Analysis of WDI data to investigate the impact of foreign remittances on the economic growth of Pakistan

Abstract

Remittances are one of the largest sources of financial inflow for developing countries and it imparts a considerable importance to economic growth. The purpose of our study is to analyse the impact of foreign workers’ remittances on GDP and in succession on economic growth. We processed annual time series data over the period 1980-2019. ADF unit root test was used to check the stationarity of variables. To check the short run and long run relationship between foreign workers’ remittances and GDP of Pakistan, ARDL (bounds) test was applied. As a result of our analysis, we found a significant positive relationship between remittances and economic growth of Pakistan. Our results provide thoughtful guidelines to policy makers who can use these insights to decide relevant and favourable policies and legislations.