Remittances and development in South Asia

In Pakistan during the 1980s migration and remittance flows were perhaps the single most important factor in explaining the rapid decline in poverty during these years. In Sri Lanka, where nearly half of out-migrants are women, migration and remittances have both affected the labour market and foreign exchange position of the country. In Bangladesh and India migration outflows have been significant but never so large to have a major impact on the labour market, although in India at the regional level e.g., Kerala and in certain districts of Bangladesh the impact may have been more important. In Bangladesh and India remittances are still significant as a proportion of the gross domestic product. This paper reviews the trends in remittances post-September 11, 2001 and analyses factors which may explain a significant increase in three of the four South Asian economies reviewed in the paper, namely, Bangladesh, India, Pakistan and Sri Lanka and the impact of this increase on economic developments in these countries.