Nexus among Foreign Remittances and Economic Growth Indicators in South Asian Countries: An Empirical Analysis

Purpose This paper aims to analyse that how the remittance effect the growth indicators like Employment;Export and Inflation in South Asian Region Countries(SAARC). Design/Methodology/Approach This paper examined the impact of remittances and economic indicators on the economic growth in SAARC region using panel data set for the period of 12/1994 to 12/2017. Our panel models are estimated using fixed effect model (FEM) or random effect model (REM) using Hausman (1978) specification test. Findings Remittances showed positive and statistically significant impact on economic growth of SAARC region. Though the coefficient is relatively low which may be due to the informal channels of transferring remittances. Export and employment also showed positive and significant impact on GDP. But;inflation have no significant impact on GDP in our sample. Research Implications Remittances have positive impact on economic growth and employment. This may encourage the overseas working force to send the remittances through formal way to predict the true magnitude of remittances. The government need to reduce the cost of transfer on remittances to discourage informal channels of remittance transfer.