejefr.v7i1.1447
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