The Role of Remittance in Bangladesh Economy

Remittance plays a significant role in the economy of Bangladesh. It is considered one of the main supporting financial pillars, trailing closely behind the export of ready-made garments (RMG) [1]. In this article, we will explore the impact of remittance on the economic growth of Bangladesh and its contribution to the rural economy.

Impact on Economic Growth

Remittance has a positive impact on economic growth in Bangladesh. It helps balance payments, increases foreign exchange reserves, enhances national savings, and increases the velocity of money [2]. Remittance has contributed around 35% of export earnings for about two decades, making it a crucial source of foreign currency for the country [2]. It is even more significant than foreign aid, reducing the country’s dependence on external assistance [2].

The percentage of remittance in Gross National Income (GNI) is increasing daily, indicating its growing importance in the overall economy [2]. Remittance affects almost all macroeconomic indicators positively, contributing to the growth and development of the country [2].

Contribution to the Rural Economy

Supported by remittance, the families of Bangladeshi migrant workers are playing a crucial role in developing the country’s rural economy [3]. Remittance not only helps meet basic needs but also stimulates investment in various ventures, creating more demand for goods and services [3].

According to a study by the Bangladesh Bureau of Statistics (BBS), a significant number of migrant workers hail from rural areas [3]. The inflow of remittance funds into these areas drives the rural economy, alongside agricultural activities [3]. The families of migrant workers invest in different small-scale income-generating opportunities, such as poultry farming, animal rearing, aquaculture, and local enterprises [3]. They also invest in transportation and purchase shops in different locations [3].

Remittance has a positive “multiplier effect” on the domestic economy, generating employment and raising aggregate demand [3]. It improves the living standards of rural families and ensures financial security [3]. Remittance-receiving families have a better purchasing capacity compared to the general public, leading to the flourishing of local markets [3].

Challenges and Opportunities

While remittance has numerous benefits for the economy, there are also challenges associated with it. One of the challenges is brain drain, as the country experiences an increasing share of unskilled or semi-skilled laborers compared to professionals in international migration [2]. This brain drain can have negative consequences for the country’s human capital development.

However, the overall contribution of remittance to Bangladesh’s economy is very effective [2]. It helps reduce poverty and improve the livelihoods of remittance-receiving families [3]. Different analyses suggest that these families spend more on education, healthcare, food, and sanitation compared to other groups of people [3].

To maximize the benefits of remittance, it is essential to focus on skill development and encourage the investment of remittance funds in productive sectors. This can help create more employment opportunities and contribute to sustainable economic growth.


Remittance plays a crucial role in the economy of Bangladesh. It contributes significantly to economic growth, helps balance payments, increases foreign exchange reserves, and enhances national savings. Remittance also has a positive impact on the rural economy, stimulating investment and creating more demand for goods and services. While there are challenges associated with remittance, its overall contribution to Bangladesh’s economy is substantial.

Learn more:

  1. Did Remittance Inflow in Bangladesh Follow the Gravity Path …
  2. EconPapers: Impact of Remittance on Economic Growth in Bangladesh
  3. Remittance CHANGING rural economy of Bangladesh | The Daily Star

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