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Article
Trade, Aid, Remittances and Financial Development: The Case of Pakistan
Journal of Social and Policy Sciences (2011)
  • Ronald Kumar
Abstract
In this paper, we explore the role of trade openness, overseas development aid (ODA), remittance inflows and financial development vis-à-vis income in Pakistan for the periods 1980-2010 using the bounds procedure within the augmented Solow-model approach. In the long-run, trade openness, ODA, and remittances have a significant positive effect on the income level, while financial development is not statistically significant. In the short run, ODA has contributed positively towards income growth while remittances, trade openness and financial development have lagged negative effects, thus underscoring somewhat different behaviour of aid and remittance inflows. Accordingly, for development policy discourse, we emphasise the need to: formalise and easing remittance transfers by minimizing transaction costs; promote financial and mobile-led technology inclusion; further strengthen and cultivate public-private partnership in developing necessary infrastructures and promoting investment; encourage trade openness whilst exploiting areas of comparative advantages with greater outward looking trade strategy; focus on regional integration and co-operation in view of promoting trade in services (labour mobility); fortify donor relations to ensure consistent flow of aid whilst effectively managing and deploying aid in productive infrastructure projects to generate employment; and build the necessary institutional conduit for overall economic development.
Keywords
  • remittances,
  • trade openness,
  • economic growth,
  • aid,
  • financial development,
  • ARDL Bounds test,
  • Pakistan
Publication Date
December, 2011
Citation Information
Ronald Kumar. "Trade, Aid, Remittances and Financial Development: The Case of Pakistan" Journal of Social and Policy Sciences Vol. 2 Iss. 1 (2011)
Available at: http://works.bepress.com/ronald_ravinesh_kumar/19/