Contribution of Workers’ Remittance on National Economy

Abstract

The research was to analyze the trend of the worker’s remittance and its contribution on macroeconomic variables of Nepal. Secondary data were used for the study collected from the Research Department of Nepal Rastra Bank and Economic Survey of the Ministry of Finance for 28 years from 1990/91 – 2018/19 . Data were analyzed by using appropriate statistical tools and the descriptive and analytical research design was used. The simple regression models were used to test significance of worker’s remittance and its macroeconomic variables GDP, Consumption, Investment and Saving. The finding from this study indicates that there was positive relationship between worker’s remittance and GDP, consumption and saving but negative relationship between investments. The research also proved that worker’s remittance has a significant impact on the growth of Consumption and saving but insignificant impact on GDP and investment of the country. The research also found that the worker’s remittance income of Nepal has been increasing rapidly during two decades especially from 2000/01. The increasing trend of worker’s remittance affects the balance of payment (BOP) of country. The study recommend that Nepal needs to further formulate policies that a) send more worker’s remittances through official rather than unofficial channel. b) Increase the levels of worker’s remittance by encouraging migrants to hold their saving in financial assets in the country rather than holding them abroad and c) encourage migrants to become investor in productive assets in the country.

Keywords: Workers’ Remittance, GDP, Consumption, Saving and Investment.