Impact of Remittances on Economic Growth of Pakistan
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Date
2018
Authors
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Journal ISSN
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Publisher
University of Management and Technology
Abstract
One of the major international financial resources in the world is remittances which
occasionally exceeds the foreign direct investment flows in few economies of the world
(Gapen et al., 2009). There had been number of research articles and debates on the
economic growth sources within developed and under developed countries (Pradhan,
Upadhyay & Upadhyaya, 2008; Fayissa & Nsiah, 2010). Remittances considered holding
the strong influence on the growth of an economy. The purpose of this research study is
to examine the influence of worker's remittances on the economic growth along with few
economic indicators in Pakistan. Panel data for the time period 1971 to 2016 is taken to
examine the empirical linkage between the worker's remittances and economic growth.
By applying the ARDL and bound cointegration approach, the study found that there is a
positive impact of remittances on the economic growth of Pakistanin the short run and
long run. This study also elaborated that worker's remittances impact increases at higher
levels relative to economic growth in Pakistan. Furthermore, the study concluded positive
association among the FDI, labor force, capital and economic growth for both short run
and long run. However, no statistically significant linkage found between economic
growth and net exports in Pakistan. The study also concluded that unattractive rate, lack
of proper foreign policy, transactions through freelancing business, AML/compliance,
rebates on home remittances and religious factors hurdles the growth of remittances.
Description
Supervised by: Mr.Muhammad Moazzam Hassan
Keywords
Remittances, Economic Growth, ARDL, Granger Causality, Pakistan, MS