Exploring the Dynamics of Remittances and their Socioeconomic Impacts on Pakistan

Aim of the Study: The prime objective of this study is to examine the association between remittances and the socio-economic development of Pakistan spanning the period from 1991 to 2022. Methodology: The examination applies a robust estimation strategy, including the unit root test of Augmented Dickey-Fuller, the Autoregressive Distributed Lag bound testing approach, and the Error Correction Model. To ensure the validity and reliability of the estimated results, diagnostic tests, including the White test for heteroscedasticity and the LM test for autocorrelation, are applied. Findings: The findings of the study unveil compelling evidence of the statistically significant and positive impact of remittances on socio-economic development in Pakistan. Furthermore, foreign investments emerge as a significant contributor to development while inflation exhibits a significant albeit negative association with socioeconomic progress. On the contrary, foreign aid is found to have a negative but insignificant impact on the socio-economic development of Pakistan. Conclusion: In response to the findings, this study recommends optimizing foreign investment policies to harness their positive impact. Simultaneously, a careful reevaluation of the role of foreign aid in the socio-economic development paradigm is directed.