Foreign Remittances in Pakistan

Topics: Human migration, Foreign exchange market, Macroeconomics Pages: 37 (13517 words) Published: October 17, 2012
Table of Contents
Executive Summary:3
Modes of Transferring Remittances5
Impact of Remittances on an Economic Insecurity6
Economic cycle7
Natural Disasters7
Policy Implications8
Fluctuation In Remittances10
Detailed Analysis and Impact of Foreign Remittances12
Findings of Different Analyst on Foreign Remittances13
Skilled and Unskilled Labor15
Remittances and Migration in Pakistan17
Methods Transferring Remittances22
Welfare Programs of the Overseas Pakistanis Foundation23
Recommendations for Optimizing Migration24
Importance on Indian economy25
Historical Perspective on Migration and Remittances to Indian Economy28
India’s fiscal Development29
Trends in Remittances: The Quantum Jump in the Globalization Era31
Remittances as a source of external development finance35
Remittances and its significance with macroeconomic variables37
Remittances and Balance of trade (BOP)37
Remittances and Exchange Rate38
Some Regulatory aspect regarding Remittances39
Long-term Sustainability of Remittance at these High Levels40
India Diaspora Abroad & Government’s Special Treatment to Them41
India to see highest foreign remittances in 201142
Recent trends of different economies to hit as foreign remittances will dry up42 COMPARTIVE ANALYSIS45
Trends of remittances in Pakistan and India collectively45 Conclusion51

Executive Summary:
The main objective of this term paper is to help colleagues understand the term remittances and its impact on various macroeconomics and development aspects for the Pakistan and Indian economy and share the knowledge. There are different sources from which the whole data is collected, graphs and charts are shown to look at different trends in flow of remittances. For this, the data regarding remittances and some of the macroeconomic variables like GDP, PFCE, GDFC, savings, export, import and balance of trade deficit etc have been analyzed for the period 1971-2008. The study shows that remittances have been consistently increasing at very fast rate for the last 15 years which have significant implications on the above mentioned macroeconomic variables. Through this study, the importance of remittances as a source of external development finance has been discussed. At last, comparative analysis are given of both India and Pakistan economy. The opinion(s), view(s) and conclusion(s) expressed in the term paper are those of the authors and not of our group.

There are numerous factors, which contribute significantly to the improvement of a society’s standard of living. However, some of these factors have a special importance in a particular community. One such factor is the foreign remittances inflow to the Third World economies. Remittances are important because they contribute conspicuously in the economic uplift of the households and overall economy in these poor countries. They are not only important source of valuable foreign exchange for the Less Developing Countries in general and Pakistan in particular, but are also a source of poverty reduction and enhancement of human capital. In Pakistan, research on international migration has primarily focused on investigating the magnitude and demographic profiles of the out-migrants. More recently, however, the implications of migrant manpower at the macro-level; such as employment of labor force, GNP growth, private savings, private investment, consumption, and balance of payments have also been investigated. Moreover, the uses of remittances by migrants’ households and by migrants themselves, on return, has been the subject of much empirical research to search not only for incentives and policy prescriptions but also to channeled these resources into productive uses. Foreign remittance can be defined as ‘the purchase and sale of freely...
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