Remittances as Development Strategy: Stepping Stones or Slippery Slope?

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.