DO WORKERS’ REMITTANCES PROMOTE ECONOMIC GROWTH? A CASE STUDY OF PAKISTAN
This study investigates the role of workers’ remittances in promoting economic growth in Pakistan, using data from 1976-2017. Remittances are an important source of Sharia-compliant (mostly) FX inflows, which may contribute to the economic development of many Islamic and non-Islamic economies. Nonet...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Bank Indonesia
2020-09-01
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| Series: | Journal of Islamic Monetary Economics and Finance |
| Online Access: | https://jimf-bi.org/index.php/JIMF/article/view/1187 |
| Summary: | This study investigates the role of workers’ remittances in promoting economic
growth in Pakistan, using data from 1976-2017. Remittances are an important source
of Sharia-compliant (mostly) FX inflows, which may contribute to the economic
development of many Islamic and non-Islamic economies. Nonetheless, they are
more relevant to Islamic economies, as they could potentially reduce the
requirements of interest-based FX financing from donor agencies and/or from global
capital markets. The impact of workers’ remittances on the economic growth of
Islamic developing economies remains a little explored area. Our research, which
employs a case study of Pakistan, is first in this direction. We used the GMM
estimation procedure to obtain efficient estimates in the presence of endogeneity and
simultaneity bias. Our estimates show that an increase in remittance inflows
positively affects the economic growth of Pakistan. The increase in per capita GDP
could be primarily due to an increase in the consumption of low-income recipients. It
is likely that this consumption demand promotes investment activity; however, the
study could not establish the impact of remittances on such activity. |
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| ISSN: | 2460-6146 2460-6618 |