Remittances, Digital Financial Inclusion, and Inclusive Growth: Pathways to Achieving SDG 8 and SDG 10

Abstract

This study examines the dynamic relationship between remittances, digital financial inclusion, and inclusive growth in Pakistan over the period 1991–2024, with a particular focus on the moderating role of digital financial inclusion. To achieve the objective, the study employs the Autoregressive Distributed Lag (ARDL) bounds testing method. The findings reveal a significant long-run relationship between remittances, digital financial inclusion, and inclusive growth, indicating that remittance inflows and digital financial inclusion contribute positively to economic inclusion. More importantly, the interaction between remittances and digital financial inclusion is found to be positive and statistically significant, suggesting that improved digital financial access amplifies the developmental impact of remittances. In the short run, adjustment dynamics indicate a gradual convergence toward the long-run equilibrium. The results underscore the critical role of digital financial infrastructure in channeling remittances into productive and inclusive economic activities. From a policy perspective, the study highlights the need for strengthening digital financial ecosystems to maximize the benefits of remittance inflows. Enhancing access to digital financial services can accelerate progress toward inclusive and sustainable economic growth, thereby supporting the achievement of SDG 8 and SDG 10.