Do personal remittances influence economic growth in South Asia? A panel analysis

Abstract This paper investigates the remittance and economic growth relationship using annual panel data for the period 1986–2019 on selected South Asian economies with trade openness (TOP) and foreign direct investment (FDI) inflow as control variables. The cross‐sectional dependency test, second‐generation panel unit root test, panel generalized least square (GLS), panel fully modified ordinary least squares (FMOLS), and Dumitrescu–Hurlin (D–H) panel causality tests are employed to accomplish the study. Both the GLS and FMOLS estimations ensure the positive impact of remittance on economic growth. The D–H causality test discloses unidirectional causality from remittances to economic growth. The findings suggest that South Asian economies may strive to attract more remittances, through augmenting international migration, enabling migration‐friendly policy and regimes, creating training and support facilities at different levels for international migrants, diversifying exports, and being selective to FDI inflows, which will take care of economic growth in the region.