DO FOREIGN REMITTANCES LEAD TO INCLUSIVE GROWTH IN PAKISTAN?

Abstract

Foreign remittances are increasing over time and becoming the main source of earning Foreign Exchange reserves, especially for the developing countries like Pakistan. So, this study explores the impact of Foreign Remittances (FR) on inclusive growth using the pooled data estimated from micro-level data over the period 1998/99–to 2018/19 in Pakistan. For this purpose, the study employs panel data techniques. The results reveal that foreign remittances have statistically significant positive effects on inclusive growth. These results are robust to the inclusion of per capita income, household size, and dependency ratio. There is also a statistically significant positive association between inclusive growth and per capita income. Further, the regional level analysis reveals that these findings are valid in the regions of urban and rural. The policy recommendation is that Government should formulate policies that maximize the inflow of foreign remittance and economic growth.