Does Greylisting Affect the Workers’ Remittances to their Home Country? A Case Study of Pakistan

Inward forward remittances are an important source of foreign reserves for Pakistan and they are also conducive in maintaining the current account deficit at a manageable level. In this article, the author has attempted to gauge the impact of FATF grey listing on the inward foreign remittances of Pakistani workers employed abroad. The time series data spanning from 2001-2022 has been used to estimate these effects using the ARDL time series estimation method and bounds testing technique for cointegration. It has been estimated that no statistically significant effect of greylisting on workers’ remittances exists either in the short or in the long run. This is in tandem with various studies that have found that FATF listing does not necessarily have a conclusive or negative effect on the economic variable(s). However, the estimates suggest that there exists a statistically significant relationship between the exchange rates and the workers’ migration stocks in the short and the long run. The result(s) of the study adds to the existing literature because to the author's knowledge, no prior work has been done regarding the impact of greylisting on the workers’ remittances sent to the home country and this effect has not been studied individually in the case of a developing country like Pakistan. Furthermore, the available literature suggests that in general, not much work has been done to estimate the impact of greylisting or blacklisting on the country’s economy; the results available in the existing literature are also mixed; where some studies report unconclusive impacts whereas other studies report a negative impact of greylisting on the economic aspects they analysed.