An Enquiry into the Sluggish Growth of Workers’ Remittance Determinants in Bangladesh

Kundu, Nobinkhor (2013): An Enquiry into the Sluggish Growth of Workers’ Remittance Determinants in Bangladesh.

Abstract

EXECUTIVE SUMMARY: Workers’ remittance for economic growth is important variable, which is the second leading amount of capital inflows in Bangladesh. Revenues from workers’ remittance in the country exceed various types of foreign exchange inflow, particularly Foreign Direct Investment (FDI), Official Development Assistant (ODA) and net earnings from exports, but workers’ remittance is one of the major sources of foreign exchange earnings and it exceeded FDI and ODA inflows to the developing countries (World Bank, 2010).

Every year, about 250,000 Bangladeshis migrate abroad and about eight million people of Bangladeshi origin are living and working abroad presently. Remittance as percentage of GDP has stood well over ten percent recently. Around eight million Bangladeshi expatriates in more than 140 countries signify the strength of Bangladesh in international migration (Bangladesh Bank, 2012). According to world bank migration and remittances factbook (2011), Bangladesh is seventh position in top ten emigration countries and top ten remittance recipients in 2010 (billions).

According to World Bank statistics (2010), about eight million Bangladesh’s are currently working aboard, with each migrant sending $1,672 per year on average, but in India, the average remittance per head is $4,843, where as for China it is $6,112. The reason for Bangladeshi’s low remittance per head is that the majority of Bangladeshi wage earners are unskilled labors. The skill composition of workers overseas has become skewed towards semi-skilled and unskilled workers over time. This may be due to employers in foreign countries feeling that Bangladeshi workers lack appropriate skills.

We always considered total workers remittance inflows in Bangladesh, but we should be considered analyses of remittance returns per head and also considered marginal analyses that is each person how much increase of his or her remittance in each year. The purpose of research study is an enquiry into the sluggish growth of remittances determinants in Bangladesh for the purpose of transition from low income country to middle income country that is development direction is required to an average GDP growth of around nine percent. The study focused on the importance of per capita and marginal productivity of remittance inflows and its implication for economic growth in Bangladesh.

The primary data were collected from the respondents during the period of May to June, 2013 from a particular districts in Bangladesh have been taken as the study area Comilla district. Using cross section data to analyzed econometrics models such as multinomial logistic regression model are used and fit them to identify the significant inputs of skill development for remitters.

The logistic regression result is difficult to predict on the basis of only empirical data. This empirical result suggests that log of remittance, which p-value is statistically significant, have been estimated to obtain the effect of significant coefficient of education of remitters, years of emigrant, remittance country, skill of remitter dummy, skill training providers, sources of borrowing, collateral for loan, rate of interest annually, professional service of remitters and invested of remittance on business (small/ medium) dummy, which also might be found the most significant in case of skill development training and access to credit for remitters. Consequently, it can be concluded that growth of remittance in Bangladesh will require access to skill development allied factors, other things remaining same.

The empirical result indicate that the most significant predictors of per-capita income and marginal productivity of remitters. So, attention should be given to expansion of allied factors which incremental productivity of remitters in Bangladesh. Appropriate policies and programs for the labor market are important drivers of economic growth and a more equitable income distribution. Now seems to be skill developed allied factors might have significant impact on per-capita and marginal growth of worker’s remittance. Therefore, it can be concluded that there is strong significant statistical correlation seems to exist with number of emigrant workers and their skills earns maximize remittances and inflows in Bangladesh in the long run.

• Item Type: MPRA Paper
• Language: English
• Keywords: Keywords: Remittances, Labor Productivity Skills, Economic Growth; JEL Classification: F24, J24, O47
• Subjects: F - International Economics > F2 - International Factor Movements and International Business > F24 - Remittances; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J24 - Human Capital ; Skills ; Occupational Choice ; Labor Productivity; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Empirical Studies of Economic Growth ; Aggregate Productivity ; Cross-Country Output Convergence

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