Abstract

Author:
Dilina Nepal, Maheshwor Adhikari

Doi: 10.26480/jtwe.02.2024.105.109

This is an open access article distributed under the Creative Commons Attribution License CC BY 4.0, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited

This article seeks to analyze relationship between export, remittance, and GDP in Nepal over a period from 1993/94–2022/23. The study aimed to demonstrate the effect of export and remittance on economic growth in both short run and long run using Vector error correction model (VECM) as a tool for analysis. The variables were found to be stationary at first difference. The results of granger causality test revealed that export doesn’t cause GDP whereas there is unidirectional causality running from remittance to GDP. Similarly, 1% increase in remittance and export was found to increase the GDP by 0.279% and 0.308% respectively in the long run. The result suggests that remittances inflows and export can play a critical role in the economic development of Nepal by increasing HDI value, reducing trade deficit, increasing foreign exchange reserve, reducing poverty and unemployment rates.