Over the past decade, workers’ remittances have been become one of the major sources of foreign income to Nepal. It is growing very fast and successfully replacing the higher ratio of merchandise export, foreign aid and FDI of the country. Undeniably, remittances have a most important role to maintain the consumption and poverty-alleviation of the recipient household. Even though there is a key question that, whether the remittances have major impact to the national economic development or not in long run. Or what kind of relationship has been existing between the remittances inflow and economic development of the country. This study deals with the analysis of direct impact of remittance on the national GDP of Nepal in both real and nominal terms. The analysis has been carried out by using the multiple regression with linear and log linear model. We also conducted a descriptive statistical analysis to examine the trend and different ratios of remittances and GDP and other sources of foreign income for the country.
The empirical analysis shows the positive relationship between the remittances and the GDP growth of the country in both real and nominal terms. The elasticity of remittances to the real and nominal GDP is remarkable and significant. The study also shows the higher coefficient of remittance to the real GDP of the country than nominal GDP. Similarly, other variables also have the positive relationship with the dependent variables. Specially, official grants have higher coefficient than other variables, it is the multiplier effect of grants money to the national economy. Likewise, the examination of economic growth rate and the increasing ratio of remittances to the GDP are not showing the robust impact of remittances to the GDP growth. So the utilization of remittances to the national economic growth is the more important issues rather than collection.