Migrant Remittances Determinants and Effects

Migrant Remittances and its Determinants and Effects on Pakistan


Migrant remittances are recognised as an important source of foreign capital especially to developing countries such as Pakistan. Remittance inflows to Pakistan as a ratio of the country’s GDP has generally grown from 2000 to 2021. So far, studies have found different and conflicting results with regard to the determinants and effects of migrant remittances. With only few such studies having been conducted in Pakistan, the present study aimed to determine the determinants of remittances to Pakistan and the influence of remittances on the GDP growth and poverty rate in Pakistan. Data relating to 20 countries that have consistently been the highest sources of remittances to Pakistan for five specific years (2014, 2015, 2017, 2018, and 2021). and time series data relating to Pakistan from 2000 to 2021 were drawn from World Bank Open Data database and the KNOMAD database. Data was analysed statistically to determine correlation coefficients and to develop gravity models.  … The study recommended that Pakistan puts in place policies and measures to make remittance transactions faster and more affordable as a way of encouraging remittance transfers and consequently lowering the poverty rate in the country.  The study also recommended that Pakistan encourage its citizens to migrate to countries with higher GDP rather than those with lower GDP as a measure towards improving remittances. Key word: Migrant remittances determinants and effects

1.0 Introduction

1.1 Background

Migrant Remittances Determinants and EffectsA key element that motivates migration to foreign countries is the prospect of remitting (Carling, 2008). Today, migrant remittances are recognised as an important source of foreign capital for several nations (Meyer & Shera, 2017). Migrant remittances are particularly important for developing countries if remittance statistics from the World Bank and the International Monetary Fund (IMF) are anything to go by. Remittances are the sum of migrant transfers in the form of cash of goods from the foreign country in which they live or work to their country of origin to support their families (Ratha, 2013). According to the IMF, while estimating the exact amount of remittance flows is not easy as many transfers are done through unofficial channels, globally, migrant remittances was in excess of $483 billion in 2011 (Ratha, 2013). Out of this amount, $351 billion flowed to developing countries. The IMF estimates that remittances to low-income countries account for as much as 6.0% of the respective countries’ gross domestic product (GDP). In comparison, remittance flows to middle income countries account for roughly 2.0% of their GDP (Ratha, 2013). The World Bank (2023a) estimates that remittances to developing countries from across the world totalled roughly 630 billion United States Dollars (USD) in 2022. This amount, according to the World Bank (2023a), is over three times the total amount that goes to countries across the world as development aid. The World Bank (2023a) further notes that remittances are on their way to overtaking foreign direct investment (FDI) to low and middle income countries.

Statistics from the Migration Policy Institute (MPI) (2011) show that from the year 1999, formal remittance inflows to Pakistan have consistently been on the rise. While in 2000 the remittance inflows to the country was estimated at $1.075, billion, in 2010, the statistic had risen to $9.683 billion. Consistent with these statistics, records from the World Bank (2023a) show that personal remittances to Pakistan as a percentage of GDP has generally been growing from 2000 to 2022. While in 2000, personal remittances to the country represented 1.3% of the country’s GDP, in 2001, it accounted for continue reading ...


Open chat
Need help?
Hello, can we help you?