Received: 19.08.2021; Revised: 28.09.2021, Accepted: 21.10.2021, Published Online: 03.11.2021

Hasnain Abbas Naqvi

Assistant Professor of Economics, University of Hafr Al Batin, Saudi Arabia

Email: hnaqvi@uhb.edu.sa

Muhammad Azhar Khan

Assistant Professor of Finance, University of Hafr Al Batin, Saudi Arabia

Email: mazhark@uhb.edu.sa

Muhammad Mohsin Hakeem

Associate Professor at NUCB Business School, Nagoya, Japan

Email: hakeem_mm@gsm.nucba.ac.jp

Ghulam Moeen ud Din

Associate Professor of Economics, Punjab College of Commerce, Blue Area, Islamabad, Pakistan. Email: prof.moeenuddin.eco@gmail.com

Nadeem Iqbal

Associate Professor, Air University, E9, Islamabad, Pakistan

Email: drnadeemiqbal1@gmail.com

Aziz Javed

Assistant Professor, Institute of Business Administration, Gomal University, DIKhan, KP, Pakistan. Email: azizjaved73@gmail.com


This paper reviews the literature to assess the effects of international remittances on development in emerging economies. In spite of continuous increase in the volume of remittance to the developing countries, almost negligible attention has been given to measure the effect of remittance on over all welfare of households and macro-economic effects of the recipient countries. The review suggests that there are several motivations to remit and it does not seem that one specific motivation has been consistently selected over the others. The literature also suggests that remittances have the potential to impact a large number of variables related to the recipient country and household. Despite different methodologies used, the broad consensus in the literature is that migrant remittances have a positive effect on economic development in emerging economies and on household welfare.  The paper then constructs a computable general equilibrium model for Pakistan, a typified-emerging economy, to examine the impact of remittances on household welfare and various macroeconomic indicators including GDP, investment, government and private consumption, trade, and taxes. Simulation results confirm the Pareto improving impact of remittances and increasing the various macroeconomic aggregates.

Keywords: Remittances; developing countries; household welfare; GDP; investment; CGE model