The beginning of Nepalese economic migration can be traced with the recruitment of a large part of the country’s youth in the British armed forces during the first and second world wars. Except for this notable fact, seasonal migration to India from numerous mid-hill districts was overall common in Nepal. People from border areas travelled to nearby Indian towns for daily wages.
While the impact of these historic patterns is still unknown, recent migration flows from Nepal are having direct effects on several socio-economic facets of the country’s economy.
During the 1990s, at the same time of neighboring countries’ march towards development, Nepal was battered by a decade long civil war that left behind thousands of victims. Nepalese economy suffered consequently as manufacturing and service sectors were severely affected, reducing their contribution to GDP growth.
Meanwhile, American, European, South-East Asian and Gulf economies were booming, kick-starting migration of youths from war-torn Nepal and bordering countries. As a result, the share of remittance on Nepalese GDP literally skyrocketed: from mere 2 percent in 2000 to more than 30 percent in 2016.
Public records show that more than 2 million Nepalese received the labor permit, which is a must for a laborer willing to travelling abroad other than India. Unsurprisingly, more than 90 percent of these permits were granted to men, leaving several villages with no male, and particularly young men.
This had direct consequences on agriculture, the major source of employment and income of the Nepalese economy. Even today, more than two thirds of Nepalese households are still involved in the agricultural sector.
Once, Nepalese farming system was a mostly labor-intensive enterprise, where male members of the household owned land rights and decision-making powers. The labor-intensive nature of farming is blamed for having driven Nepalese youths’ interest away from it, although at the same time a predominantly male migration also shifted the decision-making role and labor burden to women. All this had different effects on agriculture and food sector in Nepal.
Remittances from abroad permitted many households to invest in agriculture, lifting its productivity. In other cases, however, the left behind families had enough money to shift their attention away from farms and relocate to urban areas, either renting their lands or just leaving them fallow.
But not all households could collect enough cash to move to towns. In some cases, women had to take on themselves the burden of farming – even when unexperienced or with scarce resources. This impacted agricultural productivity and increased physical and mental stress among women.
Overall, therefore, remittances had conflicting effects on Nepal’s agriculture and economy. Sapkota (2013) compared this situation with the Dutch disease syndrome to describe the poor growth of agriculture, manufacturing and services given their overdependency on the most valuable natural resource of the country: its (emigrating) youth.
Other studies did not find any evidence that remittances receiving households were inclined to invest more in agriculture (Tuladhar, Sapkota and Adhikari, 2014), while analysis of local surveys reported the progressive abandon of farmlands by migrating households (Maharjan et al., 2012).
In even more recent times, an article found an increase in reforestation rate within some regions characterized by higher migration rates, suggesting that more farming households are abandoning farming.
All this become even clearer considering the growth of grains and food products imports to Nepal. Once net exporters of agricultural products, Nepalese devote a significant portion of their remittances to acquire food from India, China and other countries. Households are consuming increasing amounts of fine grains, like rice, and processed wheat products.
Traditional food made from millet, buck wheat, corn and soybean started to disappear from Nepalese kitchens, being replaced by noodles and other form of treated nourishments. This was detrimental to people’s health in general and contributed in part to economic deterioration.
There were of course also some very positive aspects from remittances. Nepalese parents, for instance, had the chance of investing more than ever before in their children’s education and health. Moreover, recent reports by government and non-government organizations show a significant decrease in food insecurity.
Even at times when the economy poured in bad shape, Nepal performed better in meeting the Millennium development goals compared to its regional counterparts. In 2000-15, infant mortality went from 59 to 28 per thousand births, while maternal mortality decreased from more than 500 to around 200 per 100,000 live birth.
Poverty incidence dropped from almost 50 percent to less than 20 percent from 2003 to 2015. Likewise, life expectancy and literacy indicators showed significant improvement between 2000-15: the first one increased from 62 to 70; the second one from 48 to 60 percent. The credit of all these progresses was largely due to remittances.
Although significant steps have been taken, Nepal presents persistently higher stunting and wasting rates among children when compared to other developed countries. In addition, a study by Harris-Fry et al. (2019) has clarified that women and children are the ones who are the most exposed to food insecurity.
Nepal has every right to claim its last decades’ achievements in terms of socio-economic progresses, although it still has a long way to go before leaving the “low growth and high migration trap”.
In this respect, the decrease of the remittances growth rate observed in 2016-17 has been a sort of wake-up call for policymakers and economists as well. This has raised a question: for how long Nepalese economy can be limited to export people and import food?
Economists are urging the adoption of sustainable reforms to boost agriculture, manufacturing, tourism and services and combat the emigration of people. Investments in infrastructures, education and institutions can be the steppingstones towards a brighter future.
At the same time, the government has a duty to leave behind a certain patriarchal mentality that grips the country and assure women inclusion in its policy making processes or economic reforms. Past long-term development strategies were criticized for not being gender inclusive, something that must be overcome with actions designed to engage Nepalese without any distinction based on religion, gender or ethnicity.
Women education and empowering can be the first step in moving forward. Access to technology and credit could attract youths and women, which would become a driving force for the overall development of the economy.
The answer to the question asked by Sapkota (2013) whether remittances are a boon or a bane depends on what Nepal will do with its reforms.
Creating new opportunities within the country to limit emigration is something that won’t happen overnight. If remittances become a real tool for long-term development, then the answer will be boon.
Otherwise, a bleak future is imminent in which Nepal might have neither domestic production nor remittances. The answer in this case will be beyond doubt bane.