Impact of Workers’

Remittances on
Economic Growth
Saima Munawar (25456)

Under Supervision of
Aqeel Baig
 FY19 Country-wise Workers' Remittances

6,000.00

5,000.00

4,000.00

Million US Dollars
3,000.00

2,000.00

1,000.00

0.00
USA U.K. Saudi U.A.E. Malaysia
Arabia
Workers’
Remittance –
Worldwide
Remittances
Trend – Pakistan
Title, Author Source Methodology Model, DV Model, INV Period Context Results  
Giuliano, P., and M. Ruiz-Arranz. SGMM model the growth ratio of remittances to GDP (REM/GDP 1975–2002 100 Significant nonlinear effect of
2009. “Remittances, Financial of the real liquid liabilities of the financial system developing remittances on economic growth.
Development, and Growth.” per capita (M2/GDP) countries Remittances promoted growth in less
Journal of Development Economics GDP the sum of demand, time, saving and financially developed countries.
90: 144–152. foreign currency deposits to GDP
(DEP/GDP)  
claims on the private sector divided by
GDP (LOAN/GDP)
credit provided by the banking sector
to GDP (CREDIT/GDP)
 
Rao, B., and M. Hassan. 2011. “A Panel Change in remittances and control variables like 1974–2006 40 developing Insignificant effect of remittances on
Panel Data Analysis of the Growth estimation log of GDP the investment ratio, financial countries growth
 
Effects of Remittances.” Economic per capita developments O92
Modelling 28: 701–709.
Fenny, S., S. Iamsiraroj, and M. OLS and growth of remittances as a percentage of its GDP, 1971–2010 136 Insignificant effect of remittances on
McGillivray. 2014. “Remittances GMM model real GDP Domestic investment, Trade, developing growth in developing countries.
and Economic Growth: Larger per capita Government consumption countries 25 Significant and positive effect for SIDS
 
Impacts in Smaller Countries?” expenditure, FDI, M2, Domestic Credit SIDS countries
Journal of Development Studies 50
(8): 1055–1066.
Eggoh, J., Bangake, C., & Semedo, GMM and the growth rate logarithm of real GDP per capita, the 2001-2013 49 developing remittances have a positive and significant
G. (2019). Do remittances spur Panel Smooth of real GDP ratio of remittances to GDP countries impact on economic growth in developing
economic growth? Evidence from Threshold per capita countries, while aid and foreign direct
developing countries. The Journal Regression investments have insignificant impact.
of International Trade & Economic (PSTR)
Development, 28(4), 391-418.
Iqbal, Z., & Sattar, A. (2005). The time series GDPRg is WR is workers’ remittances IG 1973 to Pakistan workers’ remittances are
Contribution of Workers’ Remittances analysis real GDP is public investment IP is 2003 the important source of
to Economic Growth in Pakistan. growth private investment INF is economic growth in
Research Report, ISBN 969-461-126- inflation rate ED is external Pakistan.
1, Pakistan institute of development debt CTOT is change in terms
economics. of trade PCI is per capita
income PCISQ is squared per
capita income

Waheed, A., & Aleem, A. (2008).       1981 to Pakistan Workers’ remittances and
Workers’ remittances and economic 2006 economic growth have
growth: empirical evidence from significant positive linking
Pakistan. Journal of Social Science and in short run while negative
Humanities, 47(1), 1–12. impact in long run.

Irfan, M. (2011). Remittances and OLS GDP Ratio of remittance to GDP, 1975 to Pakistan Remittance which leads to
poverty linkages in Pakistan evidence Population size, inflation 2009 poverty reduction and
and some suggestions for further economic development
analysis. Working Paper, Pakistan
institute of development economics.
Dilshad, W. B. (2013). Impact of Workers' time series gross employed labour force, gross fixed 1991 to Pakistan There exist a significant positive relationship
Remittances on Economic Growth: An empirical domestic capital formation as percentage of 2012 between workers’ remittances and economic
Empirical Study of Pakistan's regression and product gross domestic product, the growth in Pakistan.
Economy. International Journal of Business correlation workers’ remittances
and Management, 8(24), 126. analysis
Munir, R., Mureed, S., Dar, A. A., & Gardezi, Augmented Natural log of Natural log of personal remittance, 1980- Pakistan a positive long run impact of personal
M. A. (2016). Impact of personal Dickey Fuller gross Natural log of foreign direct 2014 remittances, FDI and human capital on economic
remittances on economic growth of (ADF) and Philips- domestic investment, Natural log of human growth of Pakistan.
pakistan: A multivariate cointegration Peron (PP) unit product capital
analysis. Developing Country Studies, 6, 45- root tests
49.
Siddique, H. M. A., Majeed, M. T., & OLS, Granger GDP growth prem(personal remittances), 1980- Pakistan In short run, inflow of remittances increase
Shaheen, A. (2016). Impact of Remittances Causality, rate and edu(secondary education), gfcf(gross 2013 economic growth of Pakistan but do not reduce
and Education on Economic Growth and Cointegration and poverty rate fixed capital formation for poverty because of mismanagement of resources.
Poverty: Evidence from Pakistan. ECM investment), to (trade openness), Secondary education does not increased economic
and
International Journal of Economics and prem*edu (interactive term for growth but reducing poverty. In the long run, both
Empirical Research. remittances and education). remittances and education promote economic
growth but does not alleviate poverty.
Khan, M. K., Teng, J. Z., & Khan, M. I. The GDP (current the migrant remittance inflow 1976 Pakistan Remittances have a significant and positive effect
(2019). The Effect of Migrant Remittances autoregressive US$) percent of GDP, foreign direct -2016 on the economic growth of Pakistan in the short-
on Economic Growth: an ARDL distributed lag investment inflow percent of GDP, run and the long-run.
Approach. Engineering Economics, 30(4), (ARDL) model exchange rate (LCU per US$, period  
434-441. average), inflation, consumer Foreign direct investment, and the gross
prices (annual %), expenditure on domestic saving have a positive effect on the
household consumption (% of economic growth of Pakistan in the long-term,
GDP) and gross domestic savings while inflation and consumption have a negative
(% of GDP) effect on the economic growth of Pakistan in the
long-term. The positive effect of remittances on
economic growth is recognized through financial
sector development and the education of the
migrant’s families
 Gross Domestic Product

GDP per capita

GDP growth

GDP per capita growth

Independent Variables
Real GDP per capita growth

Real GDP growth

Log of real GDP

Log of real GDP growth

Log of real GDP per capita

the growth of the real per capita GDP
• ratio of remittances to GDP (REM/GDP
• liquid liabilities of the financial system
(M2/GDP)
• the sum of demand, time, saving and foreign
currency deposits to GDP (DEP/GDP)
• claims on the private sector divided by GDP
(LOAN/GDP)
• credit provided by the banking sector to GDP
(CREDIT/GDP)
growth of real GDP per capita
• remittances as a percentage of its GDP,
• Domestic investment,
• Trade,
• Government consumption expenditure,
• FDI,
• M2,
• Domestic Credit
the log of real GDP per capita
• log of investment to GDP ratio,
• and the log of worker remittances to
GDP
the log of real GDP per capita
• logarithm of the Remittances/GDP ratio,
• log of worker remittances to GDP ratio,
• log of gross capital formation to GDP
ratio,
• log of net private capital flows to GDP
ratio,
Growth rate of GDP per capita
• gross fixed capital formation
(investment) per capita in logs,
• remittances as a percentage of
GDP for country,
• the indicator of the degree of
financial market development
for country,
Growth rate of real GDP per
capita
• amount of remittances received from
abroad (normalized by GDP);
• a measure of volatility of remittances;
a set of financial development
indicators,
• and an interaction variable.
•,
Current GDP in $
• Remittance as % of GDP,
• Foreign direct investment % of GDP
• Exchange rate (per US$, average),
• Inflation,
• Consumer prices (annual %),
• Expenditure on household
consumption (% of GDP)
• Gross domestic savings (% of GDP)
 Direct
Economic
Investment Foreign aid Remittances
Growth
(FDI),