Impact of Remittances from Saudi Arabia on the Socio-Economic Development of Pakistan

Abstract

The mobilization of resources and financial prosperity has surpassed various other concerns. Consequently, many Pakistanis have migrated to other countries for better-paying employment prospects. As a result, they return monies to their country. Since the late 1960s, Pakistan's primary source of remittances has been Saudi Arabia. This study's primary purpose is to quantify the effect of Saudi Arabia-to-Pakistan remittances on socio-economic development. For empirical estimation, 1990-2020 time series data are collected. Remittances favorably influence socio-economic growth, as shown by applying modern econometric estimation approaches such as (Fully Modified Ordinary Least Square) FMOLS, Dynamic Least Square (DOLS), and Robust Least Square. The primary contributor to Pakistan's economic growth and human development is Saudi Arabian remittances. There is bidirectional causality between economic growth and remittances in Pakistan and unidirectional causality between human development and remittances. Based on its findings, the paper advises developing and implementing appropriate policies for minimizing transaction costs and facilitating the flow of remittances from migrants to Pakistan. If properly implemented, the findings can boost the nation's socio-economic development.