KATHMANDU, May 24: The World Bank has said that the remittances and outmigration at a large-scale is accentuating existing challenges of the country which is in ‘a low growth, high migration trap’.
Releasing Nepal Country Economic Memorandum on Tuesday, the World Bank said that large-scale outbound migration and remittances inflow contribute in the erosion of competitiveness, fuelling consumption, sustaining low-productivity agricultural activity and reducing pressure to generate more productive employment at home.
“Though migration and remittances have delivered gains for Nepal, it has also compounded the long term-problem of the country,” said Damir Cosic, a senior economist with the World Bank.
The World Bank report said the current development path has been marred by a ‘paradox’ with rapid pace of poverty reduction but slower economic growth. “Large-scale migration is not a sign of strength, but a symptom of deep, chronic problems. Remittances are providing safety net so people do not fall into poverty, but are not being used to leverage rapid growth and greater opportunity,” read the report. “Large-scale migration is rapidly, and in many cases, permanently, depleting the country’s stock of human capital,” it added.
“And, while remittances are helping boost household expenditure. They are doing little directly to improve public service delivery. Consequently, the quality of education, health care, and infrastructure remains abysmal,” stated the report.
According to the report, large-scale migration and the ensuing remittances have also contributed to the steady loss of competitiveness (through appreciation of real exchange rate) and have enabled the growth of the low-productivity services.
Out of the total workforce of 14 million, some 4 million (28 percent) are working abroad, an estimate shows.
“Perhaps the most detrimental aspect of large-scale migration is that it relieves the pressure on policy makers to be more accountable and to deliver results,” it added.