Abstract
Foreign remittances are the most attractive aspect of labour
migration. They are unrequited receipts to the recipient
countries from their emigrants. Remittances have encouraging
impacts on the key macroeconomic variables such as
consumption, investment, balance of payments and the overall
economic growth. There has been a considerable increase in
remittances to Pakistan over the last few years. Therefore, their
role in economic growth and especially their productive
utilization has gained pensive attention in Pakistan. In this study,
an attempt has been made to statistically investigate the impacts
of remittances on economic growth of Pakistan as well to
provide suitable recommendations for judicious utilization of
remittances in the country. For this purpose, time series data
ranging from 1973 to 2015 were utilized. The Augmented Dickey
Fuller test was used for stationarity testing. The methods of
Ordinary Least Square (OLS) and Vector Error Correction
Model (VECM) for unknown parameters estimation. The overall
results proved that there was positive and significant nexus
between economic growth and household consumption, capital
investment, government spending, net exports, per capita income
and remittances both in the short and long run. The main finding
revealed that that a one percent increase in remittances lead to
0.55 percent increase in GDP of Pakistan. Therefore, the need of
the day is to devise such policies which are friendly to
productive investment rather than conspicuous consumption.
Fareed Ullah Shah, Ijaz Majid. (2018) The nexus of remittances and economic growth: An experience of pakistan 1973-2015 , Journal of Managerial Sciences, Volume 12, Issue 3.
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