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Global Financial Crisis, Remittances, Exports and Poverty in Bangladesh

Raihan, Selim (2010): Global Financial Crisis, Remittances, Exports and Poverty in Bangladesh.

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Abstract

This paper explores the impacts of reduced inflow of remittances and export earnings in the face of global financial crisis on the economy of Bangladesh. There is no denying the fact that remittances have emerged as a key driver of macroeconomic stability, economic growth and poverty reduction in Bangladesh. Also, Bangladesh experienced robust growth in export earnings, especially through the remarkable growth in readymade garments, over the last two decades. The study suggests that remittance plays a very important role in with regard to household well being measured by consumption level and their poverty incidence. The results from a CGE model suggest that a negative growth in remittance would result in fall in real GDP. The poorer households would appear to be the major victim of such a negative shock. Also a negative shock on the exports of readymade garments would decline real GDP and would lead to reduction in real return to labor. This would also lead to raise incidence of poverty. There is a growing apprehension in the country that due to global financial crisis, flow of international remittance to Bangladesh may likely to slowdown adversely affecting the economy and the household level welfare. Also, the export sectors might be at risk of facing the reduced world demand. Considering the important role of remittances and exports, appropriate policies by the government is very important to tackle the possible adverse situation.

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