Preprint Article Version 1 NOT YET PEER-REVIEWED

Nonlinear growth effect of remittances in recipient countries: an econometric analysis of remittances-growth nexus in Bangladesh

  1. Waikato Management School, University of Waikato, Hamilton, New Zealand
  2. School of Economics and Finance, Massey University, Palmerston North, New Zealand
Version 1 : Received: 20 July 2016 / Approved: 20 July 2016 / Online: 20 July 2016 (10:27:13 CEST)

How to cite: Hassan, G.; Shakur, S. Nonlinear growth effect of remittances in recipient countries: an econometric analysis of remittances-growth nexus in Bangladesh. Preprints 2016, 2016070062 (doi: 10.20944/preprints201607.0062.v1). Hassan, G.; Shakur, S. Nonlinear growth effect of remittances in recipient countries: an econometric analysis of remittances-growth nexus in Bangladesh. Preprints 2016, 2016070062 (doi: 10.20944/preprints201607.0062.v1).

Abstract

The paper examines the impact of inward remittances flows on per capita GDP growth in Bangladesh during 1976-2012. We find that the growth effect of remittances is negative at first but becomes positive at a later stage, an evidence of a non-linear. Unproductive use of remittances was rampant in the beginning when they were received by migrant families but better social and economic investments led to more productive utilisation of remittances receipts at later periods. This was the possible mechanism behind the U-shaped relationship. Unlike what is suggested in the literature that the effect of remittances is more pronounced in a less financially developed economy, our evidence do not show that the effect of remittances on per capita GDP growth in Bangladesh is conditional on the level of financial development.

Subject Areas

Remittances; Economic Growth; Bangladesh; Remittances Utilisation

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