Impact of Employment Rate, Exchange Rate and Foreign Direct Investment on Worker’s Remittances and Economic Growth

Abstract

Due to increasing saving-investment gaps and binding constraints on aid/loans, surging unemployment rates and foreign exchange fluctuations can make people in developing countries (like Pakistan) particularly more susceptible to economic miseries. Considering the above, we examine the role of remittances, employment rates and exchange rate in either alleviating or increasing economic growth using Pakistan’s data for over the 1972 through 2019 period. We correct for data biases using employment rate, exchange rate and foreign direct investment on remittance and economic growth in Pakistan. We conclude that Remittances does not appear to share a long-run co-integration with Exchange rate, foreign direct investment and employment rate. However, exchange rate does indeed share a long-run co-integration with foreign direct investment and employment.