Economics at your fingertips  

The Impact of Remittances on Economic Growth in Nepal

Dambar Uprety
Additional contact information
Dambar Uprety: University of North Carolina, United States

Journal of Development Innovations, 2017, vol. 1, issue 1, 114-134

Abstract: This paper examines the impact of remittances on economic growth in Nepal by using Johansen cointegration and error correction methods. Using annual data of remittances, GDP per capita, consumption and investment for the period of 1976–2013, this study finds the evidence of cointegrating relationship between these variables and that an increase in remittances deteriorates GDP per capita growth in Nepal. The main channel through which remittances influence economic growth is through consumption and investment. There is no evidence that remittances are used for investment; however, they have positive and statistical significant causality to consumption. Domestic production contracts with an increase in remittances. This is because of the exodus of farm workers with the rise in emigration due to Maoist’s insurgency, political instability and unemployment. Besides, demand shifts from traditional Nepali products to differentiated manufactured products with an increase in remittance incomes. The increased demand is met by imports from Indian markets. There is no evidence of association of remittances and investment; however, they are positively associated with consumption. So, an increase in inflows of remittances decreases agro-product, increases consumption and does not change investment leading to deteriorate GDP per capita. Therefore, remittances are curse for economic growth of Nepal.

Keywords: Remittances; Cointegration; Error Correction (search for similar items in EconPapers)
JEL-codes: F24 O11 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link) Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

Journal of Development Innovations is currently edited by Bamadev Paudel

More articles in Journal of Development Innovations from KarmaQuest Internatioinal KarmaQuest International 5640 Rosaline Rd Burlington, ON L7L6T4.
Bibliographic data for series maintained by Bamadev Paudel ().

Page updated 2019-05-10
Handle: RePEc:kqi:journl:2017-1-1-6