| Title : | Effect of remittance inflows on economic growth of Nepal | | Material Type: | printed text | | Authors: | Shritika Swar, Author | | Pagination: | 104p. | | Size: | GRP/Thesis | | Accompanying material: | 9/B | | Languages : | English | | Descriptors: | Remittances
| | Class number: | 332.450 | | Abstract: | In a general term, remittance is money transferred by migrant workers or remitters from host countries to their home countries to support their families. Remittance also refers to the concept of a monetary payment transferred by a customer to a business from one place to another (Mafruhah et al., 2012). Based on its size and impact on the world economic system, it is considered as one of the major sources of incomes.
Remittance inflows works as a facilitator for achieving sustained economic growth. Many developing countries like Nepal are becoming more progressively reliant on remittances as it has played an important role to uphold economic growth and development in these countries. Remittance allows workers to support their families and relatives during financial crisis and natural calamities (Orozco &Fedewa, 2006). Buch & Kuckulenz (2010) found that remittances are positively related to welfare enhancing effect, such as capital investment, consumption, education and health.
Inflow of remittances affects economic growth positively by reducing current account deficit, improving the balance of payment position and reducing dependence on external borrowing (Iqbal & Sattar, 2005). In the context of Nepal, Pradhan et al. (2008) found that remittance and economic growth are directly associated with each other. Moreover, Gaudel (2006) pointed out remittance as a major source of foreign currency to the developing nation and it has become a substantial component of making current account surplus in the balance of payments. Thus, the study further elaborated that remittance is typically helpful to meet specific needs of the respondents’ family members and thus tend to increase their standard of living.
The major purpose of this study is to analyze the remittance inflows and its effects on the economic growth. Specifically, it examines the effect of remittance inflows, consumption, import, gross capital formation and foreign direct investment on the economic growth of Nepal.
The results in the prior studies on foreign remittances and economic growth of a nation are mixed and unclear. Hence, this study has been conducted to get clear idea of the effects of remittance inflows on the economic growth in the context of Nepal. This study is based on secondary sources of data that are collected from1995/96 to 2014/15, leading to a total of 20 observations. The data are collected from the reports published by World Bank, different issues of Economic Survey published by Ministry of Finance and Quarterly Economic Bulletin published by Nepal Rastra Bank. The study has used GDP and per capita GDP as dependent variables and remittance inflows, consumption, gross capital formation, import and foreign direct investment as independent variables. Likewise, the study relies on descriptive and causal comparative research designs.
The study shows that the remittance inflows, consumption, import, gross capital formation and foreign direct investment have positive relationship with the gross domestic product. It indicates that increase in remittance inflows and foreign direct investment leads to increase in gross domestic product. Likewise, increase in consumption, import and gross capital formation leads to increase in gross domestic product. Similarly, the result shows that remittance inflows, consumption, import, gross capital formation and foreign direct investment have positive relationship with the per capita GDP. It indicates that increase in remittance inflows, consumption and import leads to increase in per capita GDP. Similarly, increase in gross capital formation and foreign direct investment leads to increase in per capita GDP. The regression results show that the beta coefficients for remittance inflows and foreign direct investment are positive with per capita GDP. Likewise, the beta coefficients for gross capital formation and foreign direct investment are positive with gross domestic product. The study concludes that remittance is the significant source of GDP and per capita GDP.
The recommendation put forward by this study is that in order to achieve higher and better economic growth, the country should increase the remittance inflows and use them more effectively in a productive sector. At the same time, foreign direct investment, gross capital information, import and consumption, should also be increased which will result into higher economic growth of the nation. The major limitation of this study is that this study has excluded some bank macroeconomic variables that might influence on performance evaluation of banks. The study remains enough ground for future researcher in the same topic. The future studies can be carried out by selecting other different macroeconomic variables to grab the wider view of effects of remittances.
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Effect of remittance inflows on economic growth of Nepal [printed text] / Shritika Swar, Author . - [s.d.] . - 104p. ; GRP/Thesis + 9/B. Languages : English | Descriptors: | Remittances
| | Class number: | 332.450 | | Abstract: | In a general term, remittance is money transferred by migrant workers or remitters from host countries to their home countries to support their families. Remittance also refers to the concept of a monetary payment transferred by a customer to a business from one place to another (Mafruhah et al., 2012). Based on its size and impact on the world economic system, it is considered as one of the major sources of incomes.
Remittance inflows works as a facilitator for achieving sustained economic growth. Many developing countries like Nepal are becoming more progressively reliant on remittances as it has played an important role to uphold economic growth and development in these countries. Remittance allows workers to support their families and relatives during financial crisis and natural calamities (Orozco &Fedewa, 2006). Buch & Kuckulenz (2010) found that remittances are positively related to welfare enhancing effect, such as capital investment, consumption, education and health.
Inflow of remittances affects economic growth positively by reducing current account deficit, improving the balance of payment position and reducing dependence on external borrowing (Iqbal & Sattar, 2005). In the context of Nepal, Pradhan et al. (2008) found that remittance and economic growth are directly associated with each other. Moreover, Gaudel (2006) pointed out remittance as a major source of foreign currency to the developing nation and it has become a substantial component of making current account surplus in the balance of payments. Thus, the study further elaborated that remittance is typically helpful to meet specific needs of the respondents’ family members and thus tend to increase their standard of living.
The major purpose of this study is to analyze the remittance inflows and its effects on the economic growth. Specifically, it examines the effect of remittance inflows, consumption, import, gross capital formation and foreign direct investment on the economic growth of Nepal.
The results in the prior studies on foreign remittances and economic growth of a nation are mixed and unclear. Hence, this study has been conducted to get clear idea of the effects of remittance inflows on the economic growth in the context of Nepal. This study is based on secondary sources of data that are collected from1995/96 to 2014/15, leading to a total of 20 observations. The data are collected from the reports published by World Bank, different issues of Economic Survey published by Ministry of Finance and Quarterly Economic Bulletin published by Nepal Rastra Bank. The study has used GDP and per capita GDP as dependent variables and remittance inflows, consumption, gross capital formation, import and foreign direct investment as independent variables. Likewise, the study relies on descriptive and causal comparative research designs.
The study shows that the remittance inflows, consumption, import, gross capital formation and foreign direct investment have positive relationship with the gross domestic product. It indicates that increase in remittance inflows and foreign direct investment leads to increase in gross domestic product. Likewise, increase in consumption, import and gross capital formation leads to increase in gross domestic product. Similarly, the result shows that remittance inflows, consumption, import, gross capital formation and foreign direct investment have positive relationship with the per capita GDP. It indicates that increase in remittance inflows, consumption and import leads to increase in per capita GDP. Similarly, increase in gross capital formation and foreign direct investment leads to increase in per capita GDP. The regression results show that the beta coefficients for remittance inflows and foreign direct investment are positive with per capita GDP. Likewise, the beta coefficients for gross capital formation and foreign direct investment are positive with gross domestic product. The study concludes that remittance is the significant source of GDP and per capita GDP.
The recommendation put forward by this study is that in order to achieve higher and better economic growth, the country should increase the remittance inflows and use them more effectively in a productive sector. At the same time, foreign direct investment, gross capital information, import and consumption, should also be increased which will result into higher economic growth of the nation. The major limitation of this study is that this study has excluded some bank macroeconomic variables that might influence on performance evaluation of banks. The study remains enough ground for future researcher in the same topic. The future studies can be carried out by selecting other different macroeconomic variables to grab the wider view of effects of remittances.
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