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Global Economy

The Remittance Multiplier in Action

Zahid Hussain's picture
David Waldorf/World Bank

In introductory macroeconomic class, students learn the theory of the multiplier and many interesting counterintuitive notions such as the paradox of thrift and the balanced budget multiplier based on the multiplier process.  Essentially, the multiplier multiplies because one person’s expenditure is another person’s income of which they spend a fraction, which in turn becomes another person’s income, of which a fraction is spent and the process eventually converges with subsequent increments to income getting smaller and smaller.

How does the multiplier process work in reality?  The Refugee Migration Movement Research Unit (RMMRU) in Bangladesh has recently completed the first phase of a longitudinal research on the impact of external and internal migration on income and poverty in Bangladesh. The research is based on a survey of 5084 external, internal and non-migrant households from 102 villages.  Among others, one of the most interesting is their findings on the impact of external migration on local level development through remittances and expenditure behavior of remittance recipients. Note that since the mid-1970s, Bangladesh has participated mostly in the short-term international labor markets of the Gulf and other Arab countries, as well as South East Asian countries. Over the last ten years, an average 500,000 workers have migrated abroad for work each year. Currently, an estimated 8 million Bangladeshi workers are on short-term migration abroad.

In 2013 the short-term international migrant (STIM) households on average received Tk 251,400 (over $3100) as remittance. The maximum amount received was Tk 4,400,000 and the minimum was Tk 6000.  The study found international migration plays a significant role in reducing poverty. Only 13 percent of the STIM households were below the poverty line, compared with 40 percent of the non-migrant households. The survey particularly covered those groups that were either below poverty line, experienced occasional deficits, or ‘break-even’ situations at the time of their first international migration.

Beware the Middle Income Trap – Says Who?

Borko Handjiski's picture

Fishing in the Hai River Economic development theorists and practitioners are increasingly using the term “middle-income trap” to describe the situation where developing economies’ convergence to the development frontier comes to a halt once their income per capita reaches a middle-income level. The term is ambiguous: is it a halt in convergence or slowdown in growth, and what exactly is the definition of middle-income? Nevertheless, the concept has been successfully used to create a scare that developing countries are more likely to run out of breath or even give up the race in the middle of the track than to continue catching up with the leading economies. Eichengreen et al. and several IMF economists are among those who provide empirical evidence that the “middle-income trap” is real and that developing countries do get stuck at some low-level equilibrium.

Collaborating Across Boundaries: Pushing University Research to the Next Level in Bangladesh

Shiro Nakata's picture
Piloting of Climate Resilient Cropping System in Coastal Region by BAU

The Bangladesh government wants to enhance support for university research as a part of its strategy for higher education (Strategic Plan 2006-2026). Supported by the Academic Innovation Fund (AIF) under the Higher Education Quality Enhancement Project (HEQEP), researchers in Bangladeshi universities are conducting advanced research on some of the most pressing economic challenges in key sectors of the country such as agriculture, environment, and health. With upgraded research facilities and equipment, Bangladeshi faculties are publishing more on international scientific journals and training competent PhD graduates.

2014: 25 Years After 1989 or 100 Years After 1914?

Martin Raiser's picture

A couple of weeks ago, I was in Warsaw to attend a conference jointly organized by the Polish and Turkish Central Banks (“Polish and Turkish Transitions: Achievements and Challenges Ahead”) on the occasion of 600 years of diplomatic relations between Poland and Turkey. Six centuries of (predominantly friendly) relations is indeed worthy of commemoration, but for our Polish hosts another anniversary was of even greater importance: 25 years ago, Poland was the first country from the former Communist Block to embark on the transition towards democracy and market economy. For Poland and other Central and Eastern European countries that joined it as new members of the European Union 10 years ago, this transition laid the foundation for a remarkable economic, cultural and political revival as Indermit Gill and I have argued in Golden Growth. Indeed, many in Poland would agree with the Economist  that Poland has not had it as good as today ever since it was the preeminent Central European power some 500 years ago.

Rising Fiscal Deficits Coupled with Weak Business Environments a Challenge across the Middle East and North Africa

Lili Mottaghi's picture

Seven countries in the Middle East and North Africa (MENA) region --Egypt, Tunisia, Iran, Lebanon, Jordan, Yemen and Libya (MENA 7)--are facing similar economic problems:  i) volatile growth that has remained significantly below potential; ii) limited fiscal space resulting from rising budget deficits, public debt and declining foreign reserves that have reduced savings available for public and private investment; and iii) a weak private sector that is far from becoming a driver of growth and creator of jobs. 

Re-thinking Economics Education: How New 'Core' Curriculum Hopes to Better Prepare Students

Miles McKenna's picture

Is it time for more pluralistic approaches to economic problems?Summer is almost over and the fall semester is about to begin for young economics students. But this semester could be the start of something much larger at University College London (UCL) and the University of Massachusetts in Boston.  
 
These two schools are among the first to pilot a fundamentally new approach to the way economics is taught in higher education. Others including the University of Sydney, Sciences Po (Paris), and the University of Chile will follow in early 2015.
 
This new approach is based on the CORE project of the Institute for New Economic Thinking (INET) at the Oxford Martin School, part of a global call for an overhaul of the economics curriculum commonly taught to undergraduates. True to its name, the CORE project has developed a new, interactive core curriculum—all delivered through an online virtual learning environment, and completely open to the public.
 

More and Better Financing for Development

Homi Kharas's picture

One of the major issues in the Open Working Group’s outcome report on the shape of the post-2015 agenda is the availability and access to financing to allow the goals to be met. There is a great temptation to simply try and calculate the financing needs for each goal and add them up to get the total financing need. Because this approach seems simple, it is appealing to many. The problem is that it is conceptually wrong.
 

This Week in #SouthAsiaDev: August 15, 2014

Mary Ongwen's picture
We've rounded up 36 tweets, posts, links, and +1's on South Asia-related development news, innovation and social good that caught our eye over the last two weeks. Countries included:Afghanistan, Bangladesh, India, Nepal, Pakistan and,

Can Seven Middle East and North Africa Countries Break the Poor Policy – Poor Growth Cycle?

Lili Mottaghi's picture


The answer is a conditional ‘Yes’, depending on whether they can accelerate the pace of the structural reforms needed to boost growth in Egypt, Tunisia, Iran, Lebanon, Jordan, Yemen and Libya. A new report from the World Bank,  “Predictions, Perceptions and Economic Reality - Challenges of Seven Middle East and North Africa Countries Described in 14 Charts,” finds that, despite recent signs of economic improvement in Egypt and Tunisia, growth continues to be weak and insufficient to reduce unemployment.

The Bangladesh Remittance Story Reaffirmed

Zahid Hussain's picture



The Bangladesh Bureau of Statistics (BBS) has just released a Survey on the Use of Remittances. The survey provides interesting update on the demographic and economic characteristics of the 8.6 million Bangladeshi workers currently working abroad. Conducted during 12-23 June 2013, the survey enumerated 9,961 Remittance Receiving Households (RRHs) from all the seven divisions of the country.

Overall, the survey mostly reaffirms findings from previous surveys and studies about migration and remittance behavior of Bangladeshis.

Who are the migrants?
The overwhelming majority (97.4 percent) of migrants are males, married (67.1 percent), Muslims (97.8 percent) most of whom (78.2 percent) are less than 39 years old with majority (61.5 percent) having less than ten years of education.

The majority (over 57 percent) of the migrants have been staying abroad for over 5 years and a significant (22.3 percent) proportion (largely from Sylhet) have been staying abroad for over ten years. Most (91 percent) work as blue colored labor in Saudi Arabia, UAE, Malaysia, Oman, Kuwait, South Korea and Singapore.  Most of them (87.8 percent) received no formal training before leaving the country.


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