The Impact of Remittance, Foreign aid and FDI on growth: Evidence from the Nepal Economy

The main thrust of the thesis is to investigate the relationships between economic growth and remittance in the case of Nepal. This study also examines the effectiveness of aid, labor and FDI on the economic growth of Nepal. The ARDL Bounds testing approach is conducted for analyzing the growth model over the period 1970- 2014. The empirical results points out that remittances and labor are very important driving forces for economic growth in both the long and short-terms of Nepal economy. These findings also show that investment, FDI, and AID do not have any impact on output growth in both the long and short run period in the case of the Nepal Economy. Error-correction modeling was used to confirm the existence of a stable long-term relationship and approve a deviation from the long-term equilibrium following a short-term shock, which is corrected by almost 16 percent after each year. Keywords: Economic Growth, Remittance, foreign Aid, FDI, ARDL, Nepal Economy.