Impact of Remittance on Economic Growth of Pakistan

Abstract

Purpose: The purpose of this research is to analyse the impact of remittance on economic growth in context of Pakistan. Pakistan ranks eighth among remittance receiving countries. An improved understanding of this relationship can support policy makers.  Methodology: The data for this study is collected from World Bank Data website from 1976 to 2018 for Pakistan. Economic growth proxied by GDP per capita growth is independent variable (DV) and Remittance, Household consumption, foreign direct investment, gross capital formation and trade as percentage of GDP as dependent variable (DV) . OLS method and Granger Casualty Test is used to analyse the data. Findings: The study results show that remittance has both long term and short term significant positive impact on economic growth. Both OLS and Granger Causality confirm long-term relationship between remittance whereas short term relationship is only established by Granger Causality test. Practical implications: The outcomes of the research can be utilised by the policy makers in designing strategy for future migrant labour management.