IMPACT OF REMITTANCE ON ECONOMIC GROWTH OF NEPAL

Abstract

This study investigates the role of remittances in Nepal's economy, addressing their significant contribution to GDP alongside challenges and varying impacts on economic growth. The study aims to analyze the relationships between remittance inflows, capital formation, exports, and real GDP to provide insights into their collective impact on Nepal's economic development. The research employs both descriptive and causal-comparative research designs. The population encompasses global economic growth influenced by remittances, focusing specifically on Nepal from FY 2000/01 to 2022/23. Data sources include the Economic Survey Report of Nepal, elected through convenience sampling to ensure relevance and reliability. Statistical tools utilized for data analysis includes descriptive statistics, correlation analysis, and multivariate regression models. The research framework examines the impact of remittance inflows, capital formation, and exports as independent variables on Nepal's real GDP as the dependent variable. Findings indicate that remittance inflows and capital formation significantly and positively influence Nepal's GDP, highlighting their pivotal roles in economic growth. In contrast, exports exhibit a weaker impact on GDP. These results underscore the importance of policies that promote remittance inflows and investment in physical capital to sustain and accelerate economic development in Nepal. Implications suggest the need for Nepal to prioritize policies enhancing remittance inflows, promoting capital formation, and strengthening export competitiveness.