The article assesses the role of remittances in the national economy and demonstrates the tremendous impact of the flow of foreign earnings on Nepal’s economic development. With 107 countries now opened up for foreign employment, remittance flow has exceeded foreign direct investment in Nepal. Between 1991 and 2005, the contribution of remittances to the GDP has increased drastically, creating a surplus in the balance of payments. The author highlights remittance transfers in Nepal as one of the best in the region, as migrants still remit through informal channels but transfers between commercial banks and transaction companies can be made at a low cost. The paper also points out the negative effects of labour migration on the socio-economic conditions at the origin, such as barren land, low agricultural productivity, separation of family, growing rate of communicable diseases among migrants and the migrants’ tendency to settle in foreign countries. Given the harm caused to the domestic economy by the absence of an economically active labour force, the author indicates the need for migrant workers to return to their country and utilise their skilled knowledge, savings, and work experiences in the productive areas that are prioritised in the national development plans.

Gaudel, Y.S. 2006. The Journal of Nepalese Business Studies. 3:1, 9-17.