The Impact of Remittances and Official Development Assistance on Human Capital: An Evidence from Pakistan

Abstract

Emerging nations have taken benefits from foreign capital inflows for increasing the amount of human capital, ultimately contributing to both economic development and growth. This research work evaluates the influence of foreign inflow of money and assistance from foreign countries on the lives of people in Pakistan. The study utilizes the post-facto design has and analyzed a sample of 32 years of secondary data ranging from 1990 to 2021, extracted from different data banks. The human capital is taken as a response variable. On the other hand, explanatory variables include official development assistance and remittance. Urban population and financial development are taken as control variables. The outcomes provide evidence that remittances, financial development and urban population provides a favorable and significant influence on the enhancement of human capital, while official development assistance provides no effect for the development of human capital in Pakistan. These findings establish a broader picture of this relationship and are in line with the related theories of economics. Furthermore, efforts should be made to provide policymakers with an understanding of critical factors which link foreign financial support, money transfers, growth in the economy, and improved human development.