ABSTRACT
International remittance is an important source of foreign capital for the developing and less developed countries. The remittance has become a focal issue in economic literature for over two or more decades, because of its rise in volume as well as its potentiality in reduction in poverty in many of these countries. It is also observed that the flows of remittance have continued to increase together with the rise in migrants’ number around the world. Reasonably significant inflows of remittances into the economies of the developing countries have macroeconomic effects, which may have critical and important implications for many of these countries. However, available studies show different types of results with respect to the effects of remittances on economic growth. These studies also differ in their methodologies. In the context of the Bangladesh economy, remittance plays an important role in terms of its contribution to the gross national income and foreign exchange earnings. Anecdotal evidence suggests that remittance has helped alleviating poverty for many of the households, both in the rural and urban areas. However, there is very little systematic research with a view to exploring the link between remittance and poverty in the context of the Bangladesh economy. Large inflows of remittances had macroeconomic and developmental
implications for Bangladesh’s economy. Over the years, Bangladesh has moved away from aid dependency. Remittance also plays a critical role
in providing the foreign currency and financing the trade deficit of Bangladesh. Raihan et al. (2009) showed that there was a strong multiplier effect of these remittances on the rural areas of Bangladesh, such as through increased consumption spending and increased investment on health and education relative to non-migrant families, and also through the establishment of enterprises and small businesses by returnee migrants or their family members, which are generating employment and creating markets for locally produced goods and services. Using household data and CGE model, Khondker and Raihan (2009) showed a large impact of remittances on reduction in poverty in Bangladesh. Against this backdrop, this study examines the impact of remittances on
households’ expenditure, savings and investment behaviour in Bangladesh. This chapter uses a cross-section econometric analysis exploring the links between remittances and expenditure for the households using the latest household survey data from RMMRU.
