The Impact of Remittances on Socioeconomic Development in Rural Bangladesh

International remittances sent back to the homeland by migrant workers have an enormous impact on the economic growth and poverty reduction in developing countries. Remittances also serve as an important source of foreign exchange reserves for developing countries. In a handful of developing countries, remittances from emigrants account for more than 10 percent of the GDP. Bangladesh is the fifth highest remittance-earning country in the world. In 2005, 6.0 percent of the GDP in Bangladesh came from remittances.
The impact of remittances may vary between and within the developing countries. There have been a lot of studies to examine the impact at the national level but none has scrutinized the impact within the country. This paper examines the impact of remittances within the country and on the rural-urban differentials in Bangladesh. Our analyses will concentrate on identifying the following: (1) the proportion of the remittances that is used for basic consumption goods, housing, education and health care; (2) the proportion that is used for capital investments; and (3) the proportion that is used for loan payments