JBS Vol 22. Num 1. 2020 - Do Oil Prices Determine Remittances from the Gulf Countries to Bangladesh?

Most Bangladeshi migrants are employed in several oil-rich Gulf countries. Therefore, not surprisingly, Bangladesh receives the highest amount of remittances from these countries. Given the importance of oil production in these Gulf countries, it is reasonable to believe that oil prices may be an important determinant of remittance flows to Bangladesh. This is the first study that empirically examines the dynamic relationship between oil prices and remittances from the Gulf countries to Bangladesh. The autoregressive distributed lags (ARDL) bounds testing is applied to a time series dataset that covers the period from 1980-81 to 2017-18. Results suggest a robust positive association between oil price and remittance flows from the Gulf countries to Bangladesh, after controlling for domestic macroeconomic factors. These results have important policy implications not only for Bangladesh but also for other remittance recipient countries.