The Nexus Between Remittances Inflow and Private Investment: Cross Country Analysis of South Asian Countries

Abstract

This study attempts to inspect the nexus between remittances inflow and private investment for Pakistan, India, Sri-lanka, Nepal and Bangladesh from 1990 to 2014. This study uses Private investment as dependent variable followed by remittances inflow, real interest rate, economic growth and remittances inflow interacting with business freedom as independent variables. Further, this study implies Panel Autoregressive Distributive Lags Model (PARDL) to find the long run and short run association between remittances influxes and private investment. The findings of this paper suggest the presence of positive association between remittances inflow and private investment. However, remittances inflow with low business freedom suggests negative relationship with private investment for Pakistan, Bangladesh, Nepal, Sri-lanka and India.