A Study On The Contribution of Remittance In GDP of Bangladesh

Summery of the Study

Remittance is the amount of money that the migrant workers send to their home countries. In other sentence it is the portion of migrant workers earnings sent back from the country of employment to the country of origin (ILO, 2000). Usually it’s in cash transfer although such transfers are frequently held in kinds which known as hawala[1]. Various studies show that flows of migrant remittances from sending to receiving countries are continuously growing. Global figures state that official remittances have increased from less than US$ 2 billion in 1970 to US$ 80 billion in 2000 (ILO, 2002). Sixty percent of the global remittance flow is towards developing countries (Sorensen 2004), which a positive signal for all developing countries and Bangladesh is no exception.Bangladesh is a small agricultural country of South Asia with a total area of 144,000 sq km with a huge population of 144.43 million (2006)­­­­­­­­­­­­­­­­­­­­BBS. Agriculture alone is the main sector in the contribution to the GDP about 15[2] percent of total in Bangladesh­­­­­­­­­­­­­­­­­­­­. Industry sector contribute 29.77 percent and Service sector 49.12 percent ­­­­­­­BBS. But it has a large labor supply. It accumulates an average of 146914 workers per year (1976-2006) in the global labor market, which is also a very important sub-sector to earn higher GDP. These big amounts of migrant workers are mainly responsible for the growing remittance in Bangladesh. In 2002, it accounted for 2% of the global remittance transfer and 12% of the official remittance to South Asia. If we give a deep look to the remittance, which is important sector to earn GDP of an economy of a country like Bangladesh, shows that from a long time migrant workers are sending remittance. The early time after independence, the total sizes of migrant workers and remittance growth rate was small. The condition improved from the beginning of 1989. Yet, still the growth trend and the amount of remittance are not satisfactory. Many problems are responsible for this unsatisfactory lower remittance. These are the ineffective policy of the government, failure of the formal banking system, inefficiency in the ministries and agencies, problem facing in the transferring money, instability and serious decline of law and order situation.

[1] Hawala is a Bengali word.
[2] BBS report on National Accounts Statistics for the FY 2007(Provisional)