In a highly connected modern world, leaving one country to undertake employment opportunities in other countries has become a commonplace phenomenon. As a result, over the years, the world has seen ever-increasing numbers of international migrants. As per the World Migration Report 2018, there were only 152 million such migrants in 1990. But within next 15 years, there were additional 91 million people leaving their native countries to work in foreign economies. In 2015, there were a total of 244 million international migrants, one in every 30 people in the entire world. Gender-wise, 52% of those migrants were male and 48% were female.
No matter whether people migrate internally or across the border, their movements have huge consequences on social, economic and political aspects of both, the home and host countries of the migrants. As the numbers of international migrants keep on increasing over the years, with only few exceptions, the amount of money – remittances – that they send back to their home countries is also on the rise. The December 2018 edition of World Bank’s Migration and Development Brief had predicted the worth of global remittances as $689 billion for the year. The same document has also highlighted that of the total global remittances in 2018; about 77% would go to the low and middle-incomes economies (LMICs) and set a new record. Remittance to LMICs was projected to grow by 10.8% in 2018, compared to growth of 7.8% in 2017, and hit $528 billion mark. This growth trend makes remittances as major source of foreign exchange earnings in LMICs, more than three times that of the official development assistance and also more than the net foreign direct investment in those economies.Though strengthening US dollar and major political and economic activities in the US, Europe and LMICs themselves won’t favour this growth in 2019/2020; net remittance inflows to LMICs is projected to grow, but at 4%, and reach $549 billion in 2019.
Jaya Jung Mahat is a policy researcher who also coordinates the Institute for Policy Research (IPR) at King’s College, Kathmandu. He tweets at @jjmahat830
Remittances – Economic Development Nexus
By simply looking at the data of rising numbers of international migrants and subsequent remittances, one can easily assume that the economies receiving most remittances, either as net amount or as percentage of GDP, must be on the track of major economic miracles. However, that is not the case. The link between remittances and economic development in home countries is highly complicated and depends on many other factors. In fact, except three countries - China, Vietnam and Bangladesh - none of the other countries that were predicted to receive largest remittances in 2018 are on their way towards major economic transformations. The case is even disappointing for countries that were anticipated to get largest remittances in terms of percentage of GDP. In fact, none of the top ten economies in this category are economically strong and based on several other factors; all these ten economics are likely to struggle hard strengthening their respective economies, at least for the next decade. Nepal falls in the latter group of economies and was supposed to receive $8.2 billion in remittances that equals 30.1% of the country’s GDP, fourth highest in the world, in 2018. However, this money is yet to be translated into the country’s economic prosperity. Nepal’s policies, decades-long political instability, limited connectivity to world markets and poor internal infrastructures are some of the factors to be blamed for this existing gap between the country’s increasing remittance receipts and steady local growth.Remittance – Entrepreneurship Linkage
There are limited scholarly works done in regard to exploring the links between remittance and entrepreneurship in the Nepali context. All available works do not find significant linkages between these two sectors. Prakash Dahal (2014) found a positive relationship, but not that significant, between remittances and entrepreneurship in Nepal. Similarly, JeevanathDevkota (2016) realised that only 4.44% had then been used in business investment; and skills learned by workers abroad did not contribute in entrepreneurial development after they returned to Nepal. The World Bank’s 2013 Report Migration and Entrepreneurship in Nepal with a focus on Youth - An Initial Analysis had found that entrepreneurship was more an economic necessity than something that came out of entrepreneurial desires. The same study also discovered that even if those workers get into entrepreneurship, they faced unique constraints while establishing and operating their firms. Based on these and other findings from past studies, we can easily draw a conclusion on how weakly entrepreneurship and remittances are inter-linked in our context and why we need to take necessary steps to improve existing conditions in this regard. As more and more Nepalis seek for employment opportunities outside, we are sure to witness surge in future remittance into the country. If we still ignore to work enough and develop proper policies and establish suitable mechanisms - that would help major stakeholders to fully utilise social, economic and cultural inputs of Nepal’s migrant workers through entrepreneurship in local settings, I doubt we would really be achieving noticeable economic transformations in future Nepal. To help concerned stakeholders, three United Nations (UN) agencies – United Nations Conference on Trade and Development, International Organisation for Migration and UN Refugee Agency – have jointly published the Policy Guide on Entrepreneurship for Migrants and Refugees earlier in 2018 to highlight how entrepreneurship could well be employed to better net positive impacts of international migrants’ social, economic and cultural contributionson their home and host countries’ diverse sectors. Also in 2018, International Centre for Integrated Mountain Development (ICIMOD) has published a working paper - Approaches to the Productive Use of Remittances in Nepal– stress how Nepal could tweak existing policies while also developing new policies to establish a solid link between remittance and entrepreneurship that fits in the country’s evolving circumstances. The UN report suggests a holistic Entrepreneurship Policy Framework that aims to benefit stakeholders in home and host countries alike, prioritising major entrepreneurship and remittance-related issues into six distinct policy areas namely formulating a cohesive entrepreneurship strategy,optimising the regulatory environment, enhancing entrepreneurial education and skill development, facilitating technology exchange and innovative start-ups, improving access to finance, and promoting awareness and networking. Analysing Nepal’s existing demography, the ICIMOD study tries to contextualise the linkage between remittance and entrepreneurship and suggests utilising major share of remittances and investing in rural parts of the country for fostering more inclusive entrepreneurship in the country.Jaya Jung Mahat is a policy researcher who also coordinates the Institute for Policy Research (IPR) at King’s College, Kathmandu. He tweets at @jjmahat830
Published Date: February 1, 2019, 12:00 am
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