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Published Date: Jan 17, 2013

Human Resource Development and Foreign Remittances: The Case of South Asia(W-130)
By: Hamid Mahmood , Muhammad Abdul Wahab
Hamid Mehmood
Muhammad Abdul Wahab
Vaqar Ahmed
January 2013
Introduction and Background :
South Asian region has experienced substantial economic growth during the past decade. This has also been complimented by a rising middle class phenomenon, which not only acts as an impetus to growth but also adds to the innovation and entrepreneurship potential available with the region. While a growing number of people in the labour force age group represent a growing potential for increasing productivity, there are also challenges associated with the provision of public goods. For example, a growing labour force will demand improved infrastructure and social services and this is where the governments of almost all South Asian economies feel challenged (Easterly 2001, Nayab 2011). The literature also tells us that even beyond the economic importance of youth bulge and growing labour force, one should also appreciate their impact on social, political and cultural changes in the society (Collier 1999, Basu 2003, Acemoglu & Robinson 2003, Bannerjee & Duflo 2007).
We have also observed that several South Asian countries have not been able to fully absorb the newcomers in the labour market (GoP 2011). This has implied that many unemployed or underemployed end up looking abroad for post-education opportunities. However, only those end up penetrating the foreign labour markets have relevant training and skills. This implies that HRD policies not only need to address the needs of local economy but also require congruence with labour demand patterns outside the country. South Asian economies are at a very different stage if compared with those countries where the South Asian Diaspora lives, however, most skilled migrants exercise those jobs in foreign countries whose training they receive in their home countries.
This study focuses on the link between Human Resource Development (HRD), migration and remittances in South Asian economies. We have followed a multi-pronged methodology in order to study the above-mentioned linkages. First, we conduct a detailed literature review on the empirical relationship between human development, migration and economic growth. Both the global and regional literature for South Asia has been discussed. Second, we resort to a descriptive analysis based on inward flows of remittances. Over time changes in remittances and changes by education and health endowment have been studied. Third, we conduct a panel data econometric exercise based on data from Bangladesh, India, Pakistan and Sri Lanka. The purpose is to identify the HRD drivers of remittances from abroad. Lastly, in order to validate our quantitative results and to seek anecdotal evidence on the subject, we carried out a perception survey exercise. The paper concludes with some policy recommendations for national governments in South Asia.
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