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Role of Workers Remittances in Export Performance of Nepal: Gravity Modelling Approach

Author

Listed:
  • Ramesh Chandra Paudel

    (Central Department of Economics, Tribhuvan University, Kirtipur, Kathmandu, Nepal)

  • Tara Prasad Bhusal

    (Central Department of Economics, Tribhuvan University, Kirtipur, Kathmandu, Nepal)

Abstract

Role of workers’ remittance seems to be an imperative part of Nepalese economy for about two decades. The remittances inflow has supported to maintain the foreign reserves at the national level and consumption in household level. This paper investigates the role of remittances in export performance of Nepal employing the gravity modelling approach using annual data for the period of 26 years, from year 1993 to 2018. First, we document the scenario of remittances and export nexus, then conduct an econometric estimation for the exports flows from Nepal to its trading partners. The major finding indicates that the remittances have a statistically significant negative impact on export performance, which is largely impacted by the size of the trading partner’s economy as indicated by the estimation’s results. The study suggests for an urgent attention from policy makers to make the remittance in favor of exports by developing the export strategies. In this regard, a special focus on exporting to the rich economies may be a good way to boost the export performance of Nepal.

Suggested Citation

  • Ramesh Chandra Paudel & Tara Prasad Bhusal, 2021. "Role of Workers Remittances in Export Performance of Nepal: Gravity Modelling Approach," NRB Economic Review, Nepal Rastra Bank, Economic Research Department, vol. 33(1-2), pages 1-13, October.
    • Handle: RePEc:nrb:journl:v:33:y:2021:i:1:p:1
    DOI: https://doi.org/10.3126/nrber.v33i1-2.47987
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    References listed on IDEAS

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    1. Ramesh Chandra Paudel & Kankesu Jayanthakumaran, 2009. "Financial Liberalization and Performance in Sri Lanka," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 10(1), pages 127-156, January.
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    3. Ramesh C. Paudel, 2019. "Exports Performance of Nepal: What Can Be Done?," Applied Economics and Finance, Redfame publishing, vol. 6(5), pages 92-103, September.
    4. Chandan Sapkota, 2013. "Remittances in Nepal: Boon or Bane?," Journal of Development Studies, Taylor & Francis Journals, vol. 49(10), pages 1316-1331, October.
    5. Mamta B. Chowdhury & Fazle Rabbi, 2014. "Workers' remittances and Dutch Disease in Bangladesh," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 23(4), pages 455-475, June.
    6. Muhammad Asif Shamim & Dr.Iqbal Ahmed Panhwar & Syed Muhammad Ahsan Rizvi & Ehsan Ahmed Shaikh, 2015. "Impact Of Remittances On Export Performance : Time Series Evidence From Pakistan," IBT Journal of Business Studies (JBS), Ilma University, Faculty of Management Science, vol. 11(2), pages 11-10.
    7. Magda Kandil & Ida A. Mirzaie, 2008. "The Impact Of Capital and Remittance Flows on Economic Performance in MENA Countries," Working Papers 440, Economic Research Forum, revised 09 Jan 2008.
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    More about this item

    Keywords

    Export performance; remittances; gravity modelling approach;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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