Uses and Impacts of Remittances in Nepal

Abstract

Remittances have attracted increasing attention in the international dis- course, partly owing to their magnitude and stability in the positive growth trend over the past three decades. A growing consensus is emerging that remittances constitute a significant source of external financing, whose availability, if managed through appropriate policies, could prove particu- larly valuable for capital-scarce developing countries. Though literature is still somewhat inconclusive on how remittances ultimately affect economic growth, there seems to be a general consensus on the fact that complemen- tary policies and sound institutions play an instrumental role in enhanc- ing their impact on development (World Bank, 2008; Pradhan et al., 2008; Catrinescu et al., 2009). Governments typically have only limited space to directly affect the allocation of remittance income, since taxation or man- datory remittance requirements have historically proved rather ineffective and in the majority of the cases have simply led migrants to use informal channels to remit.