Appraisal of Positive and Negative Implications of Foreign Labor on Host Economy - Evidence from Saudi Arabia

This paper examines the effects of foreign workers’ outward remittances on the economic activity of a country that hosts foreign labor by developing a new econometric technique to measure the effect of workers’ outward remittances on gross domestic product of the world’s largest oil producer, namely Saudi Arabia. Results indicate that outward remittances have negative and significant effects on all types of aggregate demand. The total effect of outward remittances on GDP is, then, negative. The study findings prove that the net effect of non-Saudi workers on GDP is positive for the Saudi GDP.