Foreign Remittance and Its Effect on the Economy

Abstract

Remittances are defined as foreign currency transferred by people working in foreign countries to people or groups of people in his/her home country. After the liberation war in 1971, the country was left with very few resources. The primary resource Bangladesh had at that time was “human resources”. As a result, discussion on making the best use of this resource became common in policymaking circles. The possibility of exporting workforce to other countries gained momentum soon and new opportunities opened up during the oil boom of 1970s. As the transaction of money became more accessible and more convenient, this transfer of cash started to play an ever-increasing role in the economy of many developing countries, including Bangladesh. Since then, Bangladesh has successfully exported human resources to several countries, and the remittances sent by these hard-working people have become an essential part of the economy. In the latest fiscal year, remittance earning was USD 14.98 billion, much larger than the foreign aid and foreign direct investment. Therefore, this chapter explores how this sector works and where its future lies.