THE IMPACT OF BRITISH PAKISTANI REMITTANCES ON HOUSEHOLD RESILIENCE AND NATIONAL ECONOMY IN PAKISTAN

Abstract

This study examines the dual impact of British Pakistani remittances on Pakistan’s household resilience and national economy. At the micro level, remittances enhance household resilience by enabling consumption smoothing during economic/environmental shocks (e.g., covering 40% of basic needs), funding education and healthcare (28–34% of household spending), and facilitating limited asset accumulation. However, they also foster dependency, reduce labour force participation, and reinforce gender inequalities in education. At the macro level, remittances ($3.2 billion in 2023) stabilize Pakistan’s balance of payments (covering 35% of the trade deficit) and external debt servicing but risk inducing Dutch Disease, distorting exchange rates, and undermining export competitiveness. Critically, remittances enable fiscal complacency, delaying essential tax reforms and industrial diversification. While serving as a vital transnational lifeline, they perpetuate a "survivalist" economic model rather than driving structural transformation. The paper argues for policy interventions—financial inclusion, SME investment incentives, diaspora bonds, and skills mobility partnerships—to convert remittances from a dependency crutch into a catalyst for sustainable development.