Migration and remittances in South Asia

Global migration flows have increased in magnitude and complexity due to economic and human security factors, both at sending and receiving ends. This paper explores the trends, nature and role of migration and remittances in South Asian economies.

The authors note that South Asia has traditionally had a comparative advantage in the export of low-skilled labour at low cost, pointing that there has been a growth in migration from South Asia into new markets across the world.

The document highlights that migration was considered a problem in the developing world, including South Asia, in the past for its negative implications for development in terms of brain drain and labour force depletion. However, migration has been a critical factor in South Asian economies as a source of employment and livelihood for workers, and as a source of remittances which provide a stable flow of external finance.

Conclusions encompass:

• migrants’ remittances represent a significant proportion of most South Asian countries’ gross domestic product (GDP) as well as foreign exchange earnings
• still, remittance income may not always reach the poorest of the poor since the initial costs of migration are often prohibitively high for this segment of society
• as a result, it is important for South Asian countries to improve the utilisation of remittances
• in fact, greater utilisation of formal transfers ensures greater receipts of foreign exchange and also exposure of the poor to formal savings and financial systems
• to improve the utilisation of remittances, South Asian governments are recommended to enhance formal channels of financial transfer of remittances by reducing the transaction costs of this process
• in addition, they should improve knowledge and information among migrant households