Workers’ Remittances and Domestic Investment in South Asia: A Comparative Econometric Inquiry

Abstract

This study explores the effect of workers’ remittances on domestic investment in four selected South Asian countries: Bangladesh, India, Pakistan, and Sri Lanka, using contemporary time series estimation techniques from 1980 to 2017. The estimated results of the ARDL bounds approach to cointegration analysis have revealed that among selected South Asian countries, Pakistan has witnessed a significant negative effect in the long run. Similarly, the findings of other forms of capital flows also revealed varying effects across the countries considered. This study urges the transformation of aggregate economic behaviour from consumption to the production side, by adopting policies that would encourage domestic saving and investment activities. In this regard, among others, reduction in the interest rate and the interest rate spread would be beneficial. It urges the identification of factors that conditions varying effect of workers’ remittances and other capital inflows to mitigate negative effects into positive.

Fiscal deficit and trade deficit nexus in Pakistan: An econometric inquiry

“…The increase in per capita gross domestic product shows a significant negative effect in the long run, which is consistent with the Keynesian views that are an increased income, inducing demand for imported goods and distorting the trade balance in the long run. The findings are consistent with the argument established by Shujaat Abbas (2019), that is, increasing in domestic income is inducing import demand of consumer durables and non-durables in Pakistan. The increase in the domestic price level, consistent with the monetarist approach, shows a significant negative effect of higher intensity on Pakistan's trade deficit in both the short run and long run.…”

Impact of oil prices on remittances to Pakistan from GCC countries: evidence from panel asymmetric analysis

“…Pakistan is a major labor-exporting developing country, which is facing an acute shortage of foreign capital due to highly sluggish growth performance, large fiscal deficit, and exploding current account deficit, (Abbas 2019). The majority of emigrants are working on oil-rich countries in the Persian Gulf.…”

External Debt Distress in South Asia: Evidence from Panel Data Analysis

“…One of the major problems with selected South Asian countries is the inefficient utilization of scarce capital resources in relative unproductive/less-productive activities, (Abbas, 2019; Abbas & Waheed, 2019). Among unproductive activities, spending on imported military equipment is diverting considerably large capital away from productive investment activities.…”

“…Our finding is consistent with Abbas and Wizarat (2018) and Azam and Feng (2017). This study along with the Abbas and Waheed (2019) urged selected South Asian countries to resolve their bilateral disputes and utilize scarce capital resources in more productive activities. Whereas our findings on foreign exchange reserves are consistent with Fukuda and Kon (2010) who found a positive, but insignificant effect on external debt distress in selected South Asian countries.…”