Abstract:
The international remittance is one of the important sources of foreign exchange
earnings in the country. Recently, Pakistan received over $4 billion as foreign
remittances in 2006. The flows of funds through foreign remittances served as a
cushion for balance of payment and foreign reserves. The economic
determinants of international workers’ remittances and migration in Pakistan
were investigated in this research study. The time series data were used to
identify the economic determinants of the international remittances and migration
in Pakistan for the year of 1973 through 2005. The stationary properties of each
time series were investigated and found integrated of order one. The variables of
remittances and migration models were established as co-integrated.
The real remittances in Pakistan were found positively related with real GDP, real
Growth rate and unemployment rate and were negatively related with real wage
rate, literacy rate and spread rate of banks in Pakistan. The migration from
Pakistan was found positively related with real remittances, inflation and
unemployment rate and was negatively related with real wage rate in the country.
Based on research results, it seems imperative to introduce financial innovations
and create friendly environment for migrant workers to invest in the country. The
widening gap of saving-investment can also be bridged through providing
incentives on the bank rate and saving schemes.
