Development dynamics of remittances in Bangladesh

Abstract

Remittances have become a major net source of national income in the economy of Bangladesh. The economic globalization in the 1980s and 1990s and consequential external demand for Bangladeshi manpower got interconnected to lead this development. At the domestic front, remittances as a means of transfer of wealth are increasingly viewed with importance due to the perceived development impacts on socioeconomic factors. Remittances have, indeed, helped improve various factors like nutrition, living condition and housing, education, healthcare, poverty reduction, social security, and investment activities of the recipient households in particular. Though with the expansion of the economy, the relative weight of remittances has declined, it has remained a net source of external income and a contributor to gross domestic product (GDP) growth. Because of the inflow of remittances, Bangladesh has also been able to avoid any serious imbalances in the current account of the balance of payment (BOP), though it has persistent merchandise trade deficits. Not only that, the export tradable sector has thus far remained unaffected from the Dutch Disease effects of remittances. In short, this chapter covers the development role of remittances to the Bangladesh economy.