Can a good thing eventually become bad and is there such a point when it becomes too much? Thinking about Nepal’s development, remittances appear to be precisely such an ambiguous driver. Strikingly, despite the growing importance of remittances worldwide and its increasingly high level recognition, we are missing a consistent narrative of growth and development for highly remittance dependent countries (HRDCs – a new acronym, for once, may be needed) like Nepal.
While remittances have an unambiguous direct impact on household welfare, the evidence on how they affect macroeconomic variables is mixed. Moreover, their contribution to national well-being is often under-acknowledged in those very countries they support and mixed with a sense of collective shame and fear of dependence. Here, we deliberately leave aside the thorny issue of migrant rights, recently highlighted by a feature story in the Guardian (Qatar’s World Cup ‘Slaves’), and focus on the economic impact of remittance inflows.
Nepal is an interesting case study. It is part of a small league of countries that receive a significant proportion of their income via private transfers (equivalent to 25% of GDP) and the world leader among the ones with over 10 million people.