REMITTANCES AS DEVELOPMENT STRATEGY: STEPPING STONES OR SLIPPERY SLOPE?

Authors

  • Mazhar Y. Mughal

    Corresponding author
    • Centre d'Analyse Théorique et de Traitement des données économiques, Université de Pau et des Pays de l'Adour, France
    Search for more papers by this author

Correspondence to: Mazhar Y. Mughal, Centre d'Analyse Théorique et de Traitement des données économiques, Université de Pau et des Pays de l'Adour, France.

E-mail: mayher.yasinmughal@univ-pau.fr

Abstract

Pakistan is one of the world's top 10 remittance receiving countries. This paper examines the potential for the use of remittances as a development strategy. Remittances to Pakistan do seem to promote growth and reduce economic inequality and poverty. However, they also cause the Dutch disease, are inflationary, and tend to be pro-cyclical. The paper describes the challenges in employing remittances as the cornerstone of the country's development model, particularly the loss in competitiveness, volatility and the development of a dependency mindset that high remittance inflows can foster. In the end, some steps are suggested that are needed to be taken in this regard. Copyright © 2012 John Wiley & Sons, Ltd.

Ancillary