THE IMPACT OF GEOGRAPHICAL DISTANCE ON REMITTANCES: A CASE STUDY OF PAKISTANI DIASPORA

The rise in the number of Pakistanis working abroad has created an important source of monetary flows for the country. In Pakistan, the remittances are one of the major sources of foreign exchange earnings. One of the determinants of remittances is the geographical distance between the home country and the country where Pakistanis are working. In this paper, we inquire whether the geographical distance between two countries affects two-sided remittances by using panel data of 23 major destinations from 2001 to 2017. We find that there is a significant impact of geographical distance on remittances that Pakistan receives. The positive and significant coefficient between remittance and geographical distance confirms that Pakistani migrants who are working in far locations remit more.