Author Topic: The Macroeconomic Determinants of Remittances in Bangladesh: An Empirical Analys  (Read 3877 times)

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Author : Md. Mahmud Hasan Shah, Md. Zobayer Bin Amir
International Journal of Scientific & Engineering Research Volume 2, Issue 10, October-2011
ISSN 2229-5518
Download Full Paper : PDF

Abstract- Conventional wisdom in the economics of migration holds that remittance receipts may be a more stable source of capital for developing countries than official Development Assistance or private financial capital. We use national accounts data to analyze movements in remittance flow to Bangladesh from 1975- 2010 against these series, as well as GDP at current price, Remittances, Oil Price, Foreign Exchange Rate and Number of Migrant. The paper applied Augmented Dickey Fuller and Phillips-Perron to check the stationarity of the time series, and then we find the long run stable relationship by Granger Residual Based and Johansenís cointegration test. Applying the error correction mechanism has stable relationship in Bangladesh in the short as well as in the long run.

   Key Word- Remittances, Migration, National Accounts, Stationarity, Cointegration, Error Correction,

The global completion of exporting manpower is increasing day by day. The demand for skilled and professional personal is increasing. But Bangladesh is far behind to export skilled and professional personal than some other top remittance recipient countries. As a huge labor surplus country from 1976 to 2007 total 4824072 people migrated temporarily from Bangladesh, according to a statistics of Bangladesh bureau of manpower, employment and training (BMET).
Remittances are not a new phenomenon in the Bangladesh. This country is   dependent on remittances received from their emigrants during the 20th centuries. Remittances are playing an increasingly large role in the economies of many countries, contributing to economic growth and to the livelihoods of less prosperous people (though generally not the poorest of the poor). As remittance receivers often have a higher propensity to own a bank account, remittances promote access to financial services for the sender and recipient, an essential aspect of leveraging remittances to promote economic development Remittances have emerged as a key driver of economic growth and poverty reduction in Bangladesh, increasing at an average annual rate of 19 percent in the last 30 years (1979-2009). The total workers remittance sent from 2001-2009.

From 1979 to 2010 the remittance inflow is being gone day by day by the in conregement of government policy and has a great tendency to migrate of people. In various developed and developing countries demand for labor is being increased for their own development. Foreign countries are offering more facilities to Bangladesh skilled labor.
The number of expatriate was only 192263 in 1993-94 Fiscal year. Now it stands at 427180 expatriate in 2009-10 fiscal year.
    In 2001-02 fiscal year the amount of remittance sent was 2501.13 Millions of dollar. But it has been increased to 9681.78 Millions of dollar in 2008-09 fiscal year.
    Because of increasing lobar demand, labor efficiency, establishment of new institution, Government facilities the new labor market has been created over the years. The total contribution of remittance to our GDP is 7.12 in Fiscal year 2008-09.So Bangladesh is importantly depended on receiving remittance than before.

2. Literature
A growing literature on migration and remittances, evaluated at both the international and national levels, provides some insight into the relationship between remittances and shifts in the global macro-economy. Looking solely at developing countries, Kapur (2004) plots net and gross remittances against other private and public capital flows. His study shows that while other capital flows (such as FDI) exhibit notable fluctuations over time, remittances were the most stable capital flow during the period 1990-2001. Another study by Ratha (2003) complements that of Kapur. Ratha argues that remittances are generally a less volatile, more dependable, source of funding than private capital flows and foreign direct investment. Sayan (2006) looks at remittance and output data for 12 lower and middle income countries from 1976-2003. He finds that, although the aggregate country data exhibits counter-cyclicality vis-ŗ-vis GDP, within countries the result is ambiguous as remittances can be pro-, counter-, or even a-cyclical.

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