Remittance as a Tool of Economic Development

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BANGLADESH RESEARCH PUBLICATIONS JOURNAL

ISSN: 1998-2003, Volume: 4, Issue : 3, Page: 286-296, Septe mber - Oc to ber, 2010

REMITTANCE AS A TOOL OF ECONOMIC DEVELOPMENT:BANGLADESH PERSPECTIVE

Kunta l Roy C how dhury*1, Fauzia Hamid 1 and D. D. Cha tterjee 2

Kuntal Roy ChowdhuryFauzia Hamid and D. D. Chatterjee. (2010). Rem ittanc e a s a Too l ofEconomic Development: Bangladesh Perspective . Bangladesh Res. Pub. J. 4(3): 286-296.Ret rieve from http://www.bdresearchpublications.com/admin/journal/upload/09176/09176.pdf

AbstractIn Bangladesh, remittance is one of the most important economicvariables in recent times as it helps in balancing balance of payments,increasing foreign exchange reserves, enhancing national savings andincreasing velocity of money. For about two decades remittance has

been contributing around 35% of export earning. Moreover, it is greaterthan foreign aid and thus helps in lessening dependence on foreign aid.Remittance gets momentum in recent time in Bangladesh and is thesecond largest sector of foreign exchange earning after the garmentssector. If cost of imported raw materials is deducted from the foreignexcha nge ea rning o f the garments sec tor, rem itta nce b ec ome s the singlelargest sector of foreign exchange earning. Remittance earning isincreasing day by day but at a lower rate than the increase in emigrationfrom Bangladesh due to the increasing share of unskilled or semi-skilledlab ours tha n the p rofessiona ls in inte rnat iona l migration. The sha re ofremittance in GNI (Gross National Income) is increasing day by day. Itaffects almost all the macro-economic indicators of a country positively.

Thoug h there a re a lso nega tive sides of remitta nce earning e.g. b ra indrain, its overall contribution to Bangladesh economy is very mucheffective. Appropriate and timely government policies and initiatives canboost up the amount of remittance and can rectify the problems relatedto it. Remittance has created a new dimension in the economicde velopm ent of Bang lad esh. We ha ve to prope rly unloc k the po tentialitiesof remittances and utilize it properly to make it an indispensable tool of theec onomic d evelopment o f Banglad esh.

Key words: Remittance, Investment, Balance of payments.

Introduction

Internationa l migrat ion is a wo rldwide phenomenon. Thoug h Banglad esh isa labour surplus country, most of the labours are unskilled or semi-skilled. As adeveloping country Bangladesh can not provide all its labours with job facilitiesand so unemployment rate is very high here. In this backdrop, internationalmigration started in the part of the globe. Bangladeshi emigrants send a portionof their earning as remittance or foreign exchange from foreign countries toBang lad esh for their family me mb ers and rela tives.

Remittance gets momentum in recent time in Bangladesh and is thesecond largest sector of foreign exchange earning after garments sector. If costof imported raw materials is deducted from the foreign exchange earning ofgarments sector, remittance is the single largest sector of foreign exchange

*Corresponding Author,1. Ec onom ics Disc ipline, Soc ial Sc ienc e Sc hool, Khulna University, Bang lad esh.2. Agriculture Officer, World Vision Bangladesh


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ea rning. Rem itta nc e ea rning is inc rea sing d ay by day but a t a lower ra te tha n theincrease in emigration from Bangladesh. As there is very little research or studycarried out in this topic and as remittance is now a day one of the greatestcontributing factor in Bangladesh economy, we have chosen to study on thistopic only on international inward remittance and its economic impact on

Bang lad esh ec onom y.To have c lea r conc ep tion abo ut remittanc e, to know the p rob lems ab out

the concerned activities of remittance and their solution, to know the importantdeterminants etc are some other rational or logic for choosing this type ofresearch topic.

Objec tives of the study

To know abo ut the imp ac t of rem ittances on ec onom ic c ond ition of ourcountry

To investigate the prob lem s reg ard ing d ifferent aspec ts of remittanc es

To find out the wa ys for solving the se p rob lemsTo indica te som e imp ortant d ete rminants to ra ise the amo unt of rem itta nces

Result a nd Discussion

Remittance

It is the sum of money that is sent to somebody in order to pay forsom ething o r it is the a c t of send ing mo ney to som eb od y to p ay for som ething. Itgenerally means money sent by migrant workers in foreign countries to theirformer homes. Actually, remittance is a much broader concept. It has manyd imensions and c a teg ories.

Typ es of rem ittanc e

There are mainly two types of rem itta nc e: nationa l/ domestic rem itta nc eand international/foreign remittance. While national/domestic remittance isremittance within countries, international remittance is the remittance from onecountry to another country. According to its direction international remittance isag ain of two typ es: inwa rd remittance and outwa rd remittance.

Remittanc e sending system

Formal system

Remittance is sent formally through various ways such as demand draft,

travellers check, telegraphic transfer, postal order, direct transfer, AutomaticTeller Ma chine (ATM) e tc .

Informal system

Hundi or money carrier system is prevalent as informal procedure ofremittance sending in most of the cases. Hundi refers to the illegal moneyexcha nge not supp orted by the internationa l or na tional leg a l structure. Theexchange rate offered by the hundioperators is 1-2% higher than the officialexchang e ra te. They d o not c harge anything for transac tion. It is the fastestmethod of transaction. In urgent situations this is the quickest method for sendingmoney. The hundioperators provide door to door services. It was interesting to

note that there are other social reasons for sending remittance through hundi.Few mentioned they send money to wives, fathers or brothers separately andprefe rred to keep the a mo unts sent sec ret, a s it c rea tes tension a mo ng the fa milymembers. Hundiprovides the o ppo rtunity to ma inta in suc h confidentiality.


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A numb er of rea sons have b een at tac hed to the growth of Hund i ma rket. Theseinclude:

Financ ing smuggling of va rious items, inc luding g old ;

Existing tax reg ime lea ding to under- invoicing of imp orts; Unholy a llianc e betw een o ffic ia ls of financ ial institutions and hundi

elements;

Financing recruitment charges of the recruiters;

Differenc e be tween o ffic ial and unoffic ial exchange rate s;

Qua lity and speed o f service;

Ab ility to rea ch c lients bo th in de stination c ountries and in the sourcecountries.

Impa c t analysis of rem ittance in Bang ladesh ec onomyRemittanc e and balanc e of trade & balance of paym ent

Remittanc e a nd international trade

We know tha t a c ountry has to t rade with othe r countries. Trad ing m ea nsexcha nge of g oods and servic es among c ountries. Trad ing is oc c urred throug hexport and import system. A country exports something and imports something.Normally, some currencies play important role in exchange of these goods andservices. From economic point of view trade is one of the primary needs of acountry. We need foreign currency to run trading activities. But, we have deficitba lanc e o f trad e b ec ause o ur imp ort is more than export. So, the a mount of our

foreign c urrenc y is very negligib le and its ea rning sources a re limited . In this c ase,rem itta nc e p lays a v ita l role to m ake up the deficit in foreign ea rning.

From the table 1 it is evident that exports and remittances from workersabroad increased highly in the FY 06 in comparison to the previous year, whileimport fell by a substa ntial amo unt. Tha t is exports (fob ) inc rea sed by 21.6 percentfrom US$ 8,573 million in FY 05 to US$ 10,422 million in FY 06 and remittanc es fromworkers abroa d rec orde d 24.8 percent grow th f rom US$ 3,848 million in FY 05 toUSD 4,802 million in FY 06; while imp orts (fob) inc reased by 12.1 perc ent from US$11,870 million in FY 05 to US$ 13,301 million in FY 06.


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Table 1. International trad e a nd remittanc e(million US$)

Fisca lYear(endJune)

Export(X)

Increase/Decrease

%

Import(M)

Increase/Decrease

%

TradeBalance

(X-M)

Remittance Increase/Decrease

%

2000 5,701.00

7,566.00

-1, 865 1, 949.00

2001 6,419.00

12.59 8,430.00

11.42 -2, 011 1, 882.00 -3.44

2002 5,929.00

-7.63 7,697.00

-8.70 -1, 768 2, 501.00 32.89

2003 6,492.00

9.50 8,707.00

13.12 -2, 215 3, 062.00 22.43

2004 7,521.00

15.85 9,840.00

13.01 -2, 319 3, 372.00 10.12

2005 8,573.00

13.99 11,870.00

20.63 -3, 297 3, 848.00 14.12

2006 10,422.00

21.57 13,301.00

12.06 -2, 879 4, 802.00 24.79

Total 51,057.00

65.86 67,411.00

61.54 -16,354.00

21, 416.00 100.92

Average 7,293.86

9.41 9,630.14

8.79 -2,336.29

3, 059.43 14.42

Source: Sta tistics Dep artment , Bang lad esh Bank and Bureau of Ma npow er andTraining.

Tab le 1 shows that there o c c urred de fic it in trad e b alanc e from the year2000 to 2006. On average it is -2,336.29 million US$, though the average rate ofgrowth of export earning (9.41%) was more than the average rate of growth ofimport pa yme nt (8.79%), during the sa id period . The inc rea sing ra te o f rem ittanc eis quite sa tisfac to ry in the fac e o f this defic it. This definitely played a positive rolereg arding trade ba lanc e by financ ing excess imp orts paym ents.

Remittance and b alanc e of payment

The b a lance o f pa yments of a country is a system atic record of a lleconomic transactions between the residents of the reporting country and theresidents of fo reign c ountries during a given p eriod of time . The b a lanc e o fpayment is usually composed of two accounts: (I) the current account; (ii) theca pital ac count

Symb olica lly we c an write,B = Rf-Pf

Where, B = the ba lanc e of p ayme ntsRf = receip ts from foreigne rsPf = pa yments ma de to fo reigners


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Table 2. Balance of p ayments(Million US Dollar)

Items FY1999-00

FY2000-01

FY2001-02

FY2002-03

FY2003-04

FY2004-05

FY2005-06

1 2 3 4 5 6 7 8

Trade Bala nce -1, 865 -2, 011 -1, 768 -2, 215 -2, 319 -3, 297 -2, 879Export fob (Inc lud ing EPZ) 5, 701 6, 419 5, 929 6, 492 7, 521 8, 573 10, 422

Of which, Read y Mad eGarments (RMG)

4, 252 4, 860 4, 584 4, 912 5, 686 6, 418 7, 901

Imp ort fob (Inc lud ing EPZ) -7, 566 -8, 430 -7, 697 -8, 707 -9, 840 -11, 870 -13,301

Services -645 -914 -499 -691 -874 -870 -1, 110

Receipts 849 759 865 887 924 1, 177 1, 296

Payments -1, 494 -1, 673 -1, 364 -1, 578 -1, 798 -2, 047 -2, 406

Income -302 -344 -402 -358 -374 -680 -786

Receipts 97 97 50 64 63 116 134

Payments -399 -441 -452 -422 -437 -796 -920

Of w hich, offic ial inte restpayments

-160 -168 -161 -167 -175 -203 -201

Current transfers 2, 394 2, 171 2, 826 3, 440 3, 743 4, 290 5, 347

Offic ial 165 72 69 82 61 37 34

Private 2, 229 2, 099 2, 757 3, 358 3, 682 4, 253 5, 313

Of which: workers remittance 1, 949 1, 882 2, 501 3, 062 3, 372 3, 848 4, 802

Current account balance -418 -1, 098 157 176 176 -557 572

Capital account 561 432 410 428 196 163 242

Cap ita l transfers 561 432 410 428 196 163 242

Financial ac count -116 682 391 413 78 760 -24

Foreign d irec t investment (net) 1/

383 550 391 376 385 776 675

Portfo lio investm ent 0 0 -6 2 6 0 32

Other investm ent -499 132 6 35 -313 -16 -731

MLT loa ns (exc ludingsupp liers c red it)

806 790 733 918 544 940 921

MLT amortiza tionpayments

-396 -416 -435 -452 -397 -449 -489

Other long term loa ns(net)

127 -13 -42 -20 -41 -46 -58

Othe r short term loa ns(net)

71 31 63 142 13 241 -256

Other cap ita l -190 -114 -87 -125 -125 -182 -245

Trad e c red it (ne t) -641 -260 -253 -499 -321 -320 -805Commerc ial Bank -276 114 27 71 14 -200 201

Assets -161 147 -90 217 86 -91 56

Liab ilities -115 -33 117 -146 -72 -109 145

Errors and om issions 152 -297 -550 -202 -279 -299 -425

Ove rall ba lanc e 179 -281 408 815 171 67 365

Reserve assets -179 281 -408 -815 -171 -67 -365

Bang ladesh Bank -179 281 -408 -815 -171 -67 -365

Assets -79 302 -276 -887 -235 -225 -554

Liab ilities -100 -21 -132 72 64 158 189

Source: Sta tistics Department , Bang ladesh Bank

From ta b le 2, we find tha t in the FY 2005-06, rem ittanc es from non-residentBang ladeshi nationa ls increa sed substa ntially by 24.8 percent . The c ountryscurrent account balance turned to a significant surplus with robust growth inexports and remittances and a slower growth in import payments. A significantsurplus in current account balance as well as capital account led to a sizeable


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surplus in the overall balance, which helped improve the countries foreignexcha nge reserve po sition.

Desp ite large r services defic it o f US$ 1,110 million in FY 2005-06, up from US$870 million in FY 2004-05, the c ountrys externa l current ac count b a lanc e w as in asignificant surplus due to smaller trade deficit and steady growth in workers

rem itta nc es during the year. The ove ra ll ba lanc e of p ayments rec orded asignificant surplus of US$ 365 million in FY 2005- 06, which was muc h highe r tha nthe surplus of US$ 67 million of FY 2004-05, reflecting a notable improvement inc urrent a c c ount b alanc e a nd a larger surplus in c ap ital ac c ount, despite of largenet o utflow s in trade c red it and othe r short term loa ns, the financ ia l acc ount sankinto a deficit from a large surplus of FY 2004-05.

Rem ittanc e and reserves

Satisfac to ry level of reserves of foreign c urrenc ies has positive impac t onthe m ac ro ec onom ic c ond ition of a c ountry. We ha ve limited sourc es of ea rningof foreign currencies. Our import is high but export is low. Every year we have to

ta ke loa n and to w a it for it to m ake up BOT deficit. But now rem itta nces help agrea t to have the reserves a t sa tisfac tory leve l. In rec ent times, it is rec orded tha tour reserve is at the maximum level where remittance is the largest contributingsector. Hence there is no doubt that remittances and reserves have a positivecorrelation. Moreover, reserves and remittance are rising over time.

0.00

1000.00

2000.00

3000.00

4000.00

5000.00

6000.00

1990 1995 2000 2005 2010

Financial Year

MillionUS$

Total Reserves

Total Remittances

Figure 1. Trend lines of remittanc e a nd foreign reserves

Upward sloping shape of the line means that remittance as percent of GNI is onthe inc rea se.

Figure 1 shows trend lines of remittance, balance of trade and balance ofpayments. The t rend line o f rem ittanc e is in the positive quad rant a nd is upwa rdsloping, while that of balance of trade is in the negative quadrant and isdownward sloping and the trend line of balance of payment has ups and downsaround the horizonta l axis. This imp lies tha t remitta nc e g rea tly helps to red uc e thedeficit in the balance of trade and some times make the balance of paymentsurp lus. Moreo ver, rem itta nc e is increa sing a t a n increa sing rate. Since in case o fBangladesh balance of trade is almost in all years negative, therefore amount ofremittances has significant influence on the balance of payments. It is theamount of remittance which makes BOP either deficit or surplus.


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Remittance and investment

Bangladesh is a slowly developing country with a huge population. It is alsocharacterized by political unrest. Due to political unrest, level of direct foreigninvestment and future prospects of the same in our country is not very hopeful.Besides, in our country micro level investment is not flourished due to lack of

sufficient financial support. A vast number of people are poor. According toEconomic Review of Bangladesh-2005 almost 42 percent of total population livein poverty. If they are provided some financial support then they can build upmic ro-ente rp rises to red uc e their poverty.

In case of remittance, it can be assumed that financial support providedby remittance may help the poor people to make micro-investment. But it isobserved in various studies that maximum amount of remittance is used to meetp rima ry needs and to buy luxury go od s. Som e p ortion o f rem ittanc e is used forinvestment purposes also. Macro-investment is possible if the emigrants invest injoint ve ntures. Besides, ind ividua l inve stm ent a lso p lays an importa nt role inec onomic d evelopm ent of the co untry.

Devalua tion of taka aga inst US$ over time

We ha ve ob served deva lua tion o f Taka a ga inst US$ from fisc a l yea r (EndJune) 1991 -2006 as shown in the figure 2. In this figure we see that Bangladeshhas to pay m ore money per US$ over time . It shows tha t the va lue o f R2 is eq ua l toapproximately 0.96 which is very high and shows strong positive correlationbetwe en year (End June) and Taka p er US$.

1990 1992 1994 1996 1999 2001 2003 2005 2007

Year (End June)

0.00

25.00

50.00

75.00

TakaperUSDollar

R-Square = 0.96

Figure 2. Period Ave raged Taka US Dollar Excha nge Rates

In the following table, we see that value of R is equal to 0.980 having ame ssage tha t the correlat ion is significant a t the 0.01 level (2-ta iled ). So, it issta tistica lly prove d tha t the re is deva lua tion of taka a ga inst US dollar over time .


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Correlations

1.000 .980**

. .000

16 16

.980** 1.000

.000 .

16 16

Pearson Correlation

Sig. (2-tailed)

N

Pearson Correlation

Sig. (2-tailed)

N

Year (End June)

Taka per US Dollar

Year (End

June)

Taka per

US Dollar

Correlation is significant at the 0.01 level (2-tailed).**.

Tota l reserve s (million US$)

From the graph given below, we see rising trend of total reserves (millionUS$) from f inanc ial yea r (end June) 1991-2006. The va lue of R2 is 0.19.

1990 1992 1994 1996 1999 2001 2003 2005 2007

Year (End June)

0.0

1000.0

2000.0

3000.0

4000.0

Totalreserve

s(MillionUSDollar)

R-Square = 0.19

Figure 3. Trend of Total Reserves (Million US$) Over Time

From the table given below we see that the value of R is positive but notsignificant. In o the r words to ta l reserves (million US$) is rising a t a neglig ible ra teover time.

Correlations

1.000 .434

. .093

16 16

.434 1.000

.093 .

16 16

Pearson Correlation

Sig. (2-tailed)

N

Pearson Correlation

Sig. (2-tailed)

N

Year (End June)

Total reserves

(Million US Dollar)

Year (End

June)

Total reserves

(Million US

Dollar)


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Findings

Our resea rc h find ings a re summ arized here as follow s

Remittance is the second largest sector of foreign exchange earning aftergarments sector. If cost of imported raw materials is deducted from theforeign exchange earning of garments sector, remittance is the singlela rge st sec to r of foreign excha nge ea rning.

Remittanc e earning is increasing d ay b y day b ut a t a lowe r rate than theincrease in emigration from Banglad esh.

There is a linkag e b etween remittanc es at present a nd de velopme nt a ndc onsump tion in the future .

The a va ilab le p oo l of resource s from which em igrants rem it d ep end smainly on number of emigrants, characteristics of the migrants and thecountry of employment and on salary levels and costs of living. On theother hand amount of remittances sent depends on available pool of

resources, characteristics of the migrants, country of origin andemployment a nd propensity to remit.

There is high p rob ab ility of suprem ac y of yearly growth rate of remittanceover that of RMG sector for fiscal years (end June) 2010, 2015 & 2020.

There is high p rob ab ility of supremac y of rem itta nc e o ver foreignassista nc e for fisc a l yea rs (End June) 2010, 2015 & 2020.

It is sta tistica lly p rove d tha t there is deva luat ion of taka o ver time.

Tota l reserve (million US$) is rising a t a neglig ible rate over time.

Tota l reserve (million ta ka) is rising a t a signific ant ra te over time.

Bang ladeshi emigra tion is rising a t a signific ant rate over time.

Bang ladeshi inwa rd rem ittanc e is rising a t a very significant rate over time .

Rem ittanc es of Bang lad esh (million US$) have neg ligible positive imp ac tson foreign reserves.

Remitta nc e helps in ba lanc ing Ba lance of Payments (BOP).

Remitta nc e helps in red uc ing d ep end enc e on fo reign assista nce.

Remitta nc e inc rea ses na tional savings and na tional investment.

Problem s of remittanc e

Problems c reated b y remittance

Prob lems c rea ted by rem itta nc e a re a s follow s:

Brain drain: Brain drain is the most significant negative side of enjoyingrem itta nc e for any develop ing c ountry like Bang ladesh. Thoug h we g et a nimpo rtant portion o f rem itta nc e from our educ a ted skilled person a fter all itis not favourable because educated people are very important for oureconomy.

Income inequality: In a spec ific c om munity, relative incom e inequa lity ma ybe found where there are both emigrants families and non-emigrants

families due to the variation in their income levels.

Regional disparities: In the same line of above reasoning regionald isparities may be fo und amo ng em igrants intensive reg ions or d istric ts like


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Sylhet , Chitta gong, Co milla, Noa khali, Dhaka etc . and less em igrantsintensive reg ions or d istric ts of the c ountry.

Increased demand for imported luxury goods: There is a tend enc y ofrem itta nc e earning fa milies to p urc hase fo reign luxury good s which c rea tesunfavourab le c ond ition in the ba lanc e of payments.

Misuse of remittance: Some times the young peop le of rem itta nc e ea rningfamily easily get huge money on their hand and misuse that moneyc rea ting va rious type s of imm oral and illeg a l ac tivities.

Social insecurity: Som e t imes rem ittanc e e arning fa milies fee l insec urityfrom hijac kers. They a re som etimes c om pelled to p ay to the b ad sec tion ofthe soc iety.

Exploitation by the dalals: Sometimes rem itta nce ea rning fam ilies have topay unreasonable amount of money or a portion of their income to thedalals for helping to send a person a broa d . Sometimes em igrants a recaught red-handed abroad with illegal documents and some of theemigrants are de c eived by d ifferent c onc erned ag enc ies.

Recommendations

Bangladesh is one of the important remittance earning countries in theworld. Moreover it is increasing persistently. No doubt, we want to solve ourunemployment problem and working of Bangladeshi residents in differentcountries is a great opportunity to reduce the prevailing unemployment rate. Butactual impact of remittance on the economy of migrant sending countriesde pe nds on how the remittance is be ing used .

We have seen that various po lic ies and a c tivities have b een unde rtaken to

increase remittance flow in formal way. But, lesser effort has been taken for thedeve lop ment of effec tive utiliza tion of rem itta nc e. So it is rec om mended tha tproper policy measures be formulated to manage this sector considering thefo llow ing issues c arefully.

The issues a re:

1. Proper information about job opportunities in the overseas countries has tobe sprea d a ll over the c ountry time ly and job sec urity should b e e nsured inthe foreign countries.

2. Remittance concerned information centers have to be setup andarrangement be made for provision of proper knowledge regarding

administrat ive ac tivities, pa ssport and visa p roc essing etc .

3. Tra ining c ente rs a re to be setup for the pe op le who want to g o oversea sc ountries for emp loyment op portunities.

4. Moreover, all types of migration related activities should be completelyfree from corruption. Quick processing system of issuing passport and visashould be de veloped and bureauc ratic problems should be solved w ithinvery short t ime.

5. Rea sona b le c osts should b e ensured by the c onc erned authority.

6. Influence of the middlemen and their interest should be controlled and

problems c rea ted by them should b e c hec ked.7. Inspirations to go abroad and other favourable influences have to be

provided to the migrant workers and employees.


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8. It should be ensured by the embassies in the overseas countries that anyproblem faced by the migrant workers will be taken care of as early aspossible a nd MEWOE and Ministry of Foreign Affa irs will have to ta ke everyresponsib ility to take c are o f the na tive ma npow er. The Banglad eshiembassies in foreign countries should also help the native migrants insea rching for new job o pportunities in the oversea s c ountries.

9. Government ha s to m ake a c lose relationship w ith the c onc erned oversea sc ountries to sea rc h job op portunities in those c ountries.

10.Remittance sending procedure should be developed to make it secured,quick and effective. Available formal channels for sending money to thenative country have to be reorganized to take as short time as possible.Moreover the remittance sending process should be liberalized so thatirreg ula r emigrants c an a lso send rem itta nc e through reg ular c hannels.

11.Charges on sending money should be very favourable for the migrantworkers.

12.All information regarding migration should be preserved by the concernedauthority.

Conclusion

Remittance is one of those important instruments, which helps to solve ourproblem b y strengthe ning the e c onom y.

Migration is such a process, which helps to reduce unemployment,increases reserves and helps to make the balance of payment favourable andalso helps immensely in other socio-economic aspects. Unemployment situation isone of the most alarming economic indicators of a country; migration and

c onseq uent remittance is ma inly related with emp loyment a nd ea rning of foreignc urrenc y. So, remittanc e is a vital issue for ove r-populated c ountries likeBang lad esh. Therefo re, we need to give p rop er at tention this issue.

It a lso helps to increa se foreign reserves, na tiona l savings and investments.From socio-economic point of view it uplifts living standard, social status and helpensuring b asic nee ds.

Therefore, it is very vita l for the a c c elera tion of ec onomic g row th inBangladesh. Remittance has some problems also but they are very negligible inc om parison to its ove ra ll bene fit. So, go vernment , conc erned a uthorities and thepe op le of Bang lad esh have to ta ke proper ca re a bo ut remittanc e c onside ring itsimp ortanc e in our ec onom y.

References

Bangladesh Bank (BB), Annual Report 2005-06, 2005-06(a, Bangladesh bankDhaka,

Bangladesh, www.bangladesh.org.bd , www.bangladesh-bank.org

Bang lad esh Bank (BB), (2005-06 b ), Balanc e of pa yments

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Remittance as a Tool of Economic Development

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