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Do remittances spur economic growth through export-led Growth: Empirical evidence from Sri Lanka?

Author Affiliations

  • 1Department of Economics, Faculty of Commerce and Management, Eastern University, Sri Lanka

Int. Res. J. Social Sci., Volume 12, Issue (2), Pages 1-8, July,14 (2023)

Abstract

Covering a sample from 1990 to 2020 the present study empirically investigates whether remittance influence the trade flows of Sri Lanka in long-run. The stationary condition of the series is verified by the ADF and Philips-Perron unit root tests. The short-run unilateral causality between export and remittances is validated using Wald Granger Causality. The long-run correlation between the variables is assessed using ARDL bound test techniques. The ECT method is used to verify that the variables have a long-term relationship. Further, ARDL bound test shows that remittance has positively influenced the export performance of Sri Lanka during the study period. It's conceivable that remittances are used for investment, and households have less desire to purchase imported goods and services. Granger Causality and ECT test validate the existence of short-run and long-run associations among the variables. Moreover, findings revealed, that exports and remittances influence the Sri Lankans' economic growth; hence efforts should be made to boost economic growth through remittance-led export. Thus, governments and policymakers should put more devised to enhance higher inflows of contemporary capital, like remittances, to stimulate export growth.

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