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The Macroeconomic Determinants of Remittances in Pakistan

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  • Khalid Mustafa
  • Syed Rashid Ali

Abstract

This study attempts to explore the relationship between remittances and the macroeconomic variables of Pakistan using gravity model for the period 2002–2013. The bilateral remittances from twenty-three major source countries were selected, which covered 90 percent of total remittances. The key findings of this study reveal that the economic performance of home countries has a positive and significant impact on remittances as revealed in migrants’ investment behavior. Moreover, the flow of remittances to Pakistan responds mainly due to the macroeconomic variables of remittance-receiving countries instead of the remittance-sending countries. Consequently, remittance receipts have become an important factor in promoting the economic growth of Pakistan. It is thus suggested that Pakistan should diversify migration destinations to stabilize remittance flows, promote the transfer of skilled migrants, improve the remittance transfer system, and use advanced technology to decrease the cost of remittance.

Suggested Citation

  • Khalid Mustafa & Syed Rashid Ali, 2018. "The Macroeconomic Determinants of Remittances in Pakistan," International Journal of Business Management and Finance Research, Academia Publishing Group, vol. 1(1), pages 1-8.
    • Handle: RePEc:ajo:ijbmfr:v:1:y:2018:i:1:p:1-8:id:25
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    5. Siegfried, Nikolaus & Schiopu, Ioana, 2006. "Determinants of workers' remittances: evidence from the European Neighbouring Region," Working Paper Series 688, European Central Bank.
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