THE EFFECT OF REMITTANCES OF DIASPORA

ON THE ECONOMY OF DEVELOPING

COUNTRIES: A CASE STUDY ON

BANGLADESH

Supervisor

Prof. Anna Maria Falzoni

Researcher : Faisal Rashid Majumder.

UNIVERSITÀ DEGLI STUDI DI BERGAMO

Department of Management, Economics and Quantitative Methods

Objective of this research

Investigate the impact of migration and remittances

related to developing countries: the case of

Bangladesh.

Shed some light on different channels through which

the remittances are transferred to the sending

economy.

Analyse the remittances’ contribution to sustainable

poverty reduction.

Presentation agenda

Introduction

Literature Review Inflow of remittances in developing countries.

Remittances inflows of Bangladesh.

Methodology

Instrumetation and Data collections

Data analysis and findings The determinants of sending remittances

Findings

Channel Used in Sending Remittances

Conclusion

Introduction

In developing countries , remittances are the life line of economy where migrants working in abroad send their hard earned foreign currencies to homeland.

Remittances from migrants have positive impacts on poverty reduction and development in developing countries, contributing, substantially to the achievement of the Millennium Development Goals.

These positive impacts become greater when remittances can be saved and invested in infrastructures and productive capacity.

Remittances are transfer of money by a foreign worker to his or her home country.

International remittances are defined as the portion of migrant workers’ earnings sent back from the country of employment to the country of origin (ILO, 2000).

Remittances can be individual and it can also be collective.

In Greek, the term ‘Diaspora

means ‘to scatter’ (sow), is

primarily associated with the

dispersal of the Jews out of

Israel, although it is applied to any

people living outside their

traditional homeland (OED;

Skeldon,1997).

In the view of

globalization, diaspora now refers

to international migrants, who

remain some way part of their

original community, though

dispersed from their homeland.

Remittances Diaspora

Literature review (keywords)

Inflow of remittances in developing

countries in 2012

According to the World Bank Migration and Development Brief 19 (November, 2012).

These flows are expected to rise 8% in 2013 and 10% in 2014 to reach $534

billion(Total) in 2015.

70

65

24

24

21

18

14

14

9

7

0 20 40 60 80

India

china

Philippines

Mexico

Nigeria

Egypt

Bangladesh

Pakistan

Vietnam

Lebanon

U.S $(billion)

India

china

Philippines

Mexico

Nigeria

Egypt

Bangladesh

Pakistan

Vietnam

Lebanon

Remittances inflow in Bangladesh

2501.13

3061.97

3371.97

3848.29

4802.41

5998.47

7914.78

9689.26

10987.4

11650.32

12843.43

14461.14

0 2000 4000 6000 8000 10000 12000 14000 16000

2001-2002

2002-2003

2003-2004

2004-2005

2005-2006

2006-2007

2007-2008

2008-2009

2009-2010

2010-2011

2011-2012

2012-2013

Remittance(U.S $ in million)

Remittances inflow in Bangladesh gradually increasing from previous years and expected to rise in next year. It’s a positive indicator for Bangladesh as a developing country.

Methodology

The methodology adopted in this research is experimental and a

combination of qualitative and quantitative approaches. and a

mixture of both primary and secondary research.

Target Population :all the migrants and Diaspora's living in outside

their homeland from Bangladesh.

Sampling Technique: The survey of this research is based on

qualitative sampling method. Out of the qualitative sampling

methods, group discussion and interview have been used.

Instrumentation and Data collection

The primary source of data was a semi-structured open

ended interview, with 25 respondents.

1

135

2

1

12

Respondents and Their living Country

Canada

italy

United Kingdom

Oman

Qatar

United Arab Emirates

Australia

The secondary data were collected from different

publications, and websites.

The determinants of sending

remittences

27%

9%

20%

10%

16%

5%

6%2% 5%

The determinants of sending remittances

Family maintaince

social responsivness

Saving Money

Repay of loans

Purchase assets,construction

Helping relatives and toward migrationBusiness investments

Purchasing Bonds

Findings

Reasons of sending

remittances

For

Family

Maintain

Social

responsiv

eness

Saving

Money

Repay of

loans

Purchas

e assets,

Constru

ction

Helping

relatives

Business

investme

nts

Purchasi

ng

Bonds

And

others

Total Answered Respondents 23 8 17 9 14 4 5 6

Age

distribution

21-3012 2 9 7 5 1 0 3

31-40 6 3 4 2 5 1 1 2

41-45 2 1 1 0 1 0 1 0

51-55 3 2 3 0 3 2 1 1

Educati

onal

Status

Class VI- X 4 1 5 3 4 0 1 1

SSC/GCSC 4 4 4 1 3 2 0 1

HSC/A Level 4 1 3 1 2 1 2 1

Graduate/post

-Graduation11 2 5 4 5 1 2 3

21 to 30 years age respondents are sending remittances for more reasons than the

other groups of age structures.

There is a positive correlation between educational level and remittances.

Occupa

tional

pattern

Self-employed and

sound eng. 2 1 1 0 2 1 0 1

Worker 9 3 9 6 5 1 2 2

Private Services 8 2 3 1 5 1 2 3

Restaurant worker 3 2 2 1 2 1 1 0

Students 1 0 0 1 0 0 0 0

Un-employed 0 0 0 0 0 0 0 0

Reasons of sending

remittances

For Family

Maintain

Social

responsive

ness

Saving

Money

Repay of

loans

Purchas

e assets,

Constru

ction

Helping

relatives

Busin

ess

invest

ments

Purchasing

Bonds

And others

Total Answered Respondents 23 8 17 9 14 4 5 6

Incom

e

status

of

famyly

(mont

hly)

High wage (€15741) 1 1 1 0 1 1 0 1

Medium wage(4000-

2000)4 4 3 1 5 2 2 2

Medium Low

wage(2001-1500)2 1 1 1 1 0 0 1

Low Wage (below

1500)16 2 12 7 7 0 3 2

Workers and private service holders are more concern to spend their remittances for spending family

purposes, saving money, business investment and repay of their old debts. In case of students and unemployed

respondents were found to be ineffective in sending remittances.

Income status and remittances are positive correlated.

large and medium income family has more causes to send remittances.

Channel Used in Sending Remittances

56%

32%

12%

Hundi Bank Bank and hundi

Hundi(an informal channel to send money and

unrecorded remittances)

Hundi is less expensive and easy to access

than bank.

Agent of hundi ,deliver money in short

notice, no paper work formalities; minimal

commission is required and can reach remote

areas easily.

32% of the respondents stated that they send

remittances through the formal channel for

example Bank or Money Exchange Company.

This percentage of Respondents prefer Bank

as formal channel because they wanted to

know that Bangladesh Government directly

benefited of this.

Conclusion

The main results of the research show that people migrate for different

purposes, factors and motivations.

This study observes that migration is a reason for reducing unemployment in

home country and guaranteeing remittances inflow.

Migrants transfer remittances to Bangladesh through both formal and informal

channels. The remittances which are sent through informal channels are being

unrecorded and do not participate in national economy.

It was found from the discussion with the respondents that many respondents

blamed the government for lack of transparency in law and order situation

regarding remittance.

The cost of migration is relatively high.

The methodology adopted in the current research could be improved, in future

years, in order to obtain many more empirical results and also, in order to

answer to other issues not yet solved.

Thank You