Premium
What Drives Remittances from Saudi Arabia to Pakistan? Home Versus Host Country's Economic Conditions
Author(s) -
Umair Muhammad,
Waheed Abdul
Publication year - 2017
Publication title -
international migration
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.681
H-Index - 64
eISSN - 1468-2435
pISSN - 0020-7985
DOI - 10.1111/imig.12344
Subject(s) - shock (circulatory) , economics , developing country , short run , development economics , demographic economics , international economics , monetary economics , economic growth , medicine
Saudi Arabia is the largest source country of remittances to Pakistan since the 1970s. This study examined the impact of home versus host country’s economic conditions on remittances from Saudi Arabia to Pakistan. The ARDL bounds testing is used on the annual data set from 1973 to 2014. The study concluded that economic growth in the host country and economic crises in the home country increase remittances. 1% decrease in domestic output increases remittances by 2.79% while 1% increase in sending country’s output growth increases remittances by 5.2% in the long‐run. The bilateral trade has a positive while financial deepening has a negative impact on inflows. The impact of oil shock is insignificant. We suggest cautious foreign policy as remittances depend significantly on the host country’s economic condition that is not directly under the control of the home country but remittances can be sustained with bilateral trade.