Does Remittance Promote Socio-Economic Development? Evidence from Bangladesh
DOI:
https://doi.org/10.18311/sdmimd/2024/33284Keywords:
Human Development Index, Remittance, VECMAbstract
Bangladesh is promoting remittance inflows as it has become one of the main sources of foreign exchange. This paper investigates how remittances promote socio-economic development in Bangladesh by using the time series data for the period of 1990-2020. Unit root test shows that all variables are stationary at first difference. That is, integrated of order one I(1). The long-run relationship is ensured by the Johansen Cointegration approach. Finally, we use Vector Error Correction Model (VECM) to estimate the impact. The results confirm that remittances and HDI in Bangladesh are interrelated long-run. The long-run coefficient indicates that an increase in remittance inflow will promote socio-economic development measured by HDI. For the disaggregate Level, we examine the impact of remittances on per capita GDP, life expectancy, and years of schooling. In the long run, remittances promote per capita GDP, life expectancy, and years of schooling.
Downloads
Metrics
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2024 Md. Yousuf, Raju Ahmed, Shah Md. Sumon
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
References
Acosta, P., Calderón, C., Fajnzylber, P., & Lopez, H. (2008). What is the impact of international remittances on poverty and inequality in latin America? World Development, 36(1), 89–114. https://doi.org/10.1016/j.worlddev.2007.02.016 DOI: https://doi.org/10.1016/j.worlddev.2007.02.016
Acosta, P. (2011). School Attendance, Child Labour, and Remittances from International Migration in El Salvador. Journal of Development Studies, 47(6), 913–936. https://doi.org/10.1080/00220388.2011. 563298 DOI: https://doi.org/10.1080/00220388.2011.563298
Adams, R. H., & Cuecuecha, A. (2010). Remittances, household expenditure and investment in guatemala. World Development, 38(11), 1626–1641. https:// doi.org/10.1016/j.worlddev.2010.03.003 DOI: https://doi.org/10.1016/j.worlddev.2010.03.003
Adams, R. H. (2006). International remittances and the household: analysis and review of global evidence†. Journal of African Economies, 15(suppl_2), 396– 425. https://doi.org/10.1093/jafeco/ejl028 DOI: https://doi.org/10.1093/jafeco/ejl028
Aggarwal, R., Demirgüç-Kunt, A., & Peria, M. S. M. (2006). Do workers’ remittances promote financial development? World Bank Publications. http:// books.google.ie/books?id=38Vaikze6U4C&prints ec=frontcover&dq=Do+workers%27+remittances +promote+financial+development%3F&hl=&cd= 2&source=gbs_api DOI: https://doi.org/10.1596/1813-9450-3957
Alcaraz, C., Chiquiar, D., & Salcedo, A. (2012). Remittances, schooling, and child labor in Mexico. Journal of Development Economics, 97(1), 156– 165. https://doi.org/10.1016/j.jdeveco.2010.11.004 DOI: https://doi.org/10.1016/j.jdeveco.2010.11.004
Alsamara, M. (2022). Do labor remittance outflows retard economic growth in Qatar? Evidence from nonlinear cointegration. The Quarterly Review of Economics and Finance, 83, 1–9. https://doi. org/10.1016/j.qref.2021.11.002 DOI: https://doi.org/10.1016/j.qref.2021.11.002
Amega, K. (2018). Remittances, education and health in Sub-Saharan Africa. Cogent Economics and Finance, 6(1), 1516488. https://doi.org/10.1080/23 322039.2018.1516488 DOI: https://doi.org/10.1080/23322039.2018.1516488
Ang, A., Jha, S., & Sugiyarto, G. (2009). Remittances and Household Behavior in the Philippines. SSRN Electronic Journal. https://doi.org/10.2139/ ssrn.1618125 DOI: https://doi.org/10.2139/ssrn.1618125
Antman, F. M. (2011). The intergenerational effects of paternal migration on schooling and work: What can we learn from children’s time allocations? Journal of Development Economics, 96(2), 200–208. https://doi.org/10.1016/j. jdeveco.2010.11.002 DOI: https://doi.org/10.1016/j.jdeveco.2010.11.002
Amuedo-Dorantes, C., & Pozo, S. (2010). Accounting for remittance and migration effects on children’s schooling. World Development, 38(12), 1747–1759. https://doi.org/10.1016/j.worlddev.2010.05.008 DOI: https://doi.org/10.1016/j.worlddev.2010.05.008
Asad, M., Haider Hashmi, S., & Yousaf, S. (2016). Nexus between workers’ remittances, unemployment, labor migration and economic growth in Pakistan. International Journal of Organizational Leadership, 5(4), 360–379. https:// doi.org/10.33844/ijol.2016.60188 DOI: https://doi.org/10.33844/ijol.2016.60188
Azam, M., & Raza, S. A. (2016). Do workers’ remittances boost human capital development? The Pakistan Development Review, 55(2), 123–149. https://doi.org/10.30541/v55i2pp.123-149 DOI: https://doi.org/10.30541/v55i2pp.123-149
Azizi, S. (2018). The impacts of workers’ remittances on human capital and labor supply in developing countries. Economic Modelling, 75, 377–396. https://doi.org/10.1016/j.econmod.2018.07.011 DOI: https://doi.org/10.1016/j.econmod.2018.07.011
Banga, R., & Sahu, P. K. (2010). Impact of remittances on poverty in developing Countries. Working Papersid: 2872, eSocialSciences.
Bansak, C., & Chezum, B. (2009). How do remittances affect human capital formation of school-age boys and girls? American Economic Review, 99(2), 145– 148. https://doi.org/10.1257/aer.99.2.145 DOI: https://doi.org/10.1257/aer.99.2.145
Basnet, H. C., Donou-Adonsou, F., & Upadhyaya, K. (2019). Workers’ remittances and the dutch disease: evidence from south Asian countries. International Economic Journal, 33(4), 662–678. https://doi.org/ 10.1080/10168737.2019.1666291 DOI: https://doi.org/10.1080/10168737.2019.1666291
Bouoiyour, J., Miftah, A., & Mouhoud, E. M. (2016). Education, male gender preference and migrants’ remittances: Interactions in rural Morocco. Economic Modelling, 57, 324–331. https://doi. org/10.1016/j.econmod.2015.10.026 DOI: https://doi.org/10.1016/j.econmod.2015.10.026
Bucheli, J. R., Bohara, A. K., & Fontenla, M. (2018). Mixed effects of remittances on child education. IZA Journal of Development and Migration, 8(1). https://doi.org/10.1186/s40176-017-0118-y DOI: https://doi.org/10.1186/s40176-017-0118-y
Covid-19 and Migrant Remittances: A Hidden Crisis Looming? (2021). The Economist Intelligence Unit.
Edwards, A. C., & Ureta, M. (2003). International migration, remittances, and schooling: evidence from El Salvador. Journal of Development Economics, 72(2), 429–461. https://doi. org/10.1016/s0304-3878(03)00115-9 DOI: https://doi.org/10.1016/S0304-3878(03)00115-9
Funkhouser, E. (2006). The effect of emigration on the labor market outcomes of the sender household: A longitudinal approach using data from Nicaragua. Well-Being and Social Policy, 2(2), 5-25.
Gao, X., Kikkawa, A., & Kang, J. (2021). Evaluating the impact of remittances on human capital investment in the Kyrgyz Republic. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3849991 DOI: https://doi.org/10.2139/ssrn.3849991
Guha, P. (2013). Macroeconomic effects of international remittances: The case of developing economies. Economic Modelling, 33, 292–305. https://doi. org/10.1016/j.econmod.2013.04.016 DOI: https://doi.org/10.1016/j.econmod.2013.04.016
Hassan, M., Mahmood, H., & Shahid, M. (2013). Consequences of worker’s remittances on human capital: An in-depth investigation for a case of Pakistan. Middle-East Journal of Scientific Research, 14(3), 443–452.
Huay, C. S., Winterton, J., Bani, Y., & Matemilola, B. T. (2019). Do remittances promote human development? Empirical evidence from developing countries. International Journal of Social Economics, 46(10), 1173–1185. https://doi. org/10.1108/ijse-12-2018-0673 DOI: https://doi.org/10.1108/IJSE-12-2018-0673
Iravani, M. R. (2011). Brain drain problem: A review. International Journal of Business and Social Science, 2(15).
Islam, T. (2021). Workers’ remittances and economic growth: evidence from Bangladesh. International Journal of Financial Research, 12(2), 233. https:// doi.org/10.5430/ijfr.v12n2p233 DOI: https://doi.org/10.5430/ijfr.v12n2p233
Kamalu, K., Binti Wan Ibrahim, W. H., & Umar Ahmad, A. (2022). The effect of remittance on human development in the organization of Islamic cooperation member countries: evidence from DCCE AND CS-ARDL. Iranian Journal of Management Studies, 15(2), 405-424.
Lu, Y., & Treiman, D. J. (2007). The Effect of Labor Migration and Remittances on Children’s Education among Blacks in South Africa. UCLA: California Center for Population Research.
Mozumder, L., & Islam, M. A. (2017). Effects of remittances on human capital development: An empirical analysis. Bangladesh Journal of Agricultural Economics, 36(454-2017-036), 18-1.
Naeem, M. Z., & Arzu, S. (2017). The role of remittances on human development: Evidence from developing countries. Bulletin of Business and Economics (BBE), 6(2), 74-91. Salas, V.B. (2014). International remittances and human capital formation. World Development, 59, 224–237. DOI: https://doi.org/10.1016/j.worlddev.2014.01.035
Siddique, A., Selvanathan, E. A., & Selvanathan, S. (2012). Remittances and economic growth: empirical evidence from Bangladesh, India and Sri Lanka. Journal of Development Studies, 48(8), 1045–1062. https://doi.org/10.1080/00220388.2012.663904 DOI: https://doi.org/10.1080/00220388.2012.663904
Sutradhar, S. R. (2020). The impact of remittances on economic growth in Bangladesh, India, Pakistan and Sri Lanka. International Journal of Economic Policy Studies, 14(1), 275–295. https://doi. org/10.1007/s42495-020-00034-1 DOI: https://doi.org/10.1007/s42495-020-00034-1
Ustubici, A., & Irdam, D. (2012). The impact of remittances on human development: A quantitative analysis and policy implications. Economics and Sociology, 5(1), 74–95. https://doi. org/10.14254/2071-789x.2012/5-1/6 DOI: https://doi.org/10.14254/2071-789X.2012/5-1/6
United Nations Department of Economic and Social Affairs, Population Division. (2020). International Migration 2020 Highlights (ST/ESA/SER.A/452).
Williams, K. (2017). Do remittances improve political institutions? Evidence from Sub-Saharan Africa. Economic Modelling, 61, 65–75. https://doi. org/10.1016/j.econmod.2016.12.004 DOI: https://doi.org/10.1016/j.econmod.2016.12.004
Zhunio, M. C., Vishwasrao, S., & Chiang, E. P. (2012). The influence of remittances on education and health outcomes: a cross country study. Applied Economics, 44(35), 4605–4616. https://doi.org/10 .1080/00036846.2011.593499 DOI: https://doi.org/10.1080/00036846.2011.593499