Cash Incentive on Remittance Inflow and its Impact on Economic Growth in Bangladesh

Abstract

Remittances are crucial for driving economic growth in developing countries like Bangladesh, as they effectively influencenearly all macroeconomic indicators within the financial ecosystem. This study examines the impact of remittance inflow on economic growth in Bangladesh considering the cash incentive policy of the government. The ARDL Bound testing approach is employed for the analysis using a monthly dataset covering the period from January 2015 to April 2023. The evidence from the results provides a substantial and favorable influence of remittances on the economic growth of Bangladesh, both in the short term and the long term. According to the expected error correction term, it is projected that the economy will undergo a correction of its imbalances at an annual rate of 58%. Consequently, a strategic blend of short-term policy adjustments and long-term initiatives has the potential to enhance the influence of remittances in fostering sustainable economic growth and elevating the the quality of life for both expatriates and the nation as a whole.