IDEAS home Printed from https://ideas.repec.org/a/idn/jimfjn/v6y2020i4ap713-728.html
   My bibliography  Save this article

Do Workers’ Remittances Promote Economic Growth? A Case Study Of Pakistan

Author

Listed:
  • Sarmad Ellahi

    (State Bank of Pakistan, Pakistan)

  • Muhammad Omer

    (State Bank of Pakistan, Pakistan)

Abstract

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.

Suggested Citation

  • Sarmad Ellahi & Muhammad Omer, 2020. "Do Workers’ Remittances Promote Economic Growth? A Case Study Of Pakistan," Journal of Islamic Monetary Economics and Finance, Bank Indonesia, vol. 6(4), pages 713-728, November.
    • Handle: RePEc:idn:jimfjn:v:6:y:2020:i:4a:p:713-728
    DOI: https://doi.org/10.21098/jimf.v6i4.1187
    as

    Download full text from publisher

    File URL: https://jimf-bi.org/index.php/JIMF/article/view/1187/825
    Download Restriction: no
    File URL: https://libkey.io/https://doi.org/10.21098/jimf.v6i4.1187?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    Workers’ remittances; GMM; Economic growth;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:idn:jimfjn:v:6:y:2020:i:4a:p:713-728. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Lutzardo Tobing or Jimmy Kathon (email available below). General contact details of provider: https://edirc.repec.org/data/bigovid.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.