Study on the labour market and employment impact of overseas migration and remittances in KP province of Pakistan

Project Active since Firms and Trade

The Pakistan economy and a significant proportion of its population depends on the flows of remittances from overseas workers and the broader Pakistani diaspora. At over US$ 14 billion in official remittances expected in 2012/13—which is just over half the projected total export value of goods and services and corresponding imports of around US$ 40 billion—they provide critical support to a precarious current account situation. Remittances to households also have a favorable impact on poverty reduction and job creation. Also accounting for around 5.5 percent of GDP, remittances inject much needed additional aggregate demand into an economy that has been mired in stagflation over the last five years. Given the important role that remittances play, a major objective of policymaking is to ensure that remittances flow through official channels since this would maximise the development benefits to the economy. The main purpose of this study was to identify factors that would facilitate the transfer of remittances through official channels. To do so, Amjad et al have analysed the remittances market and its major players both outside andwithin Pakistan to identify factors that drive remittances to be sent through official or unofficial channels. The study also compares Pakistan’s remittances market with those in Bangladesh, the Philippines, and to some extent India, mainly to identify policy measures and new initiatives taken in these countries to attract remittances through formal channels. An important contribution of this study is its analysis of remittances within an overall framework of a remittances market that encompasses both formal and informal players. This helps us better understand its functioning dynamics and identify factors that might explain the growth of remittances as well as forces that influence its flows through official and unofficial channels.