Impact of Remittances on Economic Growth in Nepal

Authors

  • Prasiddha Shakya Colorado State University (CSU), Fort Collins, CO 80523, United States
  • George P. Gonpu Anisfield School of Business, Ramapo College of New Jersey, United States

DOI:

https://doi.org/10.3126/nppr.v1i1.43419

Keywords:

economic growth, remittances, human capital, export, money supply, governance

Abstract

Remittances have become a significant source of foreign exchange as well as funds for small business start-ups and expansion and consumption spending of recipient households in developing countries. Accordingly, it is expected that remittances would contribute to economic development. Notwithstanding, there is yet no consensus on the impact of remittances on economic growth. This paper focuses on the impact of remittances on economic growth in Nepal, a small Asian country where remittances were 31% of GDP in 2016. Using data from the World Bank and other sources, the study found that remittances does not significantly impact economic growth. The study also found that democratic form of governance as measured by a dummy variable had a significant and positive impact on economic growth alongside capital formation and exports. Based on additional tests using cointegration and regression analysis, the paper found that there is a possibility that remittances negatively impact economic growth in the long run.

Author Biographies

Prasiddha Shakya, Colorado State University (CSU), Fort Collins, CO 80523, United States

Prasiddha Shakya is a current PhD student at Colorado State University (CSU) where he also works as a Graduate Teaching and Research Assistant. He is a Research Assistant at the Poverty Action Center (PAC-REDI) interested in developmental economics, environmental economics and economics of health and education.

George P. Gonpu, Anisfield School of Business, Ramapo College of New Jersey, United States

George P. Gonpu is currently an assistant professor of economics at the Anisfield School of Business, Ramapo College of New Jersey where he teaches Development Economics, Macroeconomics, and Management Statistics. He has taught courses in Decision Sciences, Econometrics, International Finance, Macroeconomics, Microeconomics and Money and Banking at several U.S. universities including, Cleveland State University, Grand Valley State University, Rutgers University and the State University of New York at the College of Staten Island. In addition, Dr. Gonpu has worked in the government of Liberia as a Deputy Minister of Finance for Budget and in industry as a consultant at AT & T. He holds a Ph.D. in Economics from the University of Illinois at Chicago, MA in Economics at Northwestern University, B.Sc. (summa Cum Laude) in Economics at the University of Liberia. His research interests are in applied international macroeconomics, economics of development, and fiscal, monetary and public policy.

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Additional Files

Published

2021-09-18

How to Cite

Shakya, P., & Gonpu, G. P. (2021). Impact of Remittances on Economic Growth in Nepal. Nepal Public Policy Review, 1, 31–47. https://doi.org/10.3126/nppr.v1i1.43419

Issue

Section

Regular Articles