The Effect of Migrant Remittances on Economic Growth: an ARDL Approach

  • Muhammad Kamran Khan School of Economics, Northeast Normal University, Changchun Jilin, China
  • Jian-Zhou Teng School of Economics, Northeast Normal University, Changchun Jilin, China
  • Muhammad Imran Khan School of Economics, Northeast Normal University, Changchun Jilin, China
Keywords: Worker Remittances, Foreign direct investment, gross domestic saving, Economic Growth, ARDL

Abstract

Worker remittances are the main source of financial flow to any economy.  This study intended to scrutinize the effect of remittance inflow on Pakistan’s economy over the period 1976- 2016 by employing autoregressive distributed lag (ARDL) technique; because this method has been recently developed and has different advantages as compared to time series methods. ARDL method was applied to scrutinize the long run and the short run effect of worker remittances on Pakistan’s economy. This study concluded that Pakistan’s economy is positively affected by remittance inflow, foreign direct investment and the gross domestic saving in the long run, while Pakistan’s economy negatively affected by inflation and consumption in the long run. Remittances received from immigrant support economic growth in Pakistan because remittances inflow is mostly utilized for investment purpose. To further improve the economic development of Pakistan’s economy, it is suggested that policy maker in Pakistan encourage and motivate migrants to send remittances through proper channels to Pakistan, so that these inflows of remittances be used in such profitable investments that help to improve economic growth.

Author Biographies

Muhammad Kamran Khan, School of Economics, Northeast Normal University, Changchun Jilin, China

BBA(Hons)

MSC (Economics)

MS (Finance)

PhD (Finance)

Jian-Zhou Teng, School of Economics, Northeast Normal University, Changchun Jilin, China
Professor of Economics, School of Economics, Northeast Normal University, Changchun Jilin, China
Muhammad Imran Khan, School of Economics, Northeast Normal University, Changchun Jilin, China
PhD Finance
Published
2019-10-30
Section
ECONOMICS OF ENGINEERING DECISIONS