Does inward remittance lead to export performance in South Asian countries?

Abstract

Purpose The purpose of this paper is to empirically investigate whether inward remittance leads to export performance in selected South Asian economies over the time period of 1993–2017. Design/methodology/approach The stationarity of the variables is checked by Levin, Lin and Chu t, Breitung t-stat., Im, Pesaran and Shin W-stat., ADF–Fisher and Philips–Perron–Fisher panel unit root tests. Panel Granger Causality is used to verify the short-run causality. Pedroni’s, Kao’s and Johansen–Fisher panel cointegration approaches are employed to examine the long-run relationship among the variables. Panel VECM is used to confirm the existence of a long-run relationship among the variables. Findings Panels FMOLS and DOLS show that remittance inflows have negatively impacted the export performance of the selected South Asian countries during the study period. Granger Causality and VECM test confirm the existence of short-run and long-run relationship among the variables. The authors conclude that inward remittance is affecting export performance negatively during the study period. Furthermore, inward remittances occupy a major source of development finance for selected South Asian countries. Originality/value The study uses a dynamic macroeconomic modeling framework to assess the inward remittance on export performance in South Asian countries. Taking into account the diversity of the level of growth experienced by the five countries in the Asian region, the study uses an appropriate regression technique, i.e. panel dynamic OLS whose results are robust. As exports are a proven way to further economic growth, this study fills a vital gap in the literature by ascertaining the degree of impact of remittances in influencing outbound exports from the South Asian region.

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“…This result is consistent in all specifications of the model as can be seen in column (2), (3), and (4), however in slightly different magnitudes. Our finding for this variable is in line with the literature and supports to the findings of Jena and Sethi (2020) and others in the literature.…”

“…Shamim et al (2015), detects the negative effect of remittances on export performance in the long run using the annual data from Pakistan. Jena and Sethi (2020), using the annual data for South Asian countries for the period of 1993-2017, suggest that remittance inflows are affecting export performance negatively during the study period.…”

Foreign aid and growth nexus: empirical evidence from South Asian countries

“…They found that that FDI and remittances have a significant impact on economic growth in India, whereas in Sri Lanka, foreign aid and remittances play an important role in enhancing economic growth. Similarly Jena and Sethi (2019a) empirically investigate whether inward remittance leads to export performance in selected South Asian economies over the time period of 1993–2017. They found that inward remittance is affecting export performance negatively during the study period.…”

Does remittance inflow influence human development in south Asian countries? An empirical insight

“…Different types of indices of financial development are used to illustrate the possible impact of financial development on human development. In this paper we use domestic credit to private sector percentage of GDP as proxy of financial development (Colombage, 2009; Jena & Sethi, 2019; Kar, Nazlıoğlu, & Ağır, 2011; Khan & Senhadji, 2003; Zaman, Izhar, Khan, & Ahmad, 2012).…”

“…found that financial globalization and trade openness have a positive and significant influence on economic growth. SimilarlyJena and Sethi et al (2019) empirically investigate whether inward remittance leads to export performance in selected South Asian economies over the time period of 1993-2017.…”