Impact of Workers’ Remittances from the Middle East on Pakistan’s Economy: Some Selected Issues

Over the last decade, the phenomenon of overseas migration from Pakistan to the countries of the Middle East and North Africa has had a far reaching impact on the domestic economy. Indeed, no factor has more dramatically affected the domestic employment situation and the balance-of-payments position as the outflow of contract workers and inflow of workers’ remittances from those countries. According to the Sixth Plan, as much as one-third of the increase in the labour force during the years 1978-83, i.e. the Fifth Plan period, was absorbed by migration to the Middle East [14, p. 499]. At its peak in 1982-83, official flow of remittances from the Middle-East was equivalent to 70 percent of the country’s total exports of goods and non-factor services (Table 1). More recently, the slowing down in economic activity in the major labour-receiving countries together with increased competition from other labour-exporting countries has led to a decline in the outflow of migrant workers, and, with the quickening pace of return migration, there is a decline in the stock of Pakistani workers in these countries