3.1.

Data

This study made use of secondary data that was gathered from the International Monetary Fund and
World Bank statistics.

For our analysis, which spans a period of 45 years from the economic year 1976 to 2021, we mostly
employed secondary time series data. The association between the variables is discovered via multiple
regression line analysis. The rate of economic growth is considered a dependent variable. As
independent variables, consider worker remittances, FDI, inflation, agricultural growth, and exchange
rate.

Complete information about variables in data source is given in the following table.

Variable Definition Data Source

Dependent Variables

Economic Growth Growth rate of GDP per WDI

capita

Independent Variables

Investment Gross fixed Capital WDI

Formation

Trade Trade (% of GDP) WDI

Labor Force Total (% of total population WDI

ages 15-64)

education Gross Secondary Enrollment WDI

Remittances Remittances received (% of WDI

GDP)

Inflation Consumer price (annual %) WDI

Notes: This table shows that economic growth is our dependent variables, and it is measured by GDP.
Independent variables are investment, workers’ remittances, inflation, and education, trade and labor
force.

The econometric model is given below:

growth t=bo +b 1 inv t + b2 labor t + b3 edut +b 4 remit t + b5 tradet +b 6 inf t +ut

Where,

growth=Economic Growth

inv=Investment

edu=Education

remit=remittances

inf=Inflation

u=Error term.

The above data is a time series data, and it is important to correctly measure it with different tests and
knowing whether a time series of data is stationary or non-stationary is crucial when working with it.
Constant statistical features throughout time, such as constant mean, constant variance, and constant
autocovariance, are characteristics of stationary data. Non-stationary data, on the other hand, reveals
trends, seasonality, or other time-dependent patterns.

Several tests can be performed to gauge the stationarity of time series data. The following are three
frequently used tests:

1. The Augmented Dickey-Fuller (ADF) test:

The Augmented Dickey-Fuller (ADF) test is frequently used to identify whether a time series is
stationary or not. It contrasts the alternative hypothesis of stationarity with the null hypothesis
that the data does not have a unit root (i.e., is not stationary). A test statistic and a p-value are
included in the test results. A little p-value (below a certain level of significance, like 0.05)
indicates that the null hypothesis was rejected, and stationarity was inferred.

2. Unit Root Test:

A time series is examined for the presence of a unit root, which denotes non-stationarity, using
the unit root test. According to non-stationarity, the mean and variance of the data are not
continuously constant throughout time.

The Augmented Dickey-Fuller (ADF) test is the unit root test that is most frequently employed.

3. Autoregressive Distributed Lag (ARDL) test:

 A statistical technique called the Autoregressive Distributed Lag (ARDL) test is used to look at the
long-term relationship between variables in a time series environment. It is frequently used
when working with cointegrated time series, when variables not only have a stable long-term
connection but also are associated.

The ARDL test findings should be carefully interpreted, considering the model's assumptions and
constraints, and making sure it is appropriate for your data and research question.

4. Cointegration test:

It is possible to tell whether two or more time series are integrated in the same order and have a
long-term relationship by using the statistical notion of cointegration. When examining non-
stationary time series data where the variables may have a unit root, cointegration is extremely
helpful.

The Engle-Granger two-step method or the Johansen test can be used to conduct a cointegration
test for time series data.

To make meaningful inferences about the links between time series data, cointegration tests
must be employed as part of a larger analysis that takes into account economic intuition and
other pertinent variables.

Additionally, stationarity is a fundamental presumption for many statistical and time series modelling
methods. Before using specific analyses or models, the data may need to be transformed or differ if it is
discovered to be non-stationary.