An Analysis of the Nexus between Remittances and Economic Growth: Evidence from a Panel Analysis of 4 South Asian Countries

Purpose - This study examines the impact of remittance inflows on economic growth in four South Asian countries—Bangladesh, India, Pakistan, and Nepal—over the period 1996 to 2023. Design/methodology/approach - Employing panel data econometric techniques, including pooled OLS, fixed effects (FE), and random effects (RE) models, the study estimates the relationship between remittance inflows and GDP per capita growth. Findings - Results show that a 1% increase in remittances leads to a 0.36% rise in GDP per capita, indicating a positive and statistically significant effect on economic growth. Granger causality tests reveal a bidirectional relationship between remittances and GDP per capita. The findings underscore the importance of remittance utilization, legislative frameworks, and economic conditions in shaping growth outcomes. Research implications or Originality - The study concludes with policy recommendations aimed at maximizing remittance-driven development benefits, including strengthening formal transfer mechanisms, enhancing regulatory frameworks, and promoting productive investment of remittance income.