Assessment of remittance and its impacts on economic growth in Nepal

Abstract

This study delves into the issues related to remittance and its role in the Nepalese economy. Remittance is found to have positive association with human capital formation and financial development while negative impact on productivity and international trade in Nepal. Nepal is one of the leading nations of sending workers abroad received approximately US$ 6.29 billion of remittances, almost 25 per cent of its GDP in 2017/18. The investment of remitted amount in unproductive sectors like consumption expenses rather than in productive sectors has resulted in an increment in overall import. The remitted income has occupied a major position of financing which exceeds all the foreign aid and investment in recent years. Thus, the Government of Nepal should make an appropriate policy to maximize the benefit of remittance and retain the manpower to the sustainable economic growth and development sector of the country.