The document discusses the potential of developing the overseas manpower industry as a driver of economic growth in Bangladesh. It notes that globalization has increased cross-border movement of workers and remittances, benefiting developing economies. Bangladesh has emerged as a key supplier of manpower to other countries, with over 4 million Bangladeshis working abroad and remitting US$4.8 billion annually through official channels. The report aims to outline a strategic path for Bangladesh to achieve annual remittances of US$30 billion by 2015 by diversifying markets, occupations, and improving management of worker export and remittances. It recommends transforming the roles of stakeholders like government, NGOs, private sector to professionalize the system and maximize economic

1. ABSTRACT
The impact of globalization on the world economy is becoming increasingly all-pervasive. Its
positive impact is no longer confined to the developed countries. Even a developing country like
Bangladesh, with its weak economy, is looking at globalization to strengthen its base. In the last
decade cross border movement of people across nations, especially the movement of skilled and
the unskilled labour from developing to developed countries has resulted in significant increases
in the incomes of the former through remittances of foreign exchange by their overseas citizens.
This phenomenon has given a boost to the economies of the developing nations. Bangladesh has
an edge over many other developing countries in its abundance of human resources. This has
resulted in its emergence as a key global player as a source country for the supply of manpower
to the developed nations. The report sets out to:
• Establish the importance of developing the overseas manpower industry as one of the
growth drivers of Bangladesh’s economy.
• Highlight the untapped global markets and occupational categories which Bangladesh
can explore.
• Suggest seven pronged strategies to exploit the global opportunities in manpower export
and achieve manifold increase in the flow of migrant remittances to Bangladesh.
• Identify and spell out the role of the government in executing the winning strategies that
it needs to adopt to become the leading supplier of manpower resources globally.
• Bring into focus the potential areas where the government needs to involve the NGOs
and private investors for the full exploitation of the opportunity.
The report makes the following salient points:
1. International migration yields two fold benefits to the source country. The migrants
earn more resulting in their economic betterment. They also remit a part of their earnings
to their families in their home countries resulting in their wellbeing and as a result
strengthening the nation’s economy. These potential benefits have prompted many
developing nations to integrate migration and labour export policies into their overall
development strategies. The significance of international migration to national economies
has also prompted international organizations like the World Bank, ILO and the UN to
undertake extensive research in these areas and suggest policy frameworks for emigration
of people and on the ensuing remittances.
2. The forces of globalization are contributing to greater integration of labour markets.
Emerging technologies call for new skills in new growth poles and emerging
demographic patterns call for old skills in new locations.
3. Bangladesh is emerging as a major beneficiary of this phenomenon; hence it is
imperative for it in the coming years to gainfully leverage the growing opportunities in
the international labour markets. Bangladesh has certain inherent advantages such as:
availability of abundant and cheap talent; good reputation of its overseas workers; its
historical presence and strong positions in some countries; great willingness of its citizens
to migrate; growing importance of manpower export in the eyes of the government and
the willingness of NGOs and other private sector players to play significant roles.

2. 4. The Government of Bangladesh needs to make a paradigm shift in its overseas
employment strategy. It needs to collaborate extensively with all the stakeholders— the
industry players, educational and training institutions, banking and micro-finance
institutions, NGOs and a strong eclectic industry association or forum to bring forth this
change. They need to recognize the significance of overseas remittances in alleviating
poverty. Together they have to spur investment in education and training, ensure decent
and quality employment for the migrant Bangladeshis, and create organizational
structures and processes that would ‘professionalize’ the system of overseas employment
to enable the Bangladeshi migrants to compete in the ever expanding and highly
competitive global market.
5. The government has an overarching role to play if the full economic potential of
migration is to be realized. The report proposes three key roles that the government needs
to play: that of a legislator, a regulator and an enabler.
6. First as a regulator, the government needs to enact or suitably amend the laws to grant
industry status to overseas manpower export so that agencies involved can legally deal
with foreign currencies and to prevent illegal human trafficking and human rights
violation and bring transparency in the migration process, thereby protect its citizens
from opportunistic exploitation—only then a sustained growth of the economy through
migration and remittances is possible. The Government of Bangladesh also needs to work
directly in two distinct areas. It should ensure that the education sector encompassing
schools, technical institutes and universities are in sync with the global labour market
trends and demands so that the citizens have relevant and quality educational and
technical backgrounds to avail of these opportunities. Secondly, it should have a good
networking with the governments and the organizations of the countries where the
Bangladeshis are likely to work. Both these areas are important to ensure long term
benefits and to establish a good reputation in the global market.
7. The process of migration and flow of remittances would involve many credit
institutions like banks and micro finance organizations. These credit organizations will
have to provide incentives to the migrants for remittances to be transferred officially and
thereby canalize remittances into the national market for productive investments. These
institutions will have to be carefully regulated so that the procedures in the migration
transaction are devoid of ambiguities, are easy to use and free from fraud and inaccurate
information.
8. The government needs to play the overall role of an enabler in the migration process
and also in the inducement of the migrants to remit funds back home. It must also ensure
the optimal use of these funds.
9. The government has to provide legitimacy to the formation of an overseas staffing
services forum-the core hub around which the entire development strategy of promoting
official migration and remittances will revolve.
10. A number of different types of organizations will have to be involved to form
partnership with the government. The civil society organizations like the NGOs working
in the rural areas have an essential role to play in creating awareness regarding migration
opportunities among the potential migrant households. Other organizations like self-help
groups can take up the task of evolving proper framework and creating opportunities for
the best use of the remitted funds. By extending such services these organizations work
as intermediaries between the government and the people. People have a better

3. understanding of the government policies. These organizations thus form a strong
bulwark in the national development strategy.
11. The private sector companies or the businesses need to play an integral part in the
training, funding migrants, identifying jobs, and in forming liaison with the staffing
companies at home and abroad. They need to come forward and make use of the
commercial opportunities present by creating additional facilities like vocational training
centres, providing staffing services, and make financial intermediation like setting up
micro finance institutions.
12. Bangladesh has a strong foundation. What it needs to do is to frame policies, create
partnerships, allow responsible private entrepreneurship to flourish and inject
professionalism in the management of the manpower export. All these can significantly
improve the returns to the country from migration. There is no doubt about the gains—all
it needs to do is to learn to reap maximum benefits out of this opportunity.

4. I. Introduction and Overview
The rapidly changing global economy is driven by innovative technologies and integrating
markets. There has been a tremendous spurt in the growth of international trade in goods and
services along with a significant rise in the international financial flows. Movement of people
within and across nations is on the rise. In fact one of the biggest implications of a rapidly
changing global economy has been on the impact on the labour market. In the last decade, cross
border movement of people and remittances outflow from a large number of developed countries
and remittances inflows into a number of developing countries has been increasing steadily.
Since 1980 the stock of migrants has started moving two steps ahead of the average growth rate
in the world population. According to the United Nations Report of 2006, about 3 per cent of the
world population is in transit. Sizable portions of the people living outside their countries of birth
send back regularly a part of their income home. Migrant remittances have made it possible to
bring about direct, immediate and far-reaching benefits both to the families and the countries of
the migrants. In fact the migrant workers provide a constant source of income—an amount larger
and more predictable than the official development assistance, foreign direct investment and
other private inflows.
There are three major positive effects of migration. Expatriates who remain abroad contribute
money via worker remittances. Returning migrants, in particular, bring back their skills and work
experience from abroad, thus boosting productivity of the local economy. Migrants may also
invest capital in entrepreneurial ventures that facilitate transfer of knowledge or technology to
the developing countries and boost productivity and economic development. While all three are
equally important for the development of Bangladesh, this report focuses only on the first major
impact of migration, i.e., migrant remittances.
The total inflow of remittances to recipient countries only through official channels is estimated
to be US $ 268 billion in 2006. Our analysis suggests that in the next decade remittance will
continue to be the driving force of the developing economies with the reduction in remittance
costs and expanding networks in the remittance industry, greater movement of temporary
workers and resultant growth in the migrant stock and incomes around the world. Going by the
past decade’s trend and in the light of more multilateral and bilateral discussions, the global flow
of remittances will expand rather rapidly to an estimated amount of US $ 400 billion by 2010
and cross US $ 600 billion mark by 2015. In the recent years progressive governments from both
migrant sending as well as receiving countries have started adopting a strategic approach towards
migration management. It is believed that with the implementation of GATS Mode 4 in the next
decade there will be a much greater freedom of movement of temporary workers, at least in some
areas, among the member countries of WTO. Hence, it is likely that there will be a cumulative
temporary and permanent migration of about 80-100 million labourers around the globe. This
trend holds out a remarkable promise for the labour exporting nations like

5. Bangladesh, if it works out and executes an effective strategy of developing, nurturing and
exporting human resources in the coming years. Bangladesh is an important supplier of human
resources—in fact in some developed destination countries it is a major supplier and accounts for
about 3 per cent of the global remittance income. More than four million Bangladeshis work
abroad and over a quarter million Bangladeshis join the migrant work force every year. Currently
it receives an annual remittance amount of US $4.8 billion through official and an additional
amount of US $3.0-4.0 billion through unofficial channels. The country’s man power export
industry is poised for a dramatic growth. To date this industry has played a major role in
reducing the balance of payments problems by generating valuable foreign exchange earnings in
the form of remittances. Millions of Bangladeshis have benefited directly from the industry.
Recognizing the potential development impact that can be made in this sector, the Royal Danish
Embassy in Dhaka has sponsored this study to look into possible strategic interventions that can
help Bangladesh achieve annual remittances of US $ 30 billion by 2015. Therefore, the central
question that we have addressed in this report is: How can Bangladesh achieve an annual
remittance level of US $ 30.0 billion by 2015?
This report attempts to outline a possible path and set the agenda for all the important
stakeholders in the overseas manpower industry in Bangladesh so that this ambitious target
becomes a reality. The following is a brief chapter-wise outline of the report:
• Chapters II & III: An analysis of the current situation providing the economic
justification for following the given strategy taking into account the social and the
developmental issues that are important for the future well being of the country.
• Chapter IV presents the analysis of the global labour market dynamics highlighting the
trends towards greater integration in labour markets and identifies and ranks the potential
labour receiving countries in terms of attractiveness to the Bangladesh manpower export
industry.
• Chapter V presents a trend analysis of the occupations and skills in demand globally
and an assessment of the size of the present and the future global demand in the
professional, skilled, semiskilled and unskilled categories.
• Chapter VI discusses the relative position of Bangladesh as a labour exporting country
vis-à-vis other major competing countries, and identifies its areas of competitive
advantages and disadvantages.
• Chapter VII deals with the dynamics of the supply side of the labour market in
Bangladesh and identifies areas of improvement in education and training infrastructure
in the country and recommends various governmental and non-governmental initiatives
to be taken to increase the demand for Bangladeshi migrant workers in the international
market.
• Chapter VIII presents a medium and long term strategic road map for diversifying the
portfolio of target markets and occupational categories through major transformation of
the management process, remittance transfer mechanisms, redefinition of the roles of the
existing stakeholders, and induction of new stakeholders in the manpower export
industry.

6. II. Export of Manpower and Migrant Remittances: An Alternative
Development Strategy
The rapidly changing global economy is driven by innovative technologies and integrating
markets. There has been a tremendous spurt in the growth of international trade in goods and
services along with a significant rise in international financial flows. Movement of people and
international migration is also on the rise, although this issue has received much less attention
than warranted amongst economic analysts and policy makers. Yet it may be argued that one of
the biggest implications of a rapidly changing global economy is about labour market impacts.
There are discernable changes in the wages (both absolute and relative) in different sectors and
different economies, labour contracts are becoming much more flexible, and jobs are being
relocated across the world. There is substantial misalignment between labour demand and labour
supply in local labour markets. Changing production structures and technologies, demographic
differentials, and specific sector-wise growth rates in labour demand and supply drives this.
Labour arbitrage is a distinct possibility. Indeed, the next phase of globalization is likely to be
marked by an emerging global labour market and societies will have to grapple with many
thorny problems of labour market integration. This chapter focuses on an important dimension of
labour movement, namely international migration. This process can have repercussions on both
the receiving country as well as the country of origin. Migration can be at various skill levels too.
From the point of view of a developing country, one potential benefit is the receipt of financial
remittances from the nation’s migrants living and working abroad. This can be a very important
building block of growth and development. Bangladesh have had a long experience of
emigration of workers, both for short-term employment as well as permanent resettling. For a
developing country like Bangladesh, migration and remittances have been growing rapidly and
consistently. The process of migration and the receipt of remittances are however, fraught with
their share of difficulties. These pose quite a few policy challenges. A more focused approach
could ensure a much larger and sustained economic benefit to Bangladesh. Section 2 discusses
the changing economic context of migration in the emerging global economy. Section 3
examines the economic and developmental implications of international emigration for a
developing country like Bangladesh. Section 4 analyses the macro and micro economic effects
of international remittances. It is estimated that about half of international remittances remitted
by migrant workers across the world are done through unofficial channels. Section 5 examines
the reasons why this channel operates the way it does. Section 6 looks at the entire migration
transaction from the potential migrant to the act of emigration and finally to the receipt of
financial remittance, and the challenges it poses for policy makers wanting to avail of the process
as a strategic tool of development. Section 7 puts together a set of policy priorities and
institutional initiatives that the Government of Bangladesh could consider for sustaining the
gains from international emigration of its citizens. Section 8 remarks on the scope and
importance of government intervention. Section 9 contains some concluding observations.
 The Changing World of Jobs
The growth of international trade and investments has reduced cross border barriers quite
dramatically. Market integration has been pushed with the advent of the WTO. It is also expected
that the future increases in global trade and investments will be large with positive economic
gains accruing to all the participating countries. Compared to this growth and reduction of

7. transaction costs of trade, the barriers for movement of labour remain high. There is still a
hangover from the past about the necessity of protecting local labour markets. However, the
nature of jobs, their international locations and the labour demand relative to locally available
supply have all been changing with a breath taking speed. Cutting edge technical jobs require
high-end education and skills. The demand for high skilled personnel is increasing at a rapid rate
relative to supply. Most of these jobs are located in developed high-income countries. People
with requisite skills are converging to the destination of high-income economies to avail of these
opportunities. It does not matter where one is from. If one has the skills and the education, the
job is available. Many developing low and medium income countries are pursuing successfully
their own industrial modernization like the countries of East Asia and particularly China, thereby
opening up new employment opportunities that require a different set of skills and discipline.
These skills are important in sustaining productivity changes in manufacturing and related
industrial activities. The creation of these jobs also calls for migration, although for most
developing countries the migration is likely to be internal rather than international. Alongside
this, jobs in activities that exhibit increasing costs (or diminishing returns) in the entire value
chain of integrated production structures, are shifting to locations where semi-skilled people are
abundant and the wage costs are low. These could be jobs in the low end of the information
technology sector like the information technology enabled services (ITES) or the automotive
ancillaries sector, and the whole movement of outsourcing and off-shoring jobs from high
income countries to the low income countries. These sectors too provide opportunities of new
employment with some rudimentary skills.
 The Impact of Increasing International Migration
Increasing international migration from a low-income economy is driven by push factors such as
the expected income that can be obtained in another economy where real wages are higher and
the quality of life perceived to be better. The pull factors are primarily driven by the changing
pattern of employment opportunities and hence the derived demand for labour. Broadly, as
discussed in the previous section, the job opportunities are in three segments – high skill,
knowledge intensive jobs, low or unskilled jobs, and finally jobs in selected services where some
specific skills are necessary, such as in the area of nursing or paramedical support. An interesting
feature of actual migration in the last four decades indicates that the growth in the number of
international migrants has been high and constant. The growth in remittances from these
migrants has however, grown at an increasing rate during the same period. This implies that the
remittance per migrant is increasing. The developing countries receive about 70% of total global
remittances. In many developing countries the remittances sent have become a significant source
of foreign exchange earnings. This trend has, in turn, led to some serious research on migration
issues and also led to the High Level Dialogue on International Migration and Development at
the United Nations.
A number of interesting issues are being revealed from recent research being carried out to know
more about the phenomenon of international migration. One result is the fact that migration and
remittances are concentrated among and within countries. In other words international migration
affects some countries and some regions in countries more than others. International migration
also affects men and women in different ways, implying the existence of significant gender
issues. The core question that needs an answer is: How is international migration related to the
process of development? The more we understand the emerging links between the two, the more

8. confident we can be of designing policies to influence the impact of international migration in
the migrant sending countries.
 Moral Outcomes, Country Risk and Government Policy
With increased flows of migration from the country of origin, a number of concerns crop up. One
such concern regards the migration of low or unskilled people many of whom could be illiterate,
or just functionally literate without much knowledge about the entire transaction that entails
migrating from one’s home country to a new social environment.
The scope of opportunistic behavior is high in such situations. Unscrupulous recruiting agents
can take job seekers for a ride by charging more than is warranted, providing incomplete and
incorrect information about prospects and adopting illegal processes that can make the migrant
vulnerable to prosecution under the law of the country of destination. Many such recruiting
agents could work hand in glove with similar agents in the country of destination such that the
migrating workers can be used as a cheap resource without rights and protection under the law.
Exploitation of ignorant or vulnerable migrants is a well-known fact of life.
It may be argued that migration is a private decision taken by an individual, and hence whatever
is the outcome and consequences of that decision (positive or negative), the regulators and policy
makers should refrain from intervening. This argument is not quite acceptable. There are two
reasons for this. The first difficulty arises from a moral ethical standpoint. When ignorant people
are duped and exploited by people not adhering to legal and moral norms, the least a government
can do is to ensure that such cases become much less frequent in the future. This, in turn entails,
not only having a position on ensuring justice and rule of law, but also coordinating with the
governments of country of destination of the migrant. This regulatory cooperation and the
deterring of opportunistic behaviour through a set of laws governing migration are of great
human consequence.
The second reason why this argument for passivity is unacceptable is the more strategic reason
as to the long-term consequences for the flow of migration from the country of origin. Illegal
migration thwarts both the push and the pull factors driving migration in the long run. Rising
risks increase the costs of migrating, and can reduce the flow. The collective upshot of a set of
private decisions to migrate illegally (with or without fully comprehending the consequences)
has an externality effect on the reputation and image of the country of origin. That may suffice to
drastically reduce acceptance of migrants from a country where large illegal traffic is the norm
rather than the exception.
 Wages, Skills and Remittances
In low-income labour surplus economies, the emigration of low and unskilled workers reduces
pressure on local labour markets for similar services. This is certainly a positive gain for the
individuals who remain and for the country as a whole. Even if this does not produce
instantaneous rise in local wages, the probability of getting a job locally improves. There are
positive externalities too, as the outcome of migration can be a reduced pressure on scare public
goods and civic facilities. It may also reduce the cost of providing future public goods.
The second positive impact pertains to the demand for skills that are required in getting jobs
abroad. They could be wide ranging from basic education and language proficiency to more
specific vocational skills. It could also raise the demand for higher education in technical fields

9. like engineering or management. As education becomes more oriented to labour market
outcomes, the demand for an improvement in the functional quality of educational services will
also come about.
The third and arguably the most important positive and tangible impact is the flow of
remittances from migrants’ incomes earned abroad. Migrants’ incomes are typically sent
privately to their immediate or extended families. The augmented income of the household that
receives the remittances is of obvious positive consequence. These flows of income not merely
support higher consumption levels, but are also frequently used for buying of assets like land or
farm implements, setting up a small business venture, ensuring education of children in the
family, improving healthcare and acquiring human capital. Sometimes remittances are in kind
like medicines, or food or general supplies in the event of an emergency. In other words this
possibility is like a general insurance facility that can be relied upon. Finally, sometimes
remittances can arrive in the form of specific purposes for a community like a village or a small
rural town. For instance, a migrant may feel obliged to build a school in his native village where
he grew up. He may have realized the hard way of the value of having a good school where
others canget themselves educated. Migrants often reveal a social commitment to give back to
their social roots. These commitments often result in activities that clearly go beyond the private
benefits of a particular family or individual. In cases where a number of people have emigrated
from a close knit neighborhood, the remittances that flow in can be used by collective consent
for community projects and improvements in the neighborhood infrastructure.
 The Economic Impact of Remittances
Remittances emanating from international migration have a number of beneficial economic
effects. Some of these effects are microeconomic in nature and have direct consequences on the
wellbeing of the household that receives remittances. The most obvious being an augmentation
of income. Other effects are more economy wide in nature, provided the remittance flows arrive
through official channels, and have macro-economic ramifications. This section reviews some of
the more important potential gains from remittances.
Before turning to the economic impact of remittances from migration, it is important we ask the
question: Who migrates? One would expect that the skilled and rich people could wish to get
away from the lack of opportunity to greener pastures. Or, it could be argued that the desperately
poor would migrate so that they could avail of employment opportunities and higher wages.
However, evidence reveals that neither of the two extremes in income distribution are the most
likely migrants. Initially when migration commences, the most likely migrants come from the
middle of the distribution. Migration entails costs, uncertainties and having some rudimentary
skill earned through education and adequate physical capabilities. Migrants have to trade-off
incentives against real constraints that they may face in going through the entire transaction of
international migration.
There are some important dynamic implications of this evidence. Over time, if society wishes to
leverage the economic benefits of international migration, then the crux of enabling policy
interventions has to be the reduction in the risks and costs of migrating.
Also, as income increases from very low levels in a country, migration also increases and then at
some sufficiently high level of income may taper out. Indeed, there is some evidence to suggest
that there could be a switch from a country that sends emigrants out to other parts of the world to
one where immigrants come enter as a preferred destination from other parts of the world.

10. Finally, migration flows create networks of migrants and clusters of remittance receiving regions
in developing countries. The probability of a region sending migrants is higher if the region
already has a number of families or households from where emigration has taken place. There is
a kind of regional agglomeration economies in the migration flows.
 The Macro Effects
The most direct economy wide impact of remittances is on the current account of the balance of
payments. International remittances have two distinct effects. The first is the import more
essential raw materials or universal intermediates that are crucial for the production economy.
These are no borrowed resources and hence can be used for purposes where the immediate gains
are not commercial but more developmental in nature. The second impact is the augmentation of
the domestic saving rate that remittances provide, adding to the potential flow of investable
resources in the economy.
In low-income economies the added resources for investment made available without curtailing
current consumption is undoubtedly useful.
Other important issues on which international migration is expected to have an effect are poverty
alleviation and income inequality, productivity in rural agricultural and nonagricultural activities
including investments and social sector spending such as schooling and healthcare. The effects
could be directly on the remittance receiving family as well as indirectly through induced effects
on the local region. Similarly some effects may be short-run in nature, while other effects could
be discernable only after some time such as the investments in the social sector.
A very significant finding of the research on migration pertains to the impact on inequality and
poverty. Remittances into areas from very few have migrated increase inequality while
remittances into areas from where many have migrated reduce inequality. Similarly, remittances
into areas with low migration rates increase poverty, while remittances into areas with high
migration rates reduce poverty. The reason for this result is not surprising. The first stream of
migrants comes from middle and upper middle of the income distribution. The remittances sent
by them are received by relatively well to do families in the neighborhood. Thus inequality
increases and there is no impact on absolute poverty. As migration increases, the risks and costs
decline and poorer families can avail of migration opportunities, remittances begin to be received
by poor families and that obviously has to reduce inequality and poverty. So, creating high
density migration regions is welfare improving. This has to be a focal point of policy
interventions in developing economies. An economy can find remittances a useful way to get
resources for investment in development projects. Indeed, many countries are beginning to focus
on labour export strategies to boost development. It must be kept in mind that to obtain these
resources though, the country has to sacrifice some human resources through migration. The loss
of such resources can have adverse short term effects on local economic production. At the
household level every household is not expected to be good both at producing output as well as
exporting labour. Most households will have an advantage in one of these activities. The solution
to this problem is to link the two types of households in the local economy through some
resource enhancing schemes such as micro credit.
 The Micro Effects
The microeconomic effects are more direct in the sense that the individual or the household
receiving the remittance immediately experiences a rise in disposable income.

11. What is done with the additional income could vary substantially within different income groups
and different localities and individual priorities. The priorities could range from increasing
essential consumption to increasing non-essential consumption, it could imply setting up and
financing micro business, it could imply acquiring assets such as land, or investments in human
capital such as completion of a family member’s education and training.
Each of these uses of financial resources obtained through remittances clearly has positive
effects on the local economy. Any increase in consumption expenditure induces a rise in
aggregate demand that in turn, induces additional production and employment.
Remittances act as injections of autonomous spending that have a multiplier effect on the local
economy. Remittances, moreover, are not related to local economic outcomes and shocks. Hence
remittances are truly an insurance against income fluctuations and entitlement failures. The other
types of uses are related to more long term benefits in terms of returns that are expected to flow
in the future, as in the case of the purchase of agricultural land or the investment in human
capital.
It is clear however, that households are likely to pursue the best strategies perceived for their
welfare. It could be freedom from immediate deprivation and poverty, the meeting of a social
obligation or pursuing a plan to increase the flow of future incomes. In every single case the
benefits that accrue to individuals and households at the micro level have a macro counterpart.
Governments of low income countries spend a lot of scare resources to promote sustainable
livelihoods and reduce the level of poverty and deprivation.
Remittances have a very high opportunity cost in the sense that each taka of remittance, liberates
a taka from fiscal resources to be spend on alternative ends. This is particularly true when
remittances come into households that are more poor and vulnerable.
Just as the macro opportunity of benefiting from the externalities of networked Diasporas
accrues substantially with the passage of time, the learning for the recipients of remittances is
large. The most obvious claimant for receiving remittance from a migrant is his immediate
family or next of kin in the country of origin. The relationship between the migrant and his
family is private, but it is reasonable to assume that the migrant, through his experiences, bring
home a learning that is durable and positive. The possibility of improving one’s lot by availing of
opportunities and by working hard is not a remote abstract story told by a politician or narrated
in the media. It is a living tale of success from which much nuanced learning is possible by the
family of the migrant. The value of this learning cannot be underestimated as it may have very
durable impact on attitude to work, optimism and the importance of learning from one’s
mistakes. The negative aspects of a migrant’s experience are unlikely to be revealed publicly, but
may be privately shared within the family.
So far we discussed micro effects that unambiguously improve individual welfare and create
positive stimulating effects in the local economy. There is also a potential of harnessing
remittances (or some part of the flow) to promote community assets in a poor neighbourhood. It
is often the case that migrants move out from a particular locality or area, possibly driven by the
demonstration effect of initial successful migration from the area.
 The Persistence of Unofficial Channels
We have been emphasizing the importance of official channels being used for remitting and
receiving international remittances. This is the only way to fully utilize the potential economic
benefits from the flow of remittances. However, a number of estimates by monitoring agencies,

12. including the ILO have put the volume of unofficial flows at around 50% of the total. This is
clearly too much especially when one considers the macroeconomic gains and the community
gains that are foregone. While it may not be realistic to expect that the unofficial channels will
disappear altogether, it may be worthwhile to seek answers to the question as to why so many
people prefer the unofficial channel so many times. There are a number of reasons, and
addressing each of these ought to be part of the overall strategy to increase remittances in general
and official channel remittances in particular.
The first and arguably the most important reason is the exchange rate premium obtained in the
black market. The demand for foreign exchange in the black market is usually linked to illegal
transactions such as smuggling, narcotics trafficking and gun running. If the exchange rate
premium could be reduced, then the Bangladesh economy would be contributing less to illegal
activities and thereby increasing overall welfare and reputation of its economy. Exchange rate
management should keep a close watch over the amount of the black market premium. If the
premium is substantial and growing, then it may be advisable to review the market valuation of
the Bangladesh Taka.
There could be another reason why people may prefer the unofficial route. The unofficial service
providers are in most cases efficient and user-friendly. The services are provided door to door
with promptness and with no paperwork. Many illiterate or just functionally literate migrants
may prefer this route where they do not have to fill up lengthy forms and sign in a number of
places. The modicum of risk that they take is usually offset by the low transaction costs of such
routes. Usually one known person taps a large number of migrants and builds up a reputation in
service provision and offers attractive premium on exchange rates. Thus a network is established
which may be difficult to dislodge.
However, the official agencies would have to take up the challenge in providing low cost
services that are competitive with the networks mentioned. This is certainly not impossible, but
the initial push has to be very decisive and well orchestrated. It is possible to reduce the
unofficial flows therefore, with close exchange rate management and the competitive provision
of customized needs across a large cross section of remitters. The third and final reason why a
migrant may consciously choose the unofficial route is when the person is himself in an illegal
activity or his status is not fully legitimate. In such cases opting for the official channel may be
too risky for comfort. This reason may persist and be difficult to control. This is where
cooperative efforts across international borders to prevent money laundering and check the links
these monetary flows have with international crime are likely to come in handy.
 The Migration Transaction
It may be useful to review the entire migration transaction beginning from the identification and
encouragement of the potential migrant to the optimal utilization of the remittances for
development and reduction of poverty. This exercise would be essential in the formulation of a
feasible strategy to increase and sustain remittances, and maximize the economic benefits of the
process.
The first step begins with the understanding of the demographic pool of potential migrants, their
age and skill profiles, and their location. Results of research from the study of existing migrants
may help to profile the potential migrant better. Care should be taken to match this demographic
study with the internal labour market requirements of Bangladesh. This is the supply side
beginning of the entire transaction.

13. The next step would be to have a data bank of labour market conditions in other countries that
are likely to be countries of destination of migrants from Bangladesh. This data base should not
be entirely based on numbers. The requirements of skills and language proficiency should also
be mapped.
Finally, country specific and job sector specific procedural requirements should be documented
and listed. There must also be well constructed training modules for orienting a migrant to the
country of destination. It has to be appreciated that when a migrant moves, there are problems of
adjusting in new social milieus, labour market dynamics and deeper issues of cultural integration
and coexistence. The matching of existing supply to global potential demand in a dynamic
fashion is the essence of this manpower mapping. The manpower mapping in both demand and
supply dimensions require a clear understanding of procedures, needs as well as individual
strategies and preferences of potential migrants
 Some Challenges for Adopting a Strategic Approach to Remittance
Flows
In the description of the complete migration transaction, there are some crucial aspects that will
need special attention and effort. These aspects can be broadly classified into two interrelated
categories.
The first category of challenges revolves round the imperative to reduce risks by providing
adequate resources including human capital through education and training. It is indeed obvious
that such interventions have social externalities that can spread beyond the migration question. It
will also entail legislations and regulatory procedures that are transparent (from the perspective
of clear and easy to follow rules), ethically sound (from the perspective of human dignity and
rights) and safe (from the perspective of identifying migrants and ensuring that labour export
does not get entangled with illegal activities).
The second category of challenges revolves round the need to reduce transaction costs.
Appropriate financial instruments and institutions have to be designed along with the need to
avoid wide fluctuations in the foreign exchange rates. This section briefly discusses the areas of
special challenge.
The third challenge is the identification, screening and regulation of a set of agents, or recruiter
agencies both in Bangladesh and in the most important set of countries of destination.
The biggest challenge will be to convert a growing part of the volume of remittances in low
income rural areas where the incidence of poverty is very high, into a source of developmental
micro finance to be used for creating physical infrastructural assets and promoting sustainable
livelihoods for the deprived sections of the population
Finally, in ensuring that migrants get ‘decent work’ in destination countries, the Government of
Bangladesh must keep continuous dialogue open at diplomatic levels for anticipating,
preventing, and resolving migrants’ work related problems.
 The Scope of Government’s Role

14. The above sections have stressed the potential of international migration as a tool of economic
development. Economic factors such as the ability to take risks and bear costs determine the
decision to migrate. The initial impetus comes without any government interventions. Then, as
migration flows increase and remittances grow, economic benefits emerge. This argument may
seem to imply that the government can remain passive and watch the migration process unfold.
This is however, an erroneous argument. International migration cannot be a substitute for sound
development polices. While remittances provide greater opportunities for sustainable livelihoods
and improved opportunities in the receiving country, without the right economic environment
migration can create crèches and old age homes without creating the dynamics of development.
International agencies like the United Nations and its related organizations along with the
World Bank have been emphasizing the need to better integrate migration into development
policy and planning. Countries should have comprehensive migration policies and the capacity to
implement them. These policies would need continuous fine tuning to match changing global
supply of and demand for labour. These policies will have to factor in the need for different skills
emerging in different regions and cultures. Governments need to work closely with Diasporas
and develop their links with their country of origin. This is specifically the space for government
intervening in an enabling role. Some crucial lessons for policy formation that emerge form the
recent research literature are worth keeping in mind when formulating policies. These are as
follows:
 Lack of development and economic opportunities drives migration. Remittances from
migration have a large potential to contribute to the creation of new economic
opportunities and reduction of poverty.
 Income differentials across countries are an important necessary condition for
international migration. There are issues of costs, risks and identities that constrain
migration. Only a small proportion of the population may be expected to migrate.
 As incomes grow in a migrant sending area, migration flow increases. In all countries, the
growth of income is associated with a lower proportion of the labour force remaining in
agriculture and related rural jobs.
 International migration and ensuing remittances can have a range of economic effects on
the remittance receiving household and the local region. It is important to understand the
microeconomic as well as the macroeconomic effects of migration and remittances.
 Half of the world’s migrants are women, and research shows the existence of gender
related issues in the decision to migrate. Policies must be sensitive to these issues to be
able to fully leverage the benefits.
 Networks and clusters are likely to be formed in the process of migration, with positive
externalities being reaped by a region from where migration has already taken place.
Policy makers must be able to enable such clusters to emerge.
In terms of governance these have two very critical implications. The first is the need to involve
and encourage the private sector as part of the overall development strategy focusing on
international migration. For instance, training institutes, research institutes, financial institutions
and employment agencies have potentially large roles to play. Similarly in reaching out to
potential migrants and collecting the impact of experience, civil society organizations can
provide enduring support to the strategy in reaching out to household levels and creating more
knowledge about the dynamics of migration and remittance flows. The second critical
implication is the need to create strategic ties and sustain cordial diplomatic relationships with
countries where most of the migrants go to. The migrant sending country’s migration laws have

15. to be in tune with the migration laws of the migrant receiving country. A very close knowledge
of international migration laws has to be a pivot of development strategy where leveraging the
benefits of migration is the focus.
Bangladesh has emerged as one of important source of labour services across the world and its
receipt of remittances has been growing impressively with the rise in the number of people who
are migrating internationally every year. The nation has a Ministry (the Ministry of Expatriate
and Overseas Employment) in position. This is obviously a sign of how important migration is
viewed as. The data on remittances is recorded and made available by the central bank of the
nation and also by individual banks involved in handling remittances. This data has to be backed
up by more extensive research and forecasts on labour market s and employment opportunities
worldwide. Disaggregated data on sectoral sources (over and above the country from where the
money is being remitted) of remittances may give greater insights into trends in different volume
of remittances. We have already mentioned the importance of having an integrated nodal
research, planning and training agency that prepares the data and analyses them for policy
purposes.
Bangladesh has a liberal foreign exchange rate system where nationals are allowed to have
unrestricted access on the current account transactions and foreign currency accounts held by
nationals are repatriable. The exchange rate is floating and banks have the right to set their own
rates competitively in line with market forces. Remittances are moreover, tax exempt in
Bangladesh. Apart from banks, the other formal channel is the Post Office. Bangladesh also has
an outstanding foundation for linking people together through self help groups and micro credit
networks. The potential for improving on andleveraging remittances for economic development
and poverty alleviation is enormous. Bangladesh needs to put it all together and make a quantum
leap in transforming its economic and social fabric.
 Concluding Remarks
This chapter has outlined the contours of a development strategy that has international
migration as a critical pivot. The benefits are potentially very significant but they cannot be fully
reaped by individual initiatives alone. The government has to facilitate the reaping of benefits so
that social impacts are large. Laws have to be framed to minimize illegal traffic and labour
exploitation. Networking with other governments and Diasporas is of paramount importance.
Institutions must be created to process labour market information and trends. Training
institutions and financial institutions have to play an imaginative and enabling role. This is where
the government has to create incentives for private sector partnering the public sector in reaching
developmental goals. There are challenges too for ensuring that some of the remittances are used
for durable capital accumulation and the creation of local public goods. Labour markets are
changing quite rapidly, and labour market integration is perhaps the next stage of globalization.
Competition from other developing countries is likely to be intense. Bangladesh has a head start
in having created migration flows of strength and value. The next challenge is
to sustain this advantage and leverage global opportunities in a decisive and unambiguous
manner. A comprehensive policy plan may be able to deliver all the gold that lies at the bottom
of the migration pyramid.