Impact of Globalization on Poverty in Bangladesh

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View with images and charts Impact of Globalization on Poverty in Bangladesh: A Comparative Analysis of Skilled and Unskilled Labour Migration. Overview of Globalization, International labour Migration, Skilled and Unskilled Labour Migration, Remittances and Poverty in Bangladesh Introduction This chapter deals with an overview of globalization, International Labour Migration, Skilled and Unskilled Labour Migration, Remittances and Poverty in Bangladesh. It started with the globalization focusing on economic issues. The chapter deals with International labour migration and remittances. It is important to note that, skilled and unskilled labour migrations are important factor of recent labour migration discussion. Trend of skilled and unskilled labour migrations are discussed in this chapter. This chapter deals with also trend, development and pattern of poverty in Bangladesh. Globalization Globalization is a multi-dimensional process that involves inter-linked economic, cultural and social change (Held et al. 2000). There is universal agreement that contemporary globalization is uniquely shaped by modern high-speed communications technologies(satellite phone links, the spread of cellular phones, digitalized data transfer, video conferencing, live international news coverage, etc.), fast airplane travel for passengers, and low-cost, high volume international freight (containerized transport, etc.) to speed the flow of trade goods. It is also understood that these technologies lead to a compression of time and space (Castells 1985, 1986). We are about to enter the third phase of globalization. In the first phase, goods moved globally. In the second stage – capital- and now it is the turn of skilled labour. Very

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Transcript of Impact of Globalization on Poverty in Bangladesh

Page 1: Impact of Globalization on Poverty in Bangladesh

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Impact of Globalization on Poverty in Bangladesh: A Comparative Analysis of Skilled and Unskilled Labour Migration.

Overview of Globalization, International labour Migration, Skilled and Unskilled Labour Migration, Remittances and Poverty in Bangladesh

Introduction

This chapter deals with an overview of globalization, International Labour Migration, Skilled and Unskilled Labour Migration, Remittances and Poverty in Bangladesh. It started with the globalization focusing on economic issues. The chapter deals with International labour migration and remittances. It is important to note that, skilled and unskilled labour migrations are important factor of recent labour migration discussion. Trend of skilled and unskilled labour migrations are discussed in this chapter. This chapter deals with also trend, development and pattern of poverty in Bangladesh.

Globalization

Globalization is a multi-dimensional process that involves inter-linked economic, cultural and social change (Held et al. 2000). There is universal agreement that contemporary globalization is uniquely shaped by modern high-speed communications technologies(satellite phone links, the spread of cellular phones, digitalized data transfer, video conferencing, live international news coverage, etc.), fast airplane travel for passengers, and low-cost, high volume international freight (containerized transport, etc.) to speed the flow of trade goods. It is also understood that these technologies lead to a compression of time and space (Castells 1985, 1986). We are about to enter the third phase of globalization. In the first phase, goods moved globally. In the second stage – capital- and now it is the turn of skilled labour. Very recently, a new trend has been emerging. A global pool of skilled human resources has emerged and employers in countries at different stages of development are all trying to draw from this global pool. During the recent past there has been a significant rise in work-related temporary migration from one country to another along with export of services.1

The impact of globalization of the world economy is becoming increasingly all- pervasive. Its positive impact is no longer confined to the developed countries. Even a developing country like Bangladesh, with its weak economy, is looking at globalization to strengthen its base. In the last decade cross border movement people across nations, especially the movement of skilled and the unskilled labour from developing to developed countries has resulted in significant increases in the incomes of the former through remittances of foreign exchanges by their overseas citizens. This phenomenon has given a boost to the economies of the developing nations. Bangladesh has an edge over many other developing countries in its abundance of human resources. This has resulted in its emergence as a key global player as a source country for the supply of manpower to the developed nations (Ray, Sougata and Others, 2008:1)

International Labour Migration, Skilled and Unskilled Labour Migration and Remittances in Bangladesh

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Manpower is one of the major national resources of Bangladesh. About 35 million people constitute this vast reservoir of manpower. However, inadequate education and insufficient capacity of the local industry is responsible for a large section of the population remaining unemployed. At the current level of development it is not possible for Bangladesh to absorb the full range of available unskilled, semi-skilled and professional manpower within the country in an appropriate manner and hence the need to find employment opportunities for them abroad. The absence of a vibrant domestic labour market creates huge demand for overseas employment among the young labour force. Starting in 1976, over the years, Bangladesh has emerged as a notable exporter of manpower and a steady source of human resources to a number of foreign countries who need to import manpower from other countries.

For a developing country like Bangladesh, migration and remittances have been growing rapidly and consistently in the recent years. It is interestingly to note that as income rise in a country its population increasingly sees employment generation as the returns to investment in human capital development. In the high-income countries there is preference for the high skilled and more rewarding jobs over the skilled and tedious jobs. Moreover high incomes sustained over a long period have led to a marked demographic change in the countries. The population growth rates have fallen and the current population is ageing very fast. This has given rise to two distinct and interrelated situations in the unskilled service sector, labour market (say demand for a janitor) and in the skilled service sector labour market (e.g. nurshing jobs).The first implication is that there is serious shortage of local workers who are ready to except such jobs and the second, the demand for such jobs is likely to grow in the future as the demographic changes become more pronounced. Interestingly even in the high skilled and professional job categories the global demand is higher than the supply. This mismatch is likely to become more acute in the coming years especially in the areas of health care, education and IT. Hence, broadly, the job opportunities are in three segments- high skill knowledge intensive jobs, low or unskilled jobs and finally in the selected services were some specific skills are necessary, such as in nurshing or in providing paramedical support.

Migration in a Historical perspective

Migration is very old phenomenon. From the very beginning of human civilization people migrated for food and security. Now people migrated for economic opportunity and income security. The history of migration from Bangladesh is not more than one and half century. During British ruling some people migrated for short-term to Britain and also America for trade and higher study. But the flow of migration from Bangladesh increased after the mid-twentieth centaury. But after independence of Bangladesh in 1971, the flow of migration to other countries also increased. During mid 1970 due to oil exploration of Middle East of both short-term and long-term migration increased (Hasan, R.A. 2006:4).Gradually, such migration also expanded to the newly industrialized countries of Southeast Asia. The foremost character of this type of migration is its short duration. This migration takes place on the basis of specific job market (Siddiqui, T. 2003:14).(---------------------------------------------------------------------------------------)Nature of Migrant and Scale of Migration: Every year over 300000 Bangladeshis go abroad for jobs and this number has been growing rapidly. The Bangladeshis working abroad currently range from domestic aides to atomic scientists. A large section of them are un-skilled and semi-skilled workers. Over several decades many Bangladeshis migrated permanently to the developed countries for better living. Their most preferred

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destinations were Western Europe, North America, Australia and New Zealand. However, they are also located in almost all the federating states of the former Soviet Union and eastern European states of Bulgaria, Hungary, Czech and Slovak republics, Romania and Poland. There is a relative small presence of Bangladeshis in Africa and Latin America (Ray, Sougata and Others, 2008:9).

Systematic recording of migration of Bangladeshi workers started from 1976. The Bureau of Manpower, Employment and Training (BMET), which is under the Labour and Employment Ministry of the Government of Bangladesh, is in charge of keeping the record of Bangladeshis who have left the country for overseas employment. BMET has classified temporary migrant population into four categories: professional, skilled, semi skilled and unskilled. Doctors, engineers, teachers and nurses are considered professionals, manufacturing or garments workers, driver, computer operator and electrician are considered skilled, while tailors and masons etc. are considered semi skilled. Housemaids, cleaners and menial labourers are considered unskilled workers. Table - 1 shows that the skill composition of those who migrated over this period. From 1976 to 2007 half of the total migrants were unskilled (Bangladesh Economic Review, 2008). In 1995 professionals skilled and semi-skilled workers were 52.42 percent of total migrants. But in 2007 it decreased in 42 percent. The composition of worker going abroad for 2007 was: professional 0.08 percent, skilled worker 19.86 percent, semi-skilled 22.07 percent and low skilled 57.99 percent.

Table - 1Year Wise Official Flow of Bangladeshi Workers by Their Skill Composition (1995-2007) Year Professional Skilled Semi-

SkilledUnskilled Total

1995 6352 59907 32055 89229 1875431996 3188 64301 34689 109536 2117141997 3797 65211 193558 118511 3810771998 9574 74718 51590 131785 2676671999 8045 98449 44947 116741 2681822000 10669 99606 26461 85950 2226862001 6940 42742 30702 109581 1889652002 14450 56265 36025 118516 2252562003 15862 74530 29236 136562 2541902004 19107 81887 24566 147398 2729582005 1945 113655 24546 112556 2527022006 925 115468 33965 231158 3815162007 676 165344 183754 482835 832609

Source: Bureau of Manpower, Employment & Training. (No information available in 2008)

The formal "export of manpower" was launched in 1976 with the number at 6,087 workers only. In 2007 the export went up to 832609. Form 1976 to April 2008 altogether 56.86 lack people have migrated from Bangladesh on

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overseas employment (Bangladesh Economic Review, 2008:30). Table-2 shows the migration by country of employment. Bangladesh exports contract labour mostly to Middle Eastern and Southeast Asian Countries. Saudi Arabia, UAE, Kuwait, Oman, Malaysia and Singapore are some of the major countries of destination. Saudi Arabia is the largest employer of Bangladesh migrant workers. Bahrain, Qatar, Jordan, South Korea, Brunei, Mauritius, Italy, UK, USA, Spain, Japan, France, Australia, Canada are also preferred countries for migration.

Table - 2Migration by Country of Employment

Year Saudi Arabia

Kuwait UAE Bahrain Oman Malaysia Singapore Others Total

1995 84009 17492 14686 3004 20949 35174 3762 8467 1875431996 72734 21042 23812 3759 8691 66631 5304 9741 2117141997 106534 21126 54719 5010 5985 152844 27401 7458 3810771998 158715 25444 38796 7014 4779 551 21728 10640 2676671999 185739 22400 32344 4639 4045 - 9596 9419 2681822000 144618 594 34034 4637 5258 17237 11095 5213 2226862001 137248 5341 16252 4371 4561 4921 9615 6656 1889652002 163254 15767 25438 5370 3927 85 6870 4545 2252562003 162131 26722 37346 7482 4029 28 5304 11148 2541902004 139031 41108 47012 9194 4435 224 6948 25006 2729582005 80425 47029 61978 10716 4827 2911 9651 35165 2527022006 109513 35775 130204 16355 8082 20469 20139 40979 3815162007 204112 4212 226392 16433 17478 273201 38324 52457 8326092008(up to April)

64778 4 130727 7058 16578 36556 17684 21770 295155

Source: Bureau of Manpower, Employment & Training.

It is well known that overall migration rate do not convey the full picture of the possible impact of migration and structure of migration is critical. The first element of the structure is the composition of migrants by their skill or the level of education.

Table-3Emigration rates by educational attainment and country of birth in 2000 for SAARC countries: Migrants as % of all educated (Natives plus migrants) in each categoryCountry Primary

educatedSecondary educated

Tertiary educated

Bangladesh 0.1 0.7 4.7Bhutan 0.1 0.3 1.2India 0.1 0.3 4.2Maldives 0.1 0.1 2.2Nepal 0.0 0.2 2.7

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Pakistan 0.3 1.1 9.2Sri Lanka 1.9 1.8 27.5Source: Docquier and Marfouk (2004)

The table shows that tertiary educated Bangladeshi living abroad equal 4.7% of all tertiary educated Bangladeshi in the country and abroad. This rate is not too high when compared to other SAARC countries like Pakistan (9.2%) and Sri Lanka (27.5%).

2.4 Flow of Remittance People usually migrate internationally to change their destiny. This international migration transforms not only the destiny of individual migrants but also the conditions of their families living their own country. Remittances have become the most powerful means to maintain relationship with migrants with their societies of origin. The emergence of remittances as a new strategy for poverty alleviation in developing countries has spurred multilateral institutions, international organizations, foundations, universities and national governments, including the Asian Development Bank(ADB), Inter-American Development Bank(IADB), International Monetary Fund(IMF), World Bank, and the United nations among others to seriously study, identify and implement measures on how this inflows could be maximized and then harnessed for the development of the migrants countries of origin. There are three major positive effects of migration. Expatriates who remain abroad contribute money via worker remittances, Returning migrants, in particular, bring back their skills and work experience from abroad, thus boosting productivity of the local economy. Migrants may also invest capital in entrepreneurial ventures that facilitate transfer of knowledge or technology to the developing countries and boost productivity and economic development. While all three are equally important for the development of Bangladesh (Ray, Sougata and Others, 2008:5)

The Bangladesh Bank documents remittance flows to Bangladesh from all over the world. Table-4 shows that the remittances sent by migrant workers have grown over time. It has increase from US $ 1217.06 million (1995-96) to US $ 5649.23 million (2007-08, March). In 2005-06 April remittances increased 21.91 percent compare to the figure for 2004-05. In 2004-05 remittances earnings were equivalent to 6.37 percent of GDP. This ratio has a secular increasing trend over the year. The ratio of remittances to export earning is also increasing steadily and in 2004-05 it was 44.46 percent (Table-5).

In 2004-05, 39.25% of total remittances came form Saudi Arabia. Second largest remittance sending country was US, 14.48%. UAE and Kuwait were third and fourth, 11.49% and 10.57% respectively.

Table - 4

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Country Wise Flow of Remittances Million US $

Saudi Arabia

UAE Qatar Oman Bahrain Kuwait USA UK Malaysia Singapore Others

498.20 83.70 53.28 81.71 30.08 174.27 11.536 41.28 74.43 3.99 60.76587.15 89.64 53.16 94.45 31.52 211.49 157.39 56.20 94.51 6.66 93.32589.29 106.86 57.81 87.61 32.42 213.15 203.13 65.80 78.09 7.69 83.57685.49 125.34 63.94 91.90 38.94 230.22 239.43 54.04 67.52 13.07 95.82916.01 129.86 63.73 93.01 41.80 245.01 241.30. 71.79 54.04 11.63 81.14919.61 144.28 63.44 83.66 44.05 247.39 225.62 55.70 30.60 7.84 59.911147.95 233.49 90.60 103.27 54.12 285.75 356.24 103.31 46.85 14.26 65.291254.31 327.40 113.55 114.06 63.72 338.59 458.05 220.22 41.40 31.06 99.611386.03 373.46 113.64 118.53 61.11 361.24 467.81 297.54 37.06 32.37 123.181510.45 442.24 136.41 131.32 67.18 406.80 557.31 375.77 25.51 47.69 147.601696.96 561.44 175.64 165.25 67.33 494.39 760.69 555.71 20.82 68.84 238.811734.70 804.84 233.17 196.47 79.96 680.70 930.33 886.90 11.84 80.24 339.321641.55 793.86 209.40 172.89 90.61 623.84 962.40 696.61 46.45 94.00 317.62

Source: Bangladesh Bank.

2.3.2Macro Economy and Remittances in Bangladesh

Table - 5Ratio of Remittances to GDP and Export Earnings

Financial Year

Percent of GDP Percent Export Earning

1997-98 3.46 29.491998-99 3.74 32.041999-00 4.14 33.892000-01 4.01 29.102001-02 5.26 41.782002-03 5.90 46.762003-04 5.98 44.352004-05 6.37 44.462005-06 6.89 45.622006-07 8.74 49.092007-08 ? ?Source: BBS, EPB, Bangladesh Bank.

Remittances and Global Economy

2.5 Poverty in Bangladesh-Measures, Development and Patterns

2.5.1 Defining and measuring poverty“Poverty has manifold expressions and indeed many roots. It is about income deprivation. It is about shortfalls in consumption and inadequate supply of

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nutrition. It is about poor access to education and low physical asset bases. It is about risks, uncertainties and vulnerabilities. It is about personal insecurity as much as it is about lack of food security. It is about crisis coping capacities. It is about self-development initiatives. It is about dismal state of health and health care access (Sen. and Rahman 1998)”.

2. 5. 2. Income and Human PovertyPoverty can be defined between income poverty and human poverty (Income and non-income-Nelson). Income poverty is the classical definition, in which a certain level of income or consumption is set and the people below this limit are considered poor. This is the easiest way to define and estimate poverty. However, poverty does not need to be money based. A person can also be poor in the sense of lack of opportunities and capabilities, such as education, health care and gender discrimination. In order to get a completely accurate estimation, the perception of each individual’s own situation must be considered, but this would make it impossible to measure poverty. Therefore, income poverty is often preferred as measure of poverty (Maxwell, 1999).

Absolute and Relative Poverty:The definition of poverty is also needs a distinction between absolute poverty and relative poverty. The relative definition of poverty establishes a poverty line as a fixed proportion of an income standard in the population, for example the mean or median income. The relative poverty measurement is useful when measuring inequality within a country, but does not show how the standard for the poor has developed; it may show rising poverty even though the standard of living of the poor has actually increased. Absolute poverty is more frequently used. It refers to a fixed poverty line where purchasing power is determined so that it covers basic needs (Bourguignon, 2004).

2.5.3. Poverty measureMeasurement of poverty in countries is generally based on national poverty lines. A poverty line is derived by the purchasing power parity (PPP) estimation of an income level, below which people are considered poor. However, because of the problems with different methods for estimating uniform poverty liens across countries, multilateral organizations such as the World Bank, often make their own estimations using a 1 US $ a day poverty line for estimating poverty.

To measure income poverty we can use Headcount Index, Poverty Gap Index and the Squared Poverty Gap Index. These measurements are frequently used in the literature and show different aspects of poverty.

The Headcount Index (H), given by the percentage of the population living in households with consumption per capita that is less than the poverty line. This can be interpreted as a measure of the “incidence” of poverty. The measure has the advantage that it is easy to interpret, but it tells us nothing about the depth or severity of poverty.The Poverty gap index (PG), defined by the mean distance below the poverty line (where the mean is formed over the entire population, counting the non

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poor as having zero poverty gap), One can interpret this as a measure of poverty” depth”. Its disadvantage is that it is unaffected by changes in inequality among the poor.

The squared poverty gap index (SGP), of James Foster, J. Greer and Erik Thorbecke, defined as the mean of the squared proportionate poverty gaps (again the mean is formed over the entire population, counting the nonpoor as having zero poverty gaps). Thus the poverty gaps are weighted in aggregation, with greater weight given to larger gaps, and where the weights are simply the poverty gaps themselves. This simple change to the conventional poverty-gap index allows the index to reflect changes in the “severity” of poverty, in that it will be sensitive to inequality among the poor.

All three measures can be derived from the following formula:P(∞)= 1/n∑(z-yi/z) ∞

Where, z is the poverty line, Yi is the income of the poor below poverty line, n is the total population, and ∞ represents the distribution-weight. ∞=0 yields head-count index, ∞=1 poverty gap index, ∞=2 distributionally sensitive squared poverty gap index.

In the Bangladesh context, the poverty line corresponds to 2122 calories per person per day. There are several methods for setting the poverty line. Of these, the approach which is based on costing of a given food bundle (corresponding to 2122 calories per person per day)…the so called fixed bundle approach …is found to be better than other methods such as Food-Energy Intake (FFI).

Human-Poverty calculation is measured by Human Poverty Index (HPI). HPI is composed of three indicators (one of which is a composite of three sub-indicators) capturing three types of deprivations: deprivation in health, deprivation in knowledge, and deprivation in overall economic provisioning. These dimensions are given equal weights in the construction of HPI. The specific description of each of these dimensions is given below.

Deprivation in health is indicated by vulnerability to death at a relatively early age as quantified in the percentage of people expected to die before the age of 40 years. is indicated by vulnerability to death at relatively early age as quantified in the percentage of people expected to die before the age of 40 years.

Deprivation in knowledge is captured by the percentage of adults who are illiterate.

Deprivation in overall economic provisioning is quantified in three variables, namely,(a) percentage people without access to safe drinking water,(b) Percentage of people without access to health services, and (c) percentage of children under 5 who are moderately and severely underweight(Sen Binayak, 2000).The problems with the Headcount Index are that it does not consider how far from the poverty line the poor are situated. The implications are that although

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improvement in income poverty may have occurred it does not show in the Headcount Index if they have not climbed above the poverty line. The Poverty Gap, on the other hand, measures how much money needs to be transferred to the poor in order for them to meet the poverty line, and thereby also measures the depth of poverty (World Bank, 2005).

Household Expenditure Survey (HES) was carried out first in Bangladesh in FY 1973-74. In subsequent years a number of HESs were undertaken; the latest one was conducted by BBS 2005. HESs carried out up to FY 1991-92 were based on Food energy Intake (FEI) and Direct Calorie Intake(DCI) methods in order to measure the incidence of income poverty. FEI method computes poverty lines by finding the value of per capita consumption at which a household can be expected to fulfill its calorie requirement. The direct Calorie Intake (DCI) method is traditionally used by the Bangladesh Bureau of Statistics for determining the poverty line. According to this method poor are categorized as “absolute poor” and “hardcore poor” based on their daily calorie intake. The poor who take 2122 k. cal per day per person fall below Poverty line-1 (and are known as the absolute poor) whereas the poor who take 1805 k. cal per day per person fall below Poverty line- 2 (these are termed the hardcore poor). In Household expenditure Survey (HES) conducted in FY1995-96, the BBS for the first time adopted the cost of Basic Needs (CBN) method for constructing poverty lines. Similarly, in the Household Income and Expenditure Surveys (HIES) of 2000 and 2005, CBN method was used. With this method, an absolute poverty line is defined as the value of consumption needed to satisfy minimum subsistence needs (food as well as non-food consumption) [Bangladesh Economic Review 2007:171].

2.5.4 Poverty TrendPoverty is divided into two categories, such as (1) income poverty and (2) human poverty. The report of HIES-2005 reveals that at the national level, incidence of poverty registered a declining trend in 2005 as compared to 1991-92 based on CBN method. The incidence of poverty at the national level declined from 58.8 percent in 1991-92 to 40.0 percent in 2005 based on the upper poverty line (Table-1). During this period, the compound poverty reduction rate per year is recorded at 1.8%. But the rate of reduction in urban area (yearly compound rate 2.2 percent) is faster than that of the rural areas. On the other hand, during 2000 to 2005, income poverty also reduced from 48.9 percent to 40.0 percent and the compound reduction rate is 3.9 percent. This time is also reduction rate is faster in the urban area (yearly 4.2 percent) than that of the rural area (3.5percent).Between 2000 and 2005, the depth) measured by poverty gap) and severity (measured by squared poverty gap) of poverty declined simultaneously both in urban and rural areas. It is notable that between 1991-92 to 2000, reduction rate of poverty was faster in the rural are than that of the urban area. The trends of poverty on the basis of Head Count Ratio and DCI method is presented in Table: 6.Table: 6 Trends of Poverty based on Head Count Ratio and DCI Method

People below poverty line National Rural UrbanPeople People People People People People

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Survey year

(in million)

(%) (in million)

(%) (in million)

(%)

Poverty line 1: Absolute Poverty, Daily less than 2122 kilocalorie food intake2005 56.0 40.4 41.2 39.5 14.8 43.22000 55.8 44.3 42.6 42.3 13.2 52.51995-96 55.3 47.5 45.7 47.1 9.6 49.71991-92 51.6 47.5 44.8 47.6 6.8 46.7Poverty line 2: Hardcore Poverty, Daily less than 1805 kilocalorie food intake2005 27.0 19.5 18.7 17.9 8.3 24.42000 24.9 20.0 18.8 18.7 6.0 25.01995-96 29.1 25.1 23.9 24.6 5.2 27.31991-92 30.4 28.0 26.6 28.3 3.8 26.3

Source: BBS, HIES-2005.Table: 7 Trends of Poverty based on CBN Method

2005(%) 2000(%) Annual Change (%) (2000-2005)

1991-92(%)

Annual Change (%)(1991-2005)

Head Count IndexNational 40.0 48.9 -3.9 58.8 -1.8Urban 28.4 35.2 -4.2 44.9 -2.2Rural 43.8 52.3 -3.5 61.2 -1.6Poverty GapNational 9.0 12.8 -6.80 17.2 -2.9Urban 6.5 9.1 -6.51 12.0 -2.5Rural 9.8 13.7 -6.48 18.1 -2.8Squared Poverty GapNational 2.9 4.6 -8.81 6.8 -3.8Urban 2.1 3.3 -8.64 4.4 -2.7Rural 3.1 4.9 -8.75 7.2 -3.8

Source: BBS, HIES-2005.

According to Head Count Ratio using DCI method, in 2005, the incidence of absolute poverty were 40.4, 39.5 and 43.2 percent in national, rural and urban areas respectively. Under this method, a reduction of absolute poverty is recorded at 4.1 percent from 2000 and 2005; people living poverty line in 2000 were 55.8 million, which increased to 56 million in 2005. Through the number of poor people increased by 0.2 million during this period, it increased at a slower rate than that of the previous period.

According to Head Count Ratio, using DCI method, the incidence of hardcore poverty were 19.5, 17.9 and 24.4 percent in national, rural and urban areas respectively in 2005. Under this method a reduction of hardcore poverty is recorded 0.5 percent at the national level, 0.8 percent in the rural areas and 0.6 percent in the urban area. People living below hardcore poverty line in

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2000 were 24.9 million, which increased to 27 million in 2005. Through the poor people increased during this period, it decreased as compared to 1991-92.The percentage shares of income by deciles groups and Gini coefficient with rural and urban break-down for the surveys conducted during 2000 and 2005 are presented in Table: 8.

Table: -8 Percentage Distribution of Income Accruing to Households in Groups (Deciles) and Gini Co-Efficient

Household Income Group

2005 2000Total Rural Urban Total Rural Urban

National 100.00 100.00 100.00 100.00 100.00 100.00Lower 5% 0.77 0.88 0.67 0.93 1.07 0.79Decile-1 2.00 2.25 1.80 2.41 2.80 2.02Decile-2 3.26 3.63 3.02 3.76 4.31 3.07Decile-3 4.10 4.54 3.87 4.57 5.25 3.84Decile-4 5.00 5.42 4.61 5.22 5.95 4.68Decile-5 5.96 6.43 5.66 6.10 6.84 5.60Decile-6 7.17 7.63 6.78 7.09 7.88 6.74Decile-7 8.73 9.27 8.53 8.45 9.09 8.24Decile-8 11.06 11.49 10.18 10.39 10.97 10.46Decile-9 15.07 15.43 14.48 14.00 14.09 14.04Decile-10 37.64 33.92 41.08 38.01 32.81 41.32Top 5% 26.93 23.03 30.37 28.34 23.52 31.32Income Gini co- Efficient

0.467 0.42 0.497 0.451 0.393 0.497

Source: BBS, HIES-2005

It is evident form Table- 8 that income shares accruing to households belonging to decile 1 to decile - 5 were recorded at 2.00 percent, 3.26 percent, 4.10 percent, 5.00 percent and 5.96 percent respectively at the national level. All these declined with respect to 2000 survey findings, which were 2.41 percent, 3.76 percent, 4.57 percent, 5.22 percent and 6.10 percent respectively. These five deciles jointly share only 20.32 percent of total income, although they comprise 50 percent of the population. The percentage share of income of the lowest 5 percent household decreased from0.93 percent in 2000 to 0.77 percent in 2005. On the other hand, in 2005, the income share of households belonging to decile-6 to decile-9 increased but that of decile-10 decreased compared to that of 2000. The top 5 percent households were significantly losing their share of income and recorded at 26.93 in 2005, whereas the same was 28.34 percent in 2000. It may be mentioned that in the past surveys, the decile-10 including top 5 percent households sharply gained their share of income but in 2005, their shares declined. This may be attributed to gain by decile-6 to decile -9 in 2005.2.5.6. Poverty ReductionAlthough the intensity of poverty lessened in Bangladesh due to efforts made over the last three decades, its depth and severity still persists. Addressing this problem is a great challenge mainly due to resource constraint. Bangladesh has so far implemented five Five-Year Plans and one Two-Years Plan and a Three-Year PRSP Rolling Plan. The overarching goals of these plans were to

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accelerate economic growth and poverty reduction. As an outcome of these development activities, Bangladesh has made commendable progress in terms of reduction of income and human poverty. Bangladesh has received universal appreciation for attaining success in reduction of human poverty in education, health and nutrition. Bangladesh has already achieved three targets of Millennium Development Goals (MDGs) such as (1) removing gender disparity in primary and secondary education; (2) ensuring almost universal access to primary education; and (3) ensuring access to safe drinking water. For the last five consecutive years (2003-2007), Bangladesh attained the HDI rank of “Medium Human Development,” according to UNDP Human Development Reports. The recent report on Household Income and Expenditure Survey(HIES) 2005 published by the Bangladesh Bureau of Statistics (BBS) shows downward trend in income poverty. According to the Cost of Basic Needs (CBN) method used in the survey, the incidence of poverty at the national level declined from 48.9 percent in 2000 to 40.0 percent in 2005. By using lower poverty line, poverty declined to 25.1 percent in 2005 from 34.3 percent in 2000. According to direct calorie intake (DCI) method, poverty declined from 44.3 percent in 2000 to 40.4 percent in 2005. The incidence of hard-core poverty also showed a declining trend during the same period. Keeping the MDGs in vision, the government has approved the poverty Reduction Strategy Paper (PRSP). To address the challenge the poverty reduction, the government has adopted a fundamental strategy of seeking collaboration from NGOs and Private sector, especially by providing necessary support to the activities of NGOs)[Bangladesh Economic Review 2007:169].

3. Literature Review

Globalization, International Labour Migration and Poverty

No single definition can clear the concept of globalization. Stiglitz, Joseph, defined globalization as “The removal of barriers to free trade and closer integration of natural economics” (Stiglitz, Joseph, 2002).Globalization can be defined as the integration, without borders, of economic, information, science, defiance, education, skills, culture, politics, religions and social systems. It is not a new phenomenon. Early forms of globalization existed, for example, during the Roman empire, the Arab Empire and the Islamic golden Age when Muslim Traders and explorers established an early global economy across the old world resulting in globalization of crops, trade, knowledge and technology; and later during the Mongol Empire, when there was greater integration along the Silk Road. Global integration continued through the expansion of European trade in the 16th and 17th centuries, when the Portuguese and Spanish Empires after expanding to the Americas, reached out to all corners of the world (Haq, K. M, 2007:------). The benefits of globalization are multifarious: knowledge, trade, economy culture, technology etc. Nonetheless, foreign currency earning is the direct benefit a country can have form skilled manpower export to global markets (Haq, K. M, 2007).Rapid globalization enhances fast-paced technological advancement it may restrict the employability of a large segment of a country’s labour force. However, the positive side of globalization is that it also provides new opportunities for economic growth and employment expansion. Today, the level of quality, skilled labourers that a nation possesses is deemed a

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critical factor in taking advantages of the global economy; China and India are the front runners in this pace (Haq, K. M, 2007).

International migration, the movement of people across international boundaries, has enormous economic, social and cultural implications in both origin and destination countries (Ozden, C. and M. Schiff, 2006:1). It is estimated that some 180 million people (3 percent of the world population) are living in countries in which they are not born (United Nations 2002). The flow of formal remittances from migrants to their relatives in their country of births as exhibited a rapid and accelerating rate of growth. The remittances flow has doubled in the last decade, reaching $216 billion in 2004; with 150 billion going to developing countries (Ratha 2005).It surpasses foreign aid and the largest sources of foreign capital for dozens of countries. As a result of these trends, migration issues have increasing become the focus of attention, both among governments of origin and destination countries, and within the development community (Ozden, C. and M. Schiff, 2006: 2).Globalization has made migration much easier through better communications, dissemination of information through mass media and improvement transport, among others. It is the increasing trade and investment flows in the Asia region, which facilitated interest and awareness in migration to such countries as Japan, the republic of Korea and the Taiwan province of China (Wickramasekera, P. 2002:3).

Poverty is not one- dimensional phenomenon. It is multi-dimensional. A number of different concepts and measure of poverty relate to its various dimensions. Each of these dimensions has the common characteristic of representing deprivation of an important kind. The verity of poverty concepts is use in development policy communities reflects the variety of relevant deprivations (Sen. 1999).Poverty is deprivations of income, health, education and empowerment. The longest tracking of world poverty is provided by Bourguinon and Morrisson (2002). These estimates cover the 1820 to 1992 period and include both the “poor” and “extremely poor”. The poor are defined as those living on less than US $ 2 per day (In 1985 purchasing power parity dollars). The extremely poor are defined as those living on less than US $ 1 per day (in 1985 purchasing power parity dollars).

Migration is an integral part of globalization (Drechsler, D., 2008). With globalization-the dramatic expansion of cross-border trade and investment –has comes an upsurge in international labour mobility. Falling costs of transportation and communication have reduced the distances between peoples, and the drive for better lives has motivated workers to move to areas where jobs are more plentiful and pay is better (World Bank, 2004). Recent debates on the merits and shortcomings of globalization have focused on the implications stemming from increased capital and goods flow. The international migration has received relatively little attention in the present debate on globalization(Cordova E. L 2004).Globalization has the five primary economic dimensions trade, finance, aid, migration and ideas. Increases in these dimensions of globalization, if managed in a way that supports development in all countries, can help to alleviate global poverty under certain condition (World Bank 2006). 3.2 Impact of International Labour Migration and Remittances on Poverty: With globalization, international migration will continue to derive increasing levels of remittances to developing countries (World Bank, 2005). The most important development effect of migration is its direct impact on income and poverty levels in the source countries.

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By allowing workers to move areas where they are more productive and valued, migration leads to a direct increase in global output and income. (Ozden, C. and M. Schiff, 2006: 6).

World Bank launched the international Migration and Development Economic Research Program, is divided into a number of focus areas. The main ones include (a) the impact of migration and remittances on development indicator, including poverty and inequality, investment (in both human and physical capital), entrepreneurship, and entry into capital-intensive activities; (b) the brain drain; (c) temporary migration, including under Mode4 of the General agreement on Trade in Services (GATS); and (d) the link between migration, trade and foreign direct investment (Ozden, C. and M. Schiff, 2006: 2). This section covers the impact of migration and remittances on poverty reduction, and human development-better education, wider access to health care, theoretically and empirical evidence.

3.2.1 Theoretical Evidence

Migration, Remittances and Poverty: Theories

Remittances can have an impact upon the receiving economy in different ways. Glytsos (2002) describes the channels through which remittances can affect the receiving country. There is no consensus in the literature as to whether the remittances inflows give a positive and negative effect on poverty. In the current thinking on migration and development, two opposing perspectives can be seen: the Migrant syndrome perspective, and the Developmentalist perspective.

The impact of migration and remittances on poverty are explained by two opposing theories: the” Migrant syndrome” perspective and the “Develop mentalist” perspective. The” Migrant syndrome” perspective views migration as a drain on labour and capital resources of the migrant -sending area. According to the perspective, migration may reduce income in migrant sending area if the marginal product of a migrants labour is large prior to migration and/or if migrants take productive capital (including human capital) with them when they leave. Migrants remittances may only partially compensate for the loss of labour and capital effects, and remittances may also lead to inflation and Dutch disease (Glytsos, N.P.2002)

From the pessimistic perspective, poverty may increase if migrants originate from poor households, or if the labour of poor farmers becomes less productive as a result of the lost labour and capital due to migration. For the migrant’s source country, migration can be viewed as labour export and remittances are payment for the export. In this way local production activities compete with migration for limited labour. The Dutch diseases effect on the economy can be noticed as production of tradable goods decrease.

The households with migrants will benefit (otherwise they would not migrate) but the rural poor households may not be among the beneficiaries. If migration is costly and risky, migrants may come from the middle or upper segments of the income distribution, and not from the poorest households. If migration adversely affects local production, the income of the poor may fall and poverty increases. Further, as production and income decrease, this may create negative multipliers and a downward spiral in local economic activity. The remittance-receiving households may not spend their income on locally produced goods and services, which would limit migrations potential to alleviate poverty through a higher demand

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for local production. Families that received remittances would in the case be able to buy imported goods, while the poor become poorer and income gaps increase.

The develop mentalist perspective, which is associated with the New Economics of Labour Migration (NELM), presents a more optimistic view. It views migration decisions as part of a household strategy to raise income, obtain funds for investment, and insure against risk. Remittances, or even the potential for remittances, can offset production and investment constraints, and start a development process in poor, rural areas.

This perspective sees the potential for migration and remittances to reduce poverty provide tat the benefits of migration and remittances may contribute directly or indirectly to the income levels of the poor. Remittances may contribute directly or indirectly to the income levels of the poor households that participate in migration. If migrants originate from poor households, remittances may directly reduce poverty by raising the income of the poor. Additionally, if remittances are used to buy local products and services, they can contribute to development through higher demand. In this case, other households in the economy can increase their income through a higher productivity (the multiplier effect) and income gaps can thereby decrease.

3.2.2 Impact of Remittances on Poverty: Empirical Evidence

This section is providing a review of the existing literature on the impact of international labour migration and remittances on poverty in the sending countries. Empirical evidence on the various development impacts of remittances remains limited. Many studies have analyzed the poverty impact of remittances by exploiting cross-country database, as Adams and Page [2005a, 2005b], Acosta and others (2006, 2007a, 2007b), Jongwanich (2007), Maimbo and others (2005), World Bank (2007) or exploring the issue in specific country settings as, Adams (2004, 2006a, 2006b) on Guatemala and Ghana, Lopez, Cardova (2004) and Taylor, Mora and Adams(2005) on Mexico, Yang and Martinez (2005) on the Philippine, Acosta, P. (2006) on El- Salvador and Amin, M. And Mattoo, A. (2007) on Zimbabwe and have conclude that higher remittances inflows tend to be associated with lower poverty.This section is divided into two key areas- Global studies and the Bangladesh studies.Here critically examines the empirical studies, with respect to their methodologies and findings.

3.2.3 Global Studies

The global studies presented here classified based on the sample utilized by the studies to investigate the relationship between International labour migration and Poverty. This section is classified into 1) Cross-country studies and 2) Country-specific studies.

1) Cross-Country Studies

Adams and Page (2005a) uses the cross –country data of 74 developing countries to analyze international migration and remittances affect poverty in developing world. They used the basic growth-poverty model suggested by Ravallion (1997) and Ravallion and Chen (1997). They estimate three different poverty measures- poverty headcount, depth of poverty and severity of poverty. They find that both international migration and remittances significantly reduce the level, depth and severity of poverty in developing world.

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Adams and Page (2005b) repeat the same study used a new data set of international migration; remittances and poverty from 71 developing countries in examine the impact of international migration and remittances n poverty. This study finds that a 10% increase in international migration or remittances lead to a 2.1% and 3.5% respectively decline in the share of people living in poverty. Poverty simulation model present evidences on poverty effects of remittances. The model relates the change in poverty to income growth and inequality change. It is estimated using cross-country data for 81 countries. Results from the simulation model a five percentage point average increase in the headcount ratio for lowering -remitting countries(less than 4 percent but greater than 1 percent ) and more than twice of that for higher-remittance countries are found to result when the impact of remittances on poverty rate is eliminated(world Bank 2006a).The results just described provide an indications of the rate that remittances can pay in reducing poverty, but because of the simplicity of the model and other limitations the results are not conclusive. Finally, remittances do tend to reduce poverty, have a weak impact on inequality, and lead to higher household expenses in health and education.Acosta and others (2007) explore by using a cross country analysis low remittances are contributing to poverty in the Caribbean and Latin America. They find that a one percentage point increase in remittance to GDP ratio reduces the poverty incidence in Latin America by about 0.4%. Jongwanich (2007) using a panel data set of Asia pacific countries during the periods 1993-2003. He finds that remittances directly reduce poverty through augmenting family incomes. Remittances can indirect impact on poverty reduction through the growth and human capital. He also conclude that “remittances can generate income even for families who receive no remittances at all mainly through the multiplier effects of expanded spending and such multiplier effect can lead to poverty reduction even some poor families do not directly get remittance inflows.”

Countries may differ in their concepts, definitions and measurements of the variables that are used in the estimation of the employment of cross-country regression in investigating the effects of migration or remittances on poverty alleviation in one of the major drawback (Capistrano and Maria OFW).

Maimbo and others (2005) using the cross- country data to analyze how international remittances that are sent-back through official channels affect poverty in South Asia using the basic growth-poverty model suggested by Ravallion (1997) and Ravallion and Chen (1997). In this study estimate variations in poverty as a function of three variables: mean per capita income, income distribution and level of official international remittances. This growth-poverty model assumes that economic growth -as measured by increases in mean per capita income -will reduce poverty. In this study includes 184 observations from the 71 developing countries finds that when the estimated values for unofficial remittances are added to official remittances figures, total remittances (official and unofficial) reduce the level of poverty in South Asia. On average, the point estimates for the poverty headcount measure suggest that a 10% increase in total remittances (official and unofficial) will lead to a 0.9% decline in the level of poverty in south Asia. This means that for a” representative” country where exactly one-half of the population lives below the poverty line, a 10% increase in total remittances (official and unofficial) will being the population living in poverty down to about 0.48%. Acosta, P. & Others (2007a), using a cross-country panel dataset finds that remittances in Latin American and Caribbean (LAC) countries have increased growth and reduce inequality and poverty. Its clearly find that, remittances have the capacity of lowering poverty in Latin

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America. Every 1% increase in remittances as a proportion of GDP leads to a 0.37% poverty reduction in this region. However, the impact on poverty varies from country to country and depends on initial levels of income inequality.Acosta, P. & Others (2007b), examine the impact of remittances on poverty, education and health in eleven Latin American countries using nationally representative household surveys. On the basis of balance-of-payments data and national household surveys, they evaluate the impact of remittances on poverty, education, and health in eleven Latin American countries and conclude that a moderate but positive impact on poverty reduction does exist. In World Bank (2007) includes, the effect of remittances on poverty seems much less controversial, because remittances per se do not lower anyone’s income. Remittances contribute to household income and thus, in the short run, reduce poverty.

2) Country- Specific Studies

Country-specific studies utilize different empirical approaches in their quest to generate the impact of international labour migration and remittances on poverty. There are many larger labour exporting countries such as Guatemala, Mexico, Ghana are includes these studies.Adams (2004) used data for the study come from a national household survey done by the Institute Nacional De Estadistica in Guatemala. The survey includes 7276 urban and rural households. He compares the poverty headcount, poverty gap and squared poverty gap of Guatemalan households that receive internal and/or international transfers with those of households that do not receive any remittances income. Both type of remittances decrease poverty creating a quantitatively large effect on the severity of poverty, as measured by the squared poverty gap, rather than on the proportion of people living in poverty. Remittances, when included in expenditure reduce poverty by 21.1% or 19.8% respectively. As a result international labour migration had more impact on reducing the depth of poverty than on the poverty headcount; in other words they were readily helpful for the poorest of the poor. Adams (2006a) conducts the same study in Ghana and finds that remittances do reduce poverty.Adams (2006b) using national household survey conducted by the Institute Nacional de Estadistica in Guatemala (INEG) including 7276 urban and rural households. In this study he finds that households receiving remittances spend more in education, health and housing and less on consumption(food and consume goods, durables) than do households receiving no remittances. In this study also finds that both internal and international remittances reduce the level, depth and severity of poverty in Guatemala.Lopez, Cardova (2004) using a cross-section analysis of over 2400 Mexican municipalities in the year 2000 find that an increase in the fraction of households receiving international remittances is correlated with better schooling and health indicators and with reductions in poverty. In this study econometric results show that remittances are statistically significant in poverty reduction.

Wodon and Others (2002), as cited in World Bank (2006a), conclude hat in Guerrero and Oaxaca, two southern Mexican States with significant international emigration and remittances inflows, the share of the population living in poverty is lower by 2 percentage points due to remittances income. They argue that this poverty effect is similar in magnitude to that of many government programs poverty reduction, education, health and nutrition.Taylor, Mora and Adams (2005) also cited in World Bank (2006) using data from a 2003 survey find that international remittances account for 15% of per capita household income in

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rural Mexico. They conclude that an increase in international remittances would reduce both the poverty, headcount and poverty gap.Yang and Martinez (2005) using a large dataset from the overseas Filipino survey, they found that an appreciation of the Philippine peso led to an increase in remittance flows, which contributed to the reduction in poverty. They also conclude that interestingly, increased remittances not only reduced poverty in the migrant families, they also had spillover effects on non migrant families. In this study they shows increased in remittances lead to enhanced human capital accumulation and entrepreneurship in origin households with less child labour and greater child schooling, more hours worked in self employment and higher rate of entry into capital-intensive enterprises. The later is greater for lower income than for higher income households, suggesting that this effect is related to alleviation of credit constraints.

Pernia, E. (2006) Using panel data on 15 regions of Philippines to investigate the role of remittances in poverty alleviations and regional development for the year 1994, 1997, 2000, 2003. Include there main variables- welfare of the poor (or poverty incidence), Remittances and Gross regional domestic product- this study empirically tests the impact of remittances on the welfare of the poor. The regression results shows that remittances contribute to poverty alleviation which is reflected by the higher family spending of the poorest quintile which is the bottom 20% of the households. The estimation shows that an increase of P1000 in remittances per capita leads to P 2543 additional annual family spending after controlling for the effects of other local factors. This study also finds that this positive effect rise up to the fifth quintile which he attributes to the fact that the richest quartile is less likely to have a member working as an overseas foreign workers (OFW) or to need remittances inflows. Gazdar, H.(2005), in this paper identified the types of migration are relevant to poverty reduction in different ways. The findings of this study are four types of international migration- International: Afghanistan, International: Other Asian countries, International: Gulf region, International: Developed countries and their direct impact on poverty are positive, not known, formerly high currently moderate and Potentially high currently low respectively.

Remittances from international labour migrations have played an important economic and social role, successful migration can provide adequate incomes to prevent the migrants family from into poverty, and even raise its living standards. It is obvious that family incomes in rural areas are significantly improved by migrant’s remittances (Nguyen, D. 2005:322). Skeldon, R. (2002) cited in this article “migration both internal and international is thus underlie any attempt to alleviate poverty.”

DFID (2007) looks at the relationship between migration and poverty reduction and development. In this study outlines the way in which migrants make a contribution to development and poverty reduction through their financial remittances social and political influence and diaspora activities- such as technology transfer, tourism and charitable activities.

Acosta, P. (2006) presents microeconomic evidence on the economic effect of international remittances on household spending decision in El Salvador. He conclude that remittances can increase the household budget, consumption, investment, enrolled girls and young boys(under 25 years old) from remittance recipient households, girls education. He also concludes that remittances can decrease liquidity constraint problems, child labour, and adult

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female labour supply. In this study using 1998 cross sectional household survey data in EL. Salvador.Mansuri, G. (2006) explores the relationship between temporary economic migration and investment in child schooling. Here also find that the potential positive effects of temporary economic migration on human capital accumulation are large, the gains are much greater for girls, yielding a very substantial reduction in gender inequalities in access to education.

Amin, M. And Mattoo, A. (2007), conclude that overall emigration from Zambia is not high by regional standard but the pattern of migration is skewed towards the skilled and away from the unskilled. A development friendly-approach to migration from Zambia would strive to ensure the temporariness of both types of movement. They also conclude that unskilled migration becomes feasible and skilled migration takes more desirable from.

Rapoport and Docquier (2003) provide an extensive survey of the motivations of remit and of some of the implications regarding human capital formation, entrepreneurships and inequality.

There is a few works whether remittances, by relaxing household’s liquidity constraints, allow investment in education. Cox Edwards and Ureta (2003) look at household schooling decisions in El Salvador, and conclude that receiving remittances reduces the likelihood of quitting school among individuals aged 6 to 24 years old.

Yang (2003) considers money sent by Filipino workers and finds that a rise in remittances of 105 of initial income increases the fraction of 17-21 years old children attending school by more than 10 percentage points; he also finds that child labour hours decline by almost 3 hours a week. Hanson and Woodruff (2003) use Mexico’s 2000 Census data and conclude that “children in migrant sending households complete significantly more years of schooling”.

There is small number of studies on the link between remittances and health outcomes. Kanaiaupuni and Donato (1999) suggest that infant mortality is more acute in communities with historically-high migration rates. Nonetheless, they argue that the disruptive effect of migration is offset by household reduces the risk of low-birth weight. Neither of these papers addresses the potential endogenity of remittances.

Duryea et al., (2005) suggest remittances have positive effect on infant survival through improvements in living conditions (e.g., better housing).

Ponce, J. and Others (2008), analyzes the impact of remittances on a set of human development variables in Ecuador. They focus the analisis on education and health indicators, as well on some other consumption variables.They find positive impacts on consumption, and on education and health expenditures, they find no significant results on education and health outcomes. Regarding education, they find that children receiving remittances have a higher probbility of attending private schools. In relation to health, people receiving remittances buy more nedicine and likely have more complete medical treatment in case of illness.

3.2.4 Bangladesh –Impact of International Labour Migration and Remittances on PovertyInternational migration is one of the most significant features of globalization and also socio-economic challenges of the 21st centaury. Bangladesh is a major labour sending country and remittances is the highest source of its foreign exchange earnings.

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Bangladesh is one of the largest labour sending countries and largest recipient of remittances. Government, researcher, NGOs and other stakeholder of migration are increasing attention about international labour migration and role of remittances. But there are perhaps no direct studies in Bangladesh about Impact of international labour migration and remittances on poverty. Afsar, R. and others (2000) found that migration households experienced enormous expansion of their income base during the post migration period. Currently a fifth of the migrant households have monthly income between taka 20,000 and 30,000 compared to a solitary household prior to migration of the respondents. Expansion of income base leads to a dramatic improvement of the household’s poverty situation. Using HCI (Head Count Index), the study estimates that 21 percent of the migrant households were moderately poor prior to overseas migration by the respondents. In the post-migration period the proportion of such household slashed down dramatically to seven percent.

In this study also found that remittances promote development through increased material and human capital investment. The study shows that from zero level of savings, respondents now save a quarter of their overseas income beside remittances. Apart from that their investment on health and education of family members, the two major indicators of human capital has increased significantly compared to pre-migration level.

Siddiqui (2005) has attempted to capture different aspects of voluntary migration from Bangladesh on the basis of available secondary information. It identifies the areas for policy intervention to increase the opportunities available for poor people to migrate beyond national borders with maximum protection. The study emphasis’s that through timely and appropriate intervention, migration can be turned into a major development enhancing process. It can reduce poverty and be an important sustainable livelihood strategy of the poor.

Siddiqui in her study (2001) looked into both social and economic costs and benefits of female short-term international migration. It found that 56% of families experienced positive economic results, 26.5% negative economic results and for 15.5% families, the economic impact of migration was mixed. Economic Impact was assessed on the basis of 10 indicators : (a) reasonable length of stay abroad or returning home before one year of stay; (b) reasonable flow of remittances or inability to generate remittances; (c) repaying loans for migration or inability to repay the loan; (d) buying land or inability to buy any land; (e) constructing a house or inability to construct a house of generating savings or inability to generate enough or any savings; (g) investing in business or inability to invest in business; (h) increase in income as percentage of family income or no increase in income as percentage of family income; (i) substantially bearing the subsistence costs of a family for a prolonged period or inability to bear the subsistence costs of family; (j) improve living standard or general deterioration in living standard.

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Human development is considered to be the pre-requisite for poverty alleviation and growth and development of the country. Mahmood, R. A (1998) observed that international migration and human development are interlinked. Enlarging peoples choices is by far the most important contribution of international migration to human development. It widens individual’s choices in terms of employment opportunities and for being more productive and creative. For the very poor, migration enables survival from hunger and starvation. If opens opportunities for employment and income for the unemployed; being more productive, for the underemployed. The study also observed at the household level, overseas migration, therefore remittances contribute to better and higher education among migrant family members, enable better health and Medicare, and significantly underline improved housing and sanitation for the family. Various transfer payments made migrant families towards their relatives, friends and neighbors also contribute to respective welfare. Moreover, participation and contribution of migrant families in development of local infrastructures and various institutions contribute to local human development. These include, in particular, construction and development of schools, colleges, health centers, water supply and sanitation, rural electrification etc. Migration also helps development or strengthening of local level institutions such as family values and social norms and traditions which have a positive bearing on human development.

Mahmood, R. A (1993) found that the level and the pattern of use of remittances by migrant households would have diverse implications for the welfare of the respective households as also for the community and locality to which they belong to. Overseas remittances ensure a better living condition for a family at present, and enhance its resource base for the future. Transfer of remittances in the form of gifts and donations, and use of the same for alternative purposes create various linkages for the local economy. An increased demand is generated for various goods and services which encourage local production and trading therefore generate employment opportunities. The various sectors and activities which are affected most are construction, agriculture, services, manufacturing, transport and communication and social infrastructures.

The remittance earnings have direct poverty alleviation impact. A study shows that the higher the skill and education level of the overseas workers and employees the lower their ties with the host country and incidence of sending remittances back home. About 94 percent of the Bangladeshi overseas workers are outsides professional categories; they have strong ties with home and tend to send a significant portion of their remittance back to Bangladesh. The investigation on the pattern of expenditure of the workers shows that the expatriate workers spend 29.8 percent of their income on personal consumption abroad; they send 44.9 percent of their income back home and save 22.8 percent. The remittances sent by the overseas workers are used for various productive, investment and consumption purposes. A major share of remittances (36 percent) is used to meet recurrent consumption which includes education, health care, and food. Such expenditures have a direct poverty alleviation impact. Another 20 percent is used for investment in

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land properties, while around 14 percent of remittances are spent to provide better housing arrangements. Moreover, remittances for the families play a role in restructuring the income structure and consumption (Raihan Ananya, 2006).

The impacts of migrant remittances touch not just the macro economic factors and the dependents of the migrants in home countries. They influence the social structure in terms of life standards, rural financial and trade activities, and income consumption levels of the people of particular community / villages both actively and passively. Many recipient families get rid of extreme poverty situation, at least marginally (Azad A.K. 2006).Ahmed, Jamaluddin (2007), conclude in his paper, Remittances and labour migration have contributed to poverty reduction and human capacity building. Since remittances mainly finance primary consumption, their impact on poverty alleviation has been substantial. The poverty rate in Bangladesh declined from 81 to 60 percent in 2000-2003. Although the precise impact of remittances on this declined is not known, it is likely to be positive. In households receiving remittances, children usually enjoy better education through private tutoring and all family members tend to have access to better healthcare and other personal services. Also, labour migration has reduces local labour supply and as such has been one of the factors generating growth in wages in the private sector. Remittances have boosted the overall reservation wage, as Bangladeshis returning from abroad expect higher wages at home.

3.3 Skilled and Unskilled Labour Migration, Remittances and Poverty (Global):(A Comparative analysis of skilled and unskilled labour migration and impact on poverty)

Migration can contribute to development in multiple ways, especially through effects labour market through changes in productivity and through the money sent home by migrants (remittances). The relative importance of these factors varies from country to country and often depends on the migrant’s skill composition (Policy insight, No-69, June 2008). Compared to the migration of the highly skilled, low skill migration seems to have a stronger effect on poverty reduction in sending countries. This possibly surprising result has a compelling logic behind it. For one, low skill migrants remit more money as they generally migrate shorter distances, intend to return to their home countries and generally migrate without families. Their incentive to support relations with financial transfer is thus stronger than for the highly skilled. Furthermore low skilled migrants tend to come from poorer households, which increase the poverty- reduction effect of their remittances. Finally, the emigration of low- skilled workers can reduce pressure on local labour markets which often suffer from oversupply in the low-skill segment (Policy insight, No-69, June 2008). Conversely migration of highly skilled- the so- called brain drain- has a more ambiguous development impact and disproportionately harms poor developing countries. High skill workers frequently migrate because they cannot find adequate employment in their home countries, so their loss has no immediate effects on the labour market in these countries. In fact, adequate policies can even help sending countries benefit from the migration of the highly skilled.

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In International labour migration, Remittance and Poverty studies treat international migrants as a homogenous group without distinguishing for the skill characteristics of the mover (Cattaneo, C. 2008:5). But there are various types of migrants by education or skill level. Docquier and Marfouk (2005) classify international migrants from each country according to their level of educational attainment: low-skilled(less than 8 years of schooling); medium-skilled (9 to 12 years of schooling); and high-skilled (13 years or more of schooling). Adams (2008) uses the Docquier and Marfouk (2005) data to analyze how to the skill (education) level of migrants from different developing countries affects the flow of international remittances to these countries. This paper has used new data from 76 low and middle income developing countries to examine the demographic, economic and financial determinants of international remittances. The econometric results presented here suggest that the skill composition of migrants does matter in remittance determination, :Ceteris Paribus, countries which export a larger share of high-skilled(educated) migrants receive less per capita remittances than countries which export a larger proportion of low skilled migrants. Results suggest that a 10 percent increase in the share of high- skilled migrants from a labour sending country will reduce the amount of per capita remittances received by a country by 11.2 to 19.7 percent, while a similar 10 percent increase in the share of low-skilled migrants will increase the level of remittances received by 9.1 to 19.8 percent. Here also conclude that although the country-level data presented here cannot provide a definitive explanation for these outcomes, one possible explanations is that high-skilled migrants remit less because they are more likely to bring family members and to remain in their newly adopted country and so they are less concerned with a any eventual return to their home country. By contrast, low-skilled migrants tend to remit more because their migration is more temporary in nature and they are more concerned with returning home. At micro economic level, some past studies have suggested that (holding all other factors constant) more educated migrants remit more because they typically earn more(Banerjee,1984). However, other micro-economic studies have found that more educated migrants remit less because they have lower propensities to return to their origin country (Rapport and Docquier, 2004)

It is important to note that the remittances are attributed to both skilled and low skilled diaspora from these countries and it is difficult to identify the extent to which the skilled South Asian diaspora population has contributed. It is also well established that a large part of he remittances to South Asian countries are made by low skilled and manual workers based in the Gulf and that skilled migrants living in the United States, United Kingdom and other industrialized countries tend to save more abroad as they are more attached to their host nations. On average, they remit smaller proportion of their incomes than labour migrants (Chanda, R.2008:32).

Cattaneo, C. (2008: 17) cited in this paper” the on-going economic debate questioned the nature of the effect of skilled emigration on growth, but no previous research evaluated the further link between skilled migration and poverty”. In this paper the results suggest that, controlling for the stock of migrants per capita. The departure of skilled individual does not exert detrimental effect poverty. While the stock of migrants positively effects the income of the poor, the intensity of the brain drain in the different countries does not influence the level of poverty the potential hurdle introduced by the departure of tertiary educated individuals does not prevent migration to be poverty reducing.

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Iregui, A. M. (2003), uses a multiregional CGE model computes the worldwide efficiency gains from the elimination of global restrictions on labour mobility. Considering two types of labour skilled and unskilled the results are, the elimination of global restrictions on the mobility of skilled and unskilled labour generates worldwide efficiency gains that could be considerable magnitude. Its also include when only skilled labour migrates, the worldwide efficiency gains are smaller, as this type labour represents a small fraction of the labour force in developing regions.

Niimi and Others (2008) in this study main finding is that remittances decrease with the share of migrants with tertiary education. They also include remittances increase with source countries level and rates of migration, financial sector development and population, and decrease with their per capita income and expected growth rate.

Faini (2006) cited in his paper that it is often argued that negative impact of the brain drain may be mitigating by its favorable effect of remittances. In this paper shows it’s not generally true. The brain drain seems to be associated with a lower rather than a large flow of remittances. This both because skilled migrants are more likely come from relatively wealthy families and because their propensity to remit is relatively lower, presumably reflecting the fact that they are keener (are more able) to bring their most close relations in the host country.

Niimi, Y., and Caglar Ozden (2006:4) cited in the paper “One of the factors that deserve more attention is the impact of the education level of migrant’s workers on remittances at the cross-country level. If a larger proportion of migrants are highly educated, they are more likely to earn higher income and thus remit more. Yet it can be said that educated migrants tend to come from better-off families who rely less on remittances for their livelihood. It is therefore not clear as to which force dominates”.

No country has a breakdown of remittances by skill profile. On the one hand skilled workers can be attracted to home country investment through incentives like India and Sri Lanka. Unskilled workers tend to send money through informal channels such as the “Hundi” system popular in the subcontinent of India. Skilled emigrants usually migrate with their families and overtime their remittances may decline. Moreover they are highly sensitive to economical, political development at home and may prefer to keep their saving abroad. Thus there are both positive and negative effects and the net result is not clear. This is an area which obviously requires further research (Wickramasekara, P.2002).

If migrants are low- skill or unskilled workers, the beneficial impact on poverty and inequality is maximized for the migrant- sending country. It is not just that the ensuring remittances are directed at poorer households, but that the supply of unskilled labour in the source country is reduced, thereby increasing wages of unskilled workers left behind (Devesh Kapur, 2005).

Mansuri, G. (2006), proposed to open international labour markets to allow for the temporary economic migration of low skilled workers from developing to developed countries is its potential impact on human capital accumulation by the poor.Vadean, P. and Florin,(2006) in his paper aimed to provide insight into the way in which the education and skill level of migrants affects the remittances habit, purpose and use, in the context of Afghan, Egyptian and Serbian immigrants groups in Germany. The information about the remittances patterns of the immigrant groups, identified by a snowball sampling technique. In this paper conclude that whether skilled migrants remit more or less compared

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to low skilled ones is not straightforward, this study provides evidence that the skill level significantly affects the purpose of remittances towards more productive investment. Whilst low skilled migrants mainly remit for securing the consumption need of their family members, the remittances of middle skilled migrants are more often used for investment saving(e.g. buying of real estate or bank account deposits), and high skilled migrants make also productive investments in their home countries.

Koettl, J. (2006) explains about the cost and benefit of skilled and unskilled labour migration. Brain drain is a major concern to source countries for a number of reasons. Through highly skilled migration, source countries lose a significant amount of human capital. Empirical evidence shows that the highly skilled migration might also be less prone to send remittances back home. Although highly skilled migrants typically earn more- and thus, ceteris paribus, they should remit more than low skilled migrants (Income effect)-Faini (2006) finds that the highly skilled migration results in smaller remittance flows. This is due to the fact that highly skilled migrants stay longer abroad, are more likely to reunite with their close family members in the destination country, and therefore send less remittances. A direct benefit to source countries may arise from unskilled emigration. Many source countries suffer from persistent unemployment and underemployment. Emigration of unskilled migrants can help to ease tensions in the labour market of source countries and to decrease underemployment and unemployment.There are also certain indirect benefits from highly skilled migration for source countries. The prospect of highly killed emigration-at hence, higher income- might raise the expected return on education and therefore additional investment in human capital (brain gain). If the resulting brain gain exceeds the brain drain of actual emigration, source countries experience a net brain gain.Ratha (2003), conclude that the temporary movement of lower skilled labour can offer positive benefits for LDC’s, especially in relation to skills upgrading, brain circulation, and remittances. Remittances play a significant role as a source of relatively stable many external funding and are also of greater importance to many LDC’s than to other developing countries. Low- skilled migration is usually beneficial and contributes indirectly to poverty alleviation. It has been argued both theoretically and empirically that low skilled migration can improve labour market conditions for other poor workers who stay behind. Given the extremely high unemployment rate in the economy, reduced supply of unskilled workers is likely to not only relieve unemployment pressure in the economy, but is also expected to increase the wage rate for the remaining body of unskilled workers (Mughal, A., and G. 2007).A study by Faini (2002) finds that remittances decline as the share of migrants with a tertiary education goes up.Jellal’s (2002) study on Tunisia, also finds that the percentage of a migrants income remitted is negatively correlated with skill level of the migrants.In India, Lucas (2002) noted that remittances per migrant may have been approximately comparable from the Gulf and from the United States, despite the much higher education and income levels of those in the United States. Rodriguez (2002), looking into the Philippines, finds that the amount remitted and the portion of overseas earnings remitted rise with education level of the migrant up through college, but then decline slightly among University-educated migrants.

There are some opposite view on skilled and unskilled labour migration and poverty. Mulina, T. and others (2006) conclude that migration and remittances are significant component of Samoa and Tonga. It’s providing income support for a large section of population and thus

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improving living standards and alleviating poverty at the household level. Here also conclude that the higher propensity for skilled migrants entering Australia to remit more money home than is the case among unskilled migrants to New Zealand. In this study used interview of 471 households in the two countries. Here used descriptive model and the probit model to analysis the data.

Early development literature typically concluded that skilled worker was determinant to sending countries. Even when skilled workers were unemployed at home, there social marginal productivity was not necessarily nil, as could have moved to the country side rather than migrating abroad. Now some literature suspects that the skilled migration is not an unmitigated curse. A non zero probability for educated individuals to move abroad should raise the returns to education and in the end, may even lead to an increase in the numbers of educated workers that stay at home. Skilled migrants will typically earn more and may therefore remit more. Migrants may return home after having acquired variable skills abroad and migrant’s particularly skilled ones, may establish trade and investment links with their home country, enhancing its attractiveness as a destination of foreign direct investment.(Faini, R.2006)

3.4 Skilled and Unskilled Labour Migration, Remittances and Poverty (Bangladesh):

Bureau of Manpower, Employment and Training(BMET) has classified short-term migrants to middle East and South East Asia into four categories: professional, skilled semiskilled and unskilled. Doctors, engineers, teachers and nurses are considered professional. Manufacturing of garment workers, drivers, computer operators and electricians are considered skilled, while tailors and masons are considered semi-skilled. Housemaids, cleaner and menial labourers are considered unskilled workers.

During the early years of short-term labour migration, the proportion of professional and skilled workers was higher than that of semi-skilled and unskilled workers. In recent times, however, semi-skilled and unskilled workers have made up the majority of the migrants (Siddiqui, T., and 2005:80). BMET database does not categories migrants according to age and educational status (Siddiqui, T., and 2005:82). Bangladeshi immigrants in the UK and the US have a range of educational backgrounds: professional, skilled, semi-skilled and unskilled. Migrants to the UK during the early 1920s and also in the 1950s and 1960s were mostly uneducated. In the US, those who went during the 1950s and 1960s were educated professionals (Siddiqui, T., 2005:83).

The less educated migrants not only save a higher percentage of their income abroad, but more importantly, their rate of saving demonstrates a greater uniformity and stability. This is true irrespective of whether a less educated person lives abroad with family or not. This higher propensity to save is underlined by a low monthly expenditure as due to factors such as lower standard of living, staying together with one’s own community in cheaper accommodation, and on simple and inexpensive diet. Moreover, the less educated people do tend to have a relatively higher level of dependency back home, presupposing a higher level of savings and remittances. From a labour exporting countries point of view this would imply that exporting less educated people to a country such as the UK would yield a higher and more predictable foreign exchange potential (Mahmood, A.R. 1993:23).

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Mahmood, A.R. (1991: 48) cited in his paper “the major occupations of Bangladeshi nationals in Japan are basically those which are require very little skill and training or any job experience. Broadly, such occupations can be classified as unskilled and which involve menial work or physical labour. Five different occupations account for four fifths of the employments. These are labourers, Industrial worker, helper, Waiter and cleaner. About 45% of the employments are due to occupations classified under labourers-either construction worker or industrial workers. These occupations involve no previous training or skill, and require only physical labour. These moreover, required no proficiency in local language as involving no public relation. Any language problem can be resolved if there is at least one person in the respective enterprise who can communicate in the local language and also in Bengali”.

Mahmood A.R. (1992) observes that the maximum levels of gains from migration are achieved by professionals and semi professionals. He also include that the professional and semi-professional migrants have the highest relative share of those who managed to start some trade or business out of remittances. Among the different categories of migrants, the incidence of post- migration unemployment is highest for unskilled migrants: 57 percent, compared to a pre-migration level of 15 percent. The next most affected group is the skilled migrants: unemployment among them increased from 14 to 47 percent. The various aspects of the changes in income after migration are closely related to the skill level of the returned migrants and the length of their stay abroad. The Unskilled migrants experienced the most significant decline in the numbers earning some income for wages or salaries, however, the number deriving income from business profits experienced the highest relative increase. The same was true of overseas remittances.

Mahmood A. R. (1992), conclude that the vast majority of outward migrants were semi skilled and unskilled. Overtime, Bangladeshi workers migrating to the region experienced significant changes in terms of their number, country of destination, and skill composition. In terms of composition of the labour force migrating to the Middle East, there has been a significant reduction in the relative’s share of skilled migrants, who have given way to more low and unskilled migrants.

Afsar, R. and Others (2000) found that forty-five percent of the respondents of their survey had opportunity to develop their skills prior to migration largely from private training institutions and in few cases they gained experience of similar types of work at home. Pre-migration skills appear to influence their job opportunity. The study indicates that skills and educational attainment endow migrants with greater leverage in the UAE labour market in terms of getting more secured job. The study further reveals that skills or higher level of education among labourers do not necessarily lead to enhanced income but ensures better working and living conditions at the destination compared to their compatriots who have no skills and lower levels of education. Some skilled and professional migrants are also prefer to go Australia, Canada, Germany, France, Italy Switzerland, New Zealand, Belgium, Netherlands , South Africa, Spain and Japan. The semi skilled and unskilled migrants mostly go to Middle Eastern countries and South-east Asian countries. (Jesmin Rubayat, 2005). According to Bangladesh Bank estimates, between 1997 and 2004, over US$6 billion remittances were from Saudi Arabia, that is, mainly migrant workers, followed by an

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estimated US$2.2 billion from Bangladesh is in the United Stats, many of whom are skilled and professional expatriates. (Chanda, R. 2008:35).

Chanda, R. (2008:3) cited in her paper” Asia has been a major source of highly skilled workers. Within Asia, South Asia has been an important source region for skilled migration, in addition to being a source region for low and semi skilled migration. India, Pakistan and Bangladesh and to a limited extent Sri Lanka, are important suppliers of engineers, doctors, IT professionals, accountants, scientists and educators to the rest of the world.By and large, the bulk of unskilled migrant labour is headed towards the oil rich Gulf countries, through in recent years, a growing number of skilled workers are also moving to the region. There is a mix of skilled and less skilled migration from South Asia to the South East Asian and African countries. The bulk of skilled emigration from South Asia to the OECD countries, particularly the English speaking industrialized countries of the united states, Canada, Australia, United Kingdom, and new Zealand, through even in some of these countries the diaspora population for some of the South Asian countries, such as Bangladesh, represent a mix of skills. (Chanda, R. 2008:4).

The remittance has significant macro-economic impact on household level. The majority of Bangladeshi migrants abroad is unskilled, and originates from rural areas and poor community. The poorer the household, the more impact or benefits remittances income can have alleviating poverty. Remittances allow the poor people to increase expenditures on both durables and non durables products, and provide them with protection against negative income shocks. Remittances are cited as making up around 60% to 70% of recipient poor household’s total income (Hasan, R. A. 2006).In World Bank publication” Bangladesh: Strategy for Sustained Growth” includes“Saudi Arabia alone accounts for almost two-third of emigration, but only about 40 percent of total remittances because of the low-skill emigrants it attracts. The U.A.E and Kuwait are the other preferred destinations: together, these three countries account for almost 90 percent of all emigrants. The USA has a small share of immigrants from Bangladesh(less than 5 percent), but accounts for 15 percent of the remittances because of the highest skill level of emigrants there”.Nurul Islam (2004), conclude that as population in developed countries age and as their level of training and education goes up, there will be an increasing demand for low and unskilled labour services to be imported from abroad. In some high-income fast going and labour-short developing countries, there is likely to be demand for imported labour.

3.5 GATS Mode 4 and Skilled, Unskilled Labour Migration (Global)

Today, the World Trade Organization (WTO) is dealing with an issue that lies at the interface of two major world challenges: trade liberalization and international migration. Greater freedom for the “temporary movement of individual service suppliers” is being negotiated under the General Agreement on Trade in services (GATS) (Mattoo, Aaditya, 2003). GATS, an international agreement that is part of the WTO legal framework, became effective in 1995 as part of the Uruguay Round of negotiations. It prescribes the rules for the international trade of services. The GATS aims to increases trade in services by providing transparency in, and the progressive liberalization of, service markets (Ostrovsky, Aaron, A., 2006). Potentially, one of the most significant changes to the international migration regime has been the inclusion of some specific type of international labour migration into

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the international trade regime. Under the General Agreement on Trade in Services (GATS) temporary international labour mobility is one of the four modes of supplying services. This framework provides the opportunity for world trade Organization (WTO) members to negotiate commitments to liberalize individual sectors for workers of all skills levels of other members, to provide services ranging from construction through to tourism in the territory of another member (Mistry, R. 2008: 1). The growth in the demand for services has meant that its share of world trade has increased, which has lead to increasing interest in the temporary movement of persons to provide services. Since its inception a decade ago, there has been little progress on the temporary movement of persons, under the GATS; this has particularly been the case of less skilled workers. This is a key issue for Bangladesh and other developing countries, where large populations and low rates of literacy, provide a plentiful supply of less skilled labour, and a scarcity of jobs at home. Furthermore, research suggests that most developed countries (Kippen and MacDonald, 2001) over the next ten to fifteen years will have to contend with workforce shortages. Therefore Least Developed Countries (LDC’s) needs to prepare themselves and their workforce for the time when the labour force needs to developed countries have to be met in some measure by workers from the developing world. Over the last decade, there has been increasing amount of literature on the economic benefits of the trade in services, in particular the temporary movement of natural persons (TMNP). Influential work has been published by L.A.Winter (2003); A Mattoo (2004); R.Chanda (1999_); and R. Self (2002) among others. Working papers continue to be produced, and a wealth of research continues in this area. A number of seminars and symposiums have been organized by international organizations including the World Trade Organization (WTO), World Bank (WB), United Nations Conference on Trade and Development (UNCTAD) and International Organization for Migration.

The GATS provides legally enforceable rights to trades in all services, the agreement includes built-in commitments for continuous liberalization through periodic negotiations. However, the diversity of services makes the negotiating process long and complicated (Mistry, R., 2008). GATS commitments are based on four deliveries of services.Mode 1(Cross-Border supply): Cross border supply covers services that flow from the territory of one member into the territory of another (e.g., financial services offered via internet, tele medical advice)Mode 2(Consumption abroad): Consumption abroad refers to situations where a consumer travels from his territory to another Members territory to obtain a service (e.g. patients, tourism). The essential feature of this mode is that the service is delivered outside the territory of the member making the commitment. However, activities such as ship repair abroad, where only the property of the consumer “moves” or is situated abroad, are also covered. Mode 3(Commercial Presence): Commercial presence implies that a service supplier of one Member establishes a territorial presence in another Members territory to provide a service (e.g. hotel chains, bank). In most cases, foreign investment (FDI) is involved in mode 3. It includes, among others, corporations, joint ventures, partnerships, representative offices and branches.

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Mode 4 (Movement of Natural Persons): Movement of natural persons means temporary movement of people (such as doctors, accountants etc). The term “Natural Persons” is an Orwellian euphemism used in the GATS to describe working class people that are considered to be nothing more than commodities. However, this connotation has been proven to be wrong as natural persons may includes all categories of professionals, with low to high skills. It has become essential to change the connotation of the “natural persons” to remove the stigma of lower skilled people (Raihan, A., 2005:38). In other words Mode 4(Movement of Natural Persons) is one of the four modes of supply covered by the GATS. It covers natural persons, who are services suppliers (such as Independent professionals) as well as natural persons, who are service supplier of a Member and move temporarily to another Member to supply a services. Mode 4 is defined in Article I.2(d), as entailing” the supply of service…by a service supplier of one Member, through presence of natural persons of a Member in the territory of any other Member”.GATS mode 4 only covers people moving temporally, although there is no definition temporary. In effect the length of stay allowed by GATS mode 4 is identified by the offers and agreements made in countries negotiating positions and varies from a few months to a few years 9renewable) depending on the type of work( and usually level of skill). Business visitors can usually stay for up to 3 months, while intra-corporate transfers are usually for 2-5 years (Development Research Centre, 2005).

Mode 4 is the smallest mode of delivery in terms of the amount of trade flows and volume of commitments. Mode 3 and mode 4 are usually linked by the fact that the commercial presence of a Foreign Service supplier often requires intra-corporate transferees. To, date, commitment in mode 4 have emphasized this relationship, and have focused primarily on intra-corporate transferees. The current commitments under Mode 4 are less significant for developing countries because their comparative advantage lies in low to medium skilled workers (Ostrovsky, Aaron, A., 2006: 3)

Assessing the current level commitments, it is clear to see that there is poor coverage of sectors where Mode 4 is important; there are few sector specific entries in mode 4. There are ten restrictions on geographical or sectoral mobility and only seventeen percent of schedule (horizontal) cover low-skilled persons; the current commitments focus towards highly skilled labour and often tied with mode 3, which is particular interest to most developed countries(Raihan, A., 2005).The LDC group strengthened their demands on movement of natural persons (Mode 4), suggesting that Members should open their markets to “all categories of natural persons from LDC’s, particularly unskilled and semi-skilled persons” without applying a so-called economic needs test. The LDC group argued that mode 4 of unskilled and semi-skilled persons was the most significant means for LDC’s to market their services globally as well as to reduce poverty (Raihan, A., 2005:15).The reason many commentators see GATS Mode 4 as a boon for developing countries is that it allows them to exploit a relative abundance of medium and less skilled workers. Greater market access for developing country citizens

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should yield economic benefits directly in terms of payments to workers and remittances as well as other, less tangible, benefits on return ((Development Research Centre, 2005).

Developed Country Needs for Low skilled workers

Major developed countries are facing changing demographic and economic trends (early retirement, aging population, falling birth rate, and increase in affluence of population. Growth/productivity, particularly in cities, time spent in higher education of young population) that project an important need for increased low skilled workers participation over the next 50 years. According the study conducted by McDonald and Kippen (2001), demographic and economic trends from 2000 to 2050 are projected to reduce labour supply in many of the major developed countries such as the United States, Australia and Germany. Reduction in labour supply is a major contributing to the shortage of worker in low (and high) skilled works in these countries (South Centre, 2005:3).The need for low skilled labour pool cannot be met entirely by domestic workers in developed countries. In short, the growth –oriented policies of developed countries will depend on a fast growing labour force that will require low skilled workers, whether provided domestically or from abroad (South Centre, 2005:4) One of the strongest arguments for mode 4 particularly of less skilled workers to develop countries there will be labour shortages within the next ten to twenty years. These are caused by aging populations, early retirement policies, young people entering the workforce at a later stage, low birth rates and an increase in living standards leaving the local population less interested in low skilled work. Studies have shown that in most developed countries, zero immigration would mean that countries would face a substantial fall in their labour force (Macdonald and Kippen, 2001, p.17). The success of growth-oriented policies in developed countries will depend on a fast growing labour force of low skilled workers. Without migration from labour surplus countries, developed countries will not be able to keep up with growth (Mistry, R. 2008:27).

In South Centre Analytical note, (2005:1), includes” This note considers the interest of least developed country(LDC) Members to participate in the market access negotiations of the General Agreement on Trade in Services(GATS). The request and offer process of negotiations begins appropriately with the submittal of an initial request. Thus in order for LDC’s to begin participating in negotiations, they should request their areas of existing or potential export interest. One area that has been identified by LDC Members is the movement of the natural persons in the low skilled occupations through mode 4 commitments”.

Labour Policies in Selected Developed Countries

There are need large amounts of foreign workers in most developed countries. Developed countries have in place policies for both high and low skilled foreign workers. The breadth of foreign worker policies and short-term

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worker schemes for low skill compositions suggests that developed countries do realize their shortage of low skilled labour supply. For example, the US, although limiting GATS mode 4 commitments to the highly skilled, have in place foreign labour policies that include a substantial amount of low skilled workers. These are mostly in the form of seasonal worker arrangements for the agriculture sector, however a few low skill occupations are included in its H-2B visa scheme for non-agriculture workers, among others. In Canada, most foreign labour policies are for high skilled workers. However, it does also allow for foreign low-skilled labour movements, for example, through its Temporary Foreign Worker Programs, which provides employment for foreign workers in areas of labour shortages. Mexico, Jamaica and Philippines were the top three worker source countries for this program in recent years. Similarly, the United Kingdom (UK) has a Sectors Based Scheme for foreign workers to be employed in the hospitality sector, which include low skill occupations such as bar staff, concierge staff, room attendants, etc. Germany also provides work permits to foreign workers for low skill occupations such as lorry drivers. Australia allows low skilled workers through guest worker schemes or working holiday visas. Mostly foreign young persons who perform a large amount of leisure and recreational services in the country, which are often of a low skilled nature, fill the latter category of Visas (South Centre, 2005:6).

There are existing quotas and schemes for Highly skilled in many developed countries; in the US there is the HB-1 visa scheme. In 2000 the British government and a research organization, the Wolfson foundation launched a research scheme aim at attracting leading expatriate scientist to return to the United Kingdom, as well attracting young researchers to migrate to he UK. The UK has two special worker schemes aimed at low skilled workers in particular sectors, the Seasonal Agricultural Workers Scheme (SAWS), and the Sector Based Scheme (SBS). In 2002-2003 the SAWS had quotas of 25,000 places; the SBS is aimed specifically at cooks, waiting staff and meat processors (P- 8, IPPR, 2004). The SBS was initiated 2003 and has been particularly popular with Bangladeshi migrants, initially the quota was set at 10,000; it was doubled in 2004, but subsequently reduced by a quarter for 2005 to 15,000. The UK also has a Highly Skilled Migrant program (HSMP) similar to schemes in the US and Australia, the scheme is points based and does not require the applicant to provide proof of employment. Recruitment is usually for those providing finance, business, information technology and medical services (P- 9, IPPR, 2004)[ (Mistry, R. 2008: 28).Even with the demand for low skilled labour in most developed countries, many governments maintain high barriers citing high unemployment, securing concerns and the rising trends of migrant workers, through regional migration, for example through EU expansion, low skilled workers are able to migrate from the new member states. In the US there has traditionally been both regular and irregular migration from Mexico (Mistry, R. 2008:29).

LDC’s Interest in GATS Mode 4 Commitments in Low Skill Occupations: Matching Needs with SupplyThe LDC group, in its Dakar Declaration by LDC Trade Ministers, has identified mode 4 as an area of export interest in the GATS market access

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negotiations. LDC Members are currently net importers of trade in services. LDC’s do not have the supply capacity or competitiveness necessary for supplying services in many sectors or other modes of supply. Therefore, mode 4 provides a realistic potential in the foreseeable future for LDC exports of services trade due to their supply capacity in labour (South Centre, 2005:6).Given the substantial needs for low skilled workers in developed countries, LDC’s countries may provide a good source of temporary workers. LDC countries as a whole are projected to have over 230 billion unemployed workers in 2010(South Centre, 2005:6). Challenges Faced with Mode 4 commitments for low skilled WorkersIt is quite clear that developed countries GATS commitments and initial offers do not include low skill occupations. Instead, many developed countries have more or less inscribed the same types of categories of high skilled workers with similar levels of liberalization commitments.However, if LDC’s are urged to participate in current market access negotiations, they should do so only if benefits can be received through mode 4 commitments in low skill occupations (South Centre, 2005:8).There has been little attention paid and effort made to fined practical ways of overcoming challenges perceived by members to mode 4 commitments for low skilled workers. Various mechanisms have been proposed ranging from lower skilled service providers in a service provider visa scheme to utilizing the International Standard Classification of Occupation List(ISCO-88) developed by the International Labour Organization(ILO) for occupational categories. Given that a lesser amount of discussion has taken place on the later mechanism (South Centre, 2005:8).

Low skill Occupation categories: ISCO-88First, it should be noted that paragraph 9 of the modalities for the Special Treatment for LDC Members in the negotiations on Trade in Services states the Members are to consider making commitments in Mode 4 by taking account of categories of natural persons requested by LDC’s. Categories of natural persons can be classified through occupations, such as those of the ISCO-88(South Centre, 2005:9).The ISCO-88 has in place many categories of skill occupations, ranging from waiters to hairdressers. The ISCO-88 is an internationally adopted classification of occupational groups. It holds the same status as the UN CPC classification on service sectors, which is used by Members to schedule sectoral commitments. Thus there is no barrier to utilizing the ISCO-88 categories of occupations in offers for commitments in mode 4(South Centre, 2005:9). Formulating Mode 4 requestLDC’s could utilize ISCO-88 occupation categories to ensure a detailed and more precise request. By clearly requesting commitments through occupational categories, LDC Members would be better able to assess the true value of offers receive from trading partners (South Centre, 2005:10).

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LDC’s should continue to communicate their interest in Mode 4 liberalization for low skilled workers through LDC Group declarations and individual and collective statements and official WTO submissions (South Centre, 2005:10).Mode 4 and Remittance Behavior

A recent IOM report found that it is less skilled temporary workers that remit the largest proportion of their income back to the home country. This is generally because they have not established themselves in the host country; they have very strong ties with the home country. They feel that they are investing for the future, that once they return , they will be able to use the money that they have earned in the host country to improve their quality of life, to build a better house and to buy livestock or land to sustain themselves and their families(Mistry, R. 2008: 30).Domestically TMNP is beneficial for the domestic labour market, as more people migrate overseas the pressure on the domestic employment market is relieved. Bangladesh is a labour surplus country, there is a massive supply of less skilled labour, the competition for jobs is fierce and there are high rates of unemployment. The large labour force also means that wage rates are suppressed, making even harder for those who are employed to survive. Traditionally in Bangladesh people migrated from rural to urban areas on a seasonal basis to work, however it is getting increasingly difficult for people to find work in the urban areas, and TMPN offers workers an employment opportunity that they would not otherwise have domestically(Mistry, R. 2008: 31).

The pressures on the domestic employment market mean that TMPN is not livelihood option for many people in rural Bangladesh; it is a livelihood necessity. On a short trip to a village in the district of Tangil, north of Dhaka, several families and houses were visited; in each house at least one family member was working overseas, generally in West Asia. Without the income of that one person, the entire family would not be able to survive, there were no local sources of income and the money sent back is used to buy food, clothing and repair shelter. It is difficult to convey how reliant people are on the remittances that are sent back, they are crucial for poor rural families, there are no other options for most families. This provides a extremely compelling case for TMNP, to see the direct benefits to so many people from comparatively few migrating, it shows the potential for grassroots development. The remittances provide families with options that they would not otherwise have, younger members of the family are able to attend school, to enable to them to get better jobs, living standards improve, people are able to afford the costs to see a doctor and get treatment for any medical problems they have. Overall, the money remitted back allows rural families sustain themselves and begin to improve their standard of living (Mistry, R. 2008: 31).

Remittances are not only important for less skilled workers and poorer members of society, remittances help families at all levels of economic prosperity, and it is often particularly helpful for parents when skilled children migrate overseas. During a conversation with an Indian customer support engineer currently working in Dubai, United Arab Emirates, he

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explained the benefits of working overseas. His earnings in Dubai are approximately 30-40 per cent higher than he could expect to earn doing to same job in India. The company he works for covers the cost of return ticket from Mumbai to Dubai, gives 30 days paid holiday, and provides a lunch allowance as well as conveyance. Through his wage, he is able to support himself in Dubai as well as remitting approximately 50 percent of his earnings back to his family n India. As his parents are retired, the money he remits is used in part to support the family in India (Mistry, R. 2008: 32).Winter L. A., (2003), estimates gains from temporary movement. The bottom line of the modeling exercise is that increased mobility equivalent to 3 percent of the receiving countries work forces would generate $ 156 billion a year in extra economic welfare. This gains are shared between developing and industrial countries and owe more to unskilled than to skilled labour mobility.Winters and Others (2003) have stressed that large world gains are to be had from liberalizing the temporary migration of unskilled workers. Winters and Others may well be right focusing on the unskilled first. From a global perspective, policy action is most urgently needed regarding Temporary Labour Migration of unskilled labour, especially in relations between developed and LDCs.

Brain Drain

In the country of origin, the general concerns to TMNP include the risk of loosing domestic resources, in terms of skill and expertise, this phenomenon has come to be known as the Brain Drain. As more and more highly skilled workers from developing countries choose to migrate to developed countries, where available technology allows them to utilize and develop theirs skills. This means that the money that has been invested in their education in their home countries has, some would argue, been wasted. However, other theorist would argue that through TMNP Brain Drain would not occur, and it would instead result in a phenomenon that has come to be known as Brain Circulation, where skilled and professional migration gain new skills and expertise while working overseas. They return to the home country with those new skills and expertise and pass them on to colleagues that have remain in the home country, and increasing the general skill level in the country. This can apply to workers of all skill levels not only the highly skilled, less skilled workers will also gain knowledge and expertise on different working methods that they will be able to pass on once they return(Mistry, R. 2008:29).

3.6 GATS Mode 4 and Skilled, Unskilled Labour Migration in Bangladesh Context

The new challenge for the Bangladesh and other LDC governments lies in how to manoeuvre within today’s international migration regime, whether is be through WTO negotiations or through bilateral and regional agreements with receiving countries, or alternatively through further investigating the possible opportunities for temporary labour migration through the GATS. The Bangladeshi government needs to identify where its labour force strengths lie and develop a strategy for temporary labour supply to other countries and in

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particularly to developed countries, either through the WTO framework or through bilateral agreements(Mistry, R. 2008: 02).

In Bangladesh international labour migration generally occurs because of bilateral agreements that have been set up between Bangladesh and receiving country. The management of overseas migration is currently the responsibility of the MEWOE and the BMET. The vast majority of people that currently migrate do so with the assistance of a recruiting agent. Most Bangladeshi migrants have little known of how the system works and who is responsible for their well being. The system is chaotic and difficult for most people to understand.Below there is an overview of the key ministries within the GOB, the role that they play with regard to the temporary movement of labour, how they interact with each other with regards to mode 4 and what role the provide for the migrants themselves. This will useful in order to understand how the Bangladeshi government identifies in export potential and develops its strategy with regards to mode 4(Mistry, R. 2008: 33).

Current Temporary Migration from BangladeshThere is no progress within GATS negotiations on commitments to liberalize the movement of lower skilled personnel, particularly on the part of developed countries. We also know that labour projections for many developed countries show that there are already, or are or are going to be shortages of less skilled workers. We know that Bangladesh has a huge labour surplus that cannot in any way be filled through the domestic market. This couple with economic benefits of temporary labour supply, including information from the international organization for Migration (IOM), which found that least skilled short- term temporary workers are more likely to remit higher proportions of their wages back home, makes it extremely important for Bangladesh to be able to tap into overseas labour markets (Mistry, R. 2008: 50).

What should Bangladeshi government be doing to help facilitate these movements? Should the government seek to raise the skill levels of its citizens, to create a firmer foundation with which to negotiate on (although this does not address the issues of qualification recognition)? Should the government take no action on this matter, as it is, over a quarter of million Bangladeshis are temporally migrating overseas to provide services. Most of them are working in lower skilled occupations and there is not likely to be much progress on this issue within GATS negotiations. Furthermore, even if there were commitments to liberalization from receiving countries, the Bangladeshi government would still face further problems in terms of the other barriers to trade, including Economic Needs Tests. What measures should the Bangladeshi government take? (Mistry, R. 2008: 50).

GATS Negotiations

Whether or not Bangladesh pursues the facilitation of labour mobility and service supply through GATS negotiations, the government still needs to develop a concrete negotiations strategy. This may only be through using

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mode 4 as a bargaining tool in other areas of negotiations. In order to begin to build a negotiating strategy, it is essential that the Bangladeshi government develop a better understanding of the key issues across all relevant departments and ministries. Negotiators in Geneva will not be able to enter into successful negotiations unless there is clarity back home. (Mistry, R. 2008: 51).

A serious capacity building drive is needed within central government, Ministers and officials needs to have a clear idea of what mode 4 entails and the domestic impact on their department. Mode 4 is such an important issue to Bangladesh; however with the exception of a few key officials there is know knowledge of what it is and the consequences of liberalization. There needs to be a better understanding of the issues across all government departments not only those directly involved in the negotiations process (Mistry, R. 2008: 51).

When formulating policy on mode 4, there needs to be a clear idea of the national interests, the mission in Geneva is far removed from the domestic situation; it is therefore, up to the central government to know what the national interest is. Although there is a lead ministry to deal with all meters relating to WTO negotiations, as temporary labour mobility is a complex issue and covers several ministries and agencies, there should be the creation of a central body to establish effective communication and structural links between the departments, without the internal pressures and politics that no doubt currently exist. Furthermore, such a body could oversee the research being carried out by different ministries and track the progress to ensure that this work is compete accurate and can be used by the government, in policy formulation (Mistry, R. 2008: 52).

There needs to be a bridge between the ministry of Foreign Affairs and the ministry of commerce. Policy formulation should be joint venture between the two ministries, the foreign ministry is in the best position to put the trade policy into the larger foreign policy context and the commerce ministry will be able to provide in depth trade analysis; they will be able to complement each other(Mistry, R. 2008: 52). It is also important for mode 4 negotiations to be understood within the dynamic of wider negotiations, not only with regard to other services negotiations but also in the wider context of trade negotiations and can therefore be played off against other sectors (Mistry, R. 2008: 52).

In the short- term, the negotiations at the mission in Geneva need to be in close communication the various government departments in Dhaka. There needs to be greater understanding of the negotiations process from central government so they can assist the small number of delegates when they are in negotiations. It is easy to see that small terms of LDC’s such as Bangladesh have little chance of gaining the upper hand when they are negotiating with large terms of trade specialists from developed countries, like the United States and the European Union. In order to improve their negotiations strategy they need to have more support from the central government to build up their skills and expertise (Mistry, R. 2008: 52).

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Officials at the Bangladeshi mission in Geneva to need to work closely with officials from other LDC countries, in order to prepare requests in conjunction with each other, which are in their best interests. In preparing requests, they should take advantage of the special modalities for LDC’s and highlight the poverty alleviation potential of those requests(Raihan 2004, p-16). There needs to be consensus among LDC’s on how to negotiate with developed countries, particularly with regards to GATS. If LDC’s show a united front when negotiating with developed countries on issues that are of such significance (Mistry, R. 2008: 53).

It is also important that the government and the negotiators look at the possibility of incorporating labour rights and standards into their requests. One of the problems that Bangladesh faces at the moment is that the countries that it currently exports to do not uphold international labour standards, which leaves many Bangladeshi workers in a vulnerable position. Negotiators need to make safety of their workers of paramount importance. This in itself is problematic as within the WTO it is argued that labour standards should not be incorporated into agreements because the WTO is a trade organization, and labour rights do not come under its remit. Bangladeshi negotiators need to address this issue, because the rights of their overseas workers are paramount. Overseas labour migration is a valuable asset to the Bangladeshi economy, therefore the welfare of Bangladeshi workers cannot be guaranteed through GATS negotiations then perhaps the government need to reconsider their negotiations strategy, and their policies on overseas labour migration (Mistry, R. 2008: 53).

Outside of GATS negotiations, as we have seen above the vast majority of Bangladeshi labour migrants go to countries in West Asia. Some of these countries are not members of the WTO, this means that the issue of labour rights needs to be addressed through bilateral negotiations. That is an issue that the Bangladeshi government must be disregard. Bangladeshi construction labourers and domestic workers, often are defined basic labour rights, and in some case their basic human rights. It is important that arguments are made so that mechanisms are in place for workers to take up any grievances with their employers and they are not punished for doing so (Mistry, R. 2008: 53).

Although the primary objective is to get commitments from developed countries on the liberalization of mode 4, the Bangladesh government should also explore the potential of labour export to developing countries. Many Bangladeshi’s currently migrate to India, however there is no indication of this according to the information provided by the BMET, and it remains a contentious issue among both governments, due to the numbers migrating and the legality of the migration. However, in conversation with owners of construction companies in the West of India, the Author found that there were many Bangladeshi’s working as manual labourers for these companies. Therefore, the potential to export to countries within the region is something that the Bangladeshi government must not overlook. However, it is also important that the government manage this migration. There is great potential for Bangladesh to develop overseas migration within the region, but it must

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be done with agreement from receiving country governments (Mistry, R. 2008: 54).

Bhattacharya, D., (2005), conclude that negotiations on trade in services have not yet seen any significant progress. Although the revised date for advancing the market access negotiations by completing the offer- request process is stipulated in the July package was May 31, 2005, only a few countries have submitted their revised offer. Canada is only the country which has till now submitted it’s revised improve offer. There are some reservations about the quality of the offer which could be improved significantly. Some countries consider Canadian proposal as a reference point; other countries are expected to follow the Canadian. Only on the regulatory issues negotiations have made some progress. The regulatory issues are expected to make progress in market access for mode 4, but only for the skilled categories service providers. The issues of ENT, mutual recognition, transparency in information related to TMNP are being discussed now. GATS visa issue might be the most tangible outcome of the Doha Round. Classification issue is back on the negotiation table.A few member countries submitted requests on mode 4 using ISCO-88 categories .A new group titled ”friends of mode 4” has emerged, however, the focus of the activities of the group is only with the current classification of the services. The core members of the group are Brazil, Columbia, India and Philippines. There is another group of 32 member countries. This is lead by Canada. Most of the developed countries still have strong reservations on market opening under mode 4; they do not think that any progress is possible in the Doha round on mode 4. Developing countries have pushed the regulatory issues and have made some progress in this area. They are not showing any tangible interest in mode-4 related less killed labour movements.

Domestic measure In terms of domestic measures that need to be taken, we have already mentioned the needs for capacity building within the government. There needs to be further research conducted into the potential export power of Bangladesh’s labour force. The government needs to be aware of its domestic labour force and the skill level of its workers (Raihan 2004, P.16). There needs to be knowledge of the work and research undertaken in the area by specific government departments. This information can then be used to develop a negotiations strategy. There should also be detailed data collected on overseas migration. The information collected by BMET was simply not accurate enough. The information on occupations given by the many of the migrants could not be correlated with the ISCO-88, there was no information about the qualifications and skill levels of the migrants, it did not contain data on whether or not they were first time migrants, and if not, where they had migrated to before. This information is essential and it important that the BMET begin to keep accurate records (Mistry, R. 2008: 54).

The recruitment process must also be streamlined and regulated by the government more rigorously. Families pay large sums of money to send a member overseas to work, it is a livelihood necessity for many, but in the current system it is also a great risk. Most people are not aware of the rules

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and regulations governing overseas labour migration, which leaves them in a very vulnerable position. They cannot guarantee that the Dalal is being honest with them, they are left to put all their trust and money into this one person, it is huge risk, and they may find that the Dalal does not honors his side of the deal, and takes their money, while there relative is detain by the host country authorities. If the government were to regulate the recruitment system more vigorously, there would be fewer problems with migrants becoming irregular as soon as they depart from the sending country, and families would have some guarantee that they will see a return on the massive investment they have made(Mistry, R. 2008: 55).

The Bangladeshi government must also invest in the people. There needs to be education and training for its labour force to enable them to travel internationally to work. Currently one of the limitations of Bangladeshi service suppliers, which make them less competitive, is that they do not have English language skills. Although many Bangladeshi’s can understand and speak some English, they do not have the fluency that labour migrants from other countries have. This is a great disadvantage when trying to facilitate the temporary movement of workers to developed countries. Receiving country governments in North America, Australia and the United Kingdom will be reluctant to liberalize movement for Bangladeshi workers over workers from other countries, because they perceive social problems of migrant workers not being able to speak the local language. They would rather have migrants who have high level fluency because they will integrate into local society faster (Mistry, R. 2008: 56).The government must also invest in training its workforce in those occupations that are in demand in receiving countries. It is up to Bangladeshi missions in receiving countries to follow employments trends and forecast those sectors that are likely to have labour shortages in the future. This information can then be channeled into providing education and training schemes in these areas. Once they have skilled personnel in these specific occupations negotiators have more leverage in GATS negotiations. This also allows the Bangladeshi government to enter into bilateral negotiation outside of the GATS framework, with receiving countries to develop a quota system for the supply of its labour force (Mistry, R. 2008: 56).

Domestic measures do not simply lie in how to export manpower overseas, they also have ramification I the home country and Bangladesh needs to aware, and ready for the social and cultural changes that will inevitably occur with mass manpower export. The government needs to be aware of how the domestic market will be affected if they promote the temporary migration of its highly skilled work force. For highly skilled workers, will temporary actually mean temporary? Many of those who migrate they become entitled to permanent residency after some years in another country, this will add to the brain drain effect. Should the Bangladeshi government be taking any action that encourages skill drain (Mistry, R. 2008: 56)?

A concern from Bangladeshi government should be the extent of the economic reliance on temporary migration. For Bangladesh, the remittance

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received from overseas workers is the second highest source of income after textiles; the dependence of government on remittances cannot be understated. The temporary nature of mode 4 means that whenever there is an economic downturn, temporary workers will be gotten rid of, this could have devastating repercussions for the Bangladeshi economy and the livelihoods needs of the poorest people. An extension of this is how to absorb returnee migrants back into the local workforce (Raihan 2004, p.17); the government needs to ensure that there are measures to incorporate these workers back into the local market. Not only economic and social reasons, but also because they will have acquired new skills, which they will then be able to transfer to workers in the domestic market, thereby enriching Bangladesh’s labour force(Mistry, R. 2008: 57).

One of the biggest issues for Bangladesh and other developing countries remains in the current slant of the GATS towards highly skilled and professional migrants and the apparent disregard for less skilled migrants. For example, in Hong Kong a migrant professor at one of the universities has the right of abode after living and working in Hong Kong for seven years, however no such rights are dispended to migrant domestic workers. Unless workers of different skill levels are put on an even keel, there can be no way forward for developing countries. There would be little point in Bangladesh negotiating for commitments in mode 4, while at the same time making sacrifices in other areas, if their less skilled migrants are not accorded the same opportunities as skilled migrants.There are still significant problems concerning the movement of temporary services suppliers under the GATS. However, for Bangladesh its labour force remain a real asset and the Bangladeshi government needs to organize itself and its recruiting process so that it can negotiate convincingly both through the WTO and has the potential to enter into negotiations with specific countries, to open up opportunities for labour export. Without organization and investment in its people the Bangladeshi government will find it increasingly difficult to complete in the global link.

TMNP and Poverty AlleviationTemporary Movement of natural Persons (TMNP) from Bangladesh can reduce the pressure on the acute-employment problem of the country. Moreover, TMNP plays a vital role in poverty alleviation, in attaining a sound Balance of payments (BOP) position (Ahmed and Yusuf, 2006). The TMNP has direct poverty alleviation impact. A study (IOM, 2003) shows that the higher the skill and education level of the overseas workers and employees, the lower their ties with the host country and incidence of sending remittances back home. About 94 percent of the Bangladeshi overseas workers are outside professional categories; they have strong ties with home and tend to send a significant portion of their remittance back to Bangladesh. The remittances sent by the overseas workers are used for various productive, investment and consumption purposes. A major share of remittances is used to meet recurrent consumption which includes education, health care and food. Such expenditures have a direct poverty alleviation impact. (Raihan, A. and Mahmood, M.2004:4).

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Regression analysis for total remittances of the service providers through TMNP with number of professionals, skilled, semi-skilled and unskilled workers shows that Bangladesh would gain substantially through increased export of service providers through TMNP. The following three scenarios have been considered to capture the potential gains from Bangladesh’s export through TMNP;

Scenario 1: Increase in Export of Skilled WorkersScenario 2: Increase in Export of Un-skilled WorkersScenario 3: Increase in Export of Professionals

Under the each of the above scenarios, the regression exercise produced the following outputs:

Scenario 1: The potential benefit from increase of number of skilled service providers is lowest, which may be explained by low ratio of skilled workers in total composition of migrant workers. An increase of 2 lakhs skilled workers would bring USD 381 million.

Scenario 2: The potential benefit from exporting unskilled workers is more than that of exporting skilled workers. An increase in number of unskilled workers by 2 lakhs would bring additional USD 3.5 billion. Scenario 3: The benefit from export of professionals by increased number of professionals going abroad is even higher. The potential benefit from exporting of 2 lakhs professionals would be USD 11.57 billion.

WTO, GATS identified four modes of supply of services and among these four Modes of services delivery, specifically the Mode 4 deals with the temporary movement of natural Persons (TMNP). The temporary workers, which are going abroad now under bi-lateral arrangements, will come under the jurisdiction of GATS once the negotiations of liberalization of trade in services, will be concluded in favor of LDC’s. Such liberalization will allow Bangladesh, as an LDC to send temporary workers on a multilateral basis into all member countries of the WTO. For making services trade negotiations benefiting LDC’s special modalities were adopted in 2003, successful implementation of these modalities will allow Bangladesh to send temporary workers of all skill categories. Article 9 of the special modalities mentioned” It is recognized that the temporary movement of natural persons supplying services (Mode 4) provides potential benefits to the sending and recipients Members. LDC’s have indicated that this is one of the most important means of supplying services internationally. Members shall, to the extent possible, and consistently with article ×I× of the GATS, consider undertaking commitments to provide access in Mode 4, taking into account all categories of natural persons identified by LDC’s in their request.For identification of categories of export interests in Mode 4, an internationally acceptable classification of service providers is required. International Standard Classification of Occupation (ISCO-88) is such an international category which can be the basis of multilaterally accepted classification of service providers, which will act as an implementation act of

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Article 3 of Annex on Mode 4 of GATS. To operationalize the process of inclusion of all categories of workers, the following exercises are required:Mapping the categories of overseas workers into ISCO-88 codes.Identification of important categories which may be used in possible requests of Bangladesh to the developed and developing countries for opening market in upcoming GATS negotiations.Identification of new destinations for Bangladeshis service providersIdentification of possible gain from enhanced market access for TMNP

Analysis shows that unskilled and professionals are the two groups who send more remittances compared to other two groups. Current focus of manpower export is concentrated mainly on low skilled people. The focus should be broadened and export of professional service providers should be included into the plan.There are still a number of unresolved issues in the GATS negotiations on mode 4. These concern particularly Economic Need Tests (ENTs), and mutual recognition of qualifications. Other issues, such as negotiations on rules are also important. These issues need further work and have not been focused in the present policy brief.Active market search is essential for enhancing benefit from TMNP. Bangladesh missions should identify niche opportunities in the recipient countries. Identification of market and negotiations for market access should be linked with skill development plan. Otherwise, the opportunities will remain unrealized.The potential benefit from increase of number of skilled service providers is lowest, which may be explained by low ratio of skilled workers in total composition of migrant workers. An increase of 2 lakhs skilled workers would bring USD 381 million. The potential benefit from exporting unskilled workers is more than that of exporting skilled workers. An increase in number of unskilled workers by 2 lakhs would bring additional USD 3.5 billion. The benefit from export of professionals by increased number of professional going abroad is even higher. The potential benefit from exporting of2 lakhs professionals would be USD11.57 billion (Raihan A. 2006, The Business Bangladesh, and April 2006).

Existing work Adams and Page [2004, 2005a, 2005b, 2006a, 2006b], Acosta and others (2006, 2007a, 2007b), Jongwanich (2007), Maimbo and others (2005), World Bank (2007), Lopez, Cardova (2004) and Taylor, Mora and Adams (2005), Yang and Martinez (2005), Acosta, P. (2006), Amin, M., And Mattoo, A. (2007), in Bangladesh context Afsar, R. and others (2000), Siddiqui (2005, 2001), Mahmood, R. A., (1993), Raihan Ananya, 2006). (Azad A.K. 2006) mainly deals with the impact on poverty.

Docquier and Marfouk (2005) Adams (2008) Chanda, R.(2008), Cattaneo, C. (2008) Iregui, A. M. (2003), Niimi and Others (2008) Faini (2006) Niimi, Y., and Caglar Ozden (2006),Mansuri, G. (2006), Vadean, P. and Florin,(2006) Mulina, T. and others (2006) Ratha (2003), Rodriguez (2002) Siddiqui, T.,( 2005), Jesmin Rubayat, (2005) Hasan, R. A. (2006) Nurul Islam (2004), deals with the skilled- unskilled labour migration, remittances and Poverty but not complete micro economic study about this topic. So, in this study, we

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consider the simultaneous existence of skilled and unskilled labour in the economy to comparative analysis of impact of skilled and unskilled labour migration on poverty.

Chapter -4: “Theoretical Framework” of International labour Migration, Remittances and Poverty

4.1 Introduction

4.2 MigrationMigration is a broad term. Migration is usually defined as movement of a person or group of persons from one geographical unit to another across an administrative or political border and wishing to settle permanently or temporality in a place other than their place of origin since the movement between two geographical units does not have to occurs directly, one can further differentiate between the place of origin or sending region, transit region and the place of destination or receiving region (IOM, 2003:8).Movement within a country are usually defined as internal migration and accordingly, movements across international borders are called international migration. Henceforth here exclusively focus on an international migration. International MigrationInternational migration is defined as movement of people from one country to another in order to take up employment or established residence to seek refuge from persecution (IOM, 1995). In World Bank publication Ozden and Schiff define International migration, as, “the movement of people across international boundaries, has enormous economic, social and cultural implications in both origin and destination countries” (World Bank, 2006e: 1)

Appleyard, 1991, Rogers, 1992, IOM 1992, have classified international migration into six broad categories. These are permanent settlers, documented or regular labour migrants, undocumented or irregular migrants, asylum seekers, recognized refugees and de facto refugees.

Theory of International Migration

More research into international migration has focused on explaining why people move from one area to another. Massey et al. (1998, p. 17) rightly observe at present, there is no single theory widely accepted by social scientists to account for the emergence and persistence of international migration.Among the models that attempt to explain why international immigration occurs here distinguish 11 major trends.(1) Neoclassical economics: The oldest theory of migration is neoclassical economic theory. From a macroeconomic point of view the geographic difference in the supply and demand of the labour in the countries of origin and destination are considered to be the main factors that guide the decision of individuals to emigrate. Hence, emigration, owing to wage differences, occurs from countries with low levels towards those with higher wage levels.

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At the micro economic point of view migrants as individual, rational actors, who decide to move on the basis of cost-benefit calculation. Assuming free choice and full access to information, they are expected to go where they can be most productive, that is are able to earn the highest wages. This capacity obviously depends on the specific skills a person possesses and the specific structure of labour markets (Borjas 1989, Massey et al 1993, 1998, Bauer and Zimmermann 1995).

(2). Historical-structure Theory

A radically different interpretation of migration was provided as of the 1960s by the historical –structural paradigm on development, which has its intellectual roots in Marxist political economy and in world systems theory(Castles & Miller 2003:25). Historical-structuralists postulate that economic and political power is unequally distributed among developed and under developed countries, that people have unequal access to resources and that capitalist expansion has the tendency to reinforce these inequalities. Instead of modernizing and gradually progressing towards economic development, underdeveloped countries are trapped by their disadvantaged position within the global geopolitical structure.Historical-structuralists emphasize the role of structural factors, such as geographical characteristics and changes in the international patterns of production, in explaining migration. These approaches can be critiqued for downplaying individual choice and reproduction.Historical-structuralists have criticized for being too determinist and rigid in their thinking in viewing individuals as victims or” pawns” that passively adapt to micro-forces, thereby largely ruling out individual agency.

(3) Push-pull framework

Both neo-classical and historical-structural theories of migration generally fail to explain why some people in a certain country or region migrate and others do not (Massey et al 1993; Reniers 1999:680) and why people tend to migrate between particular places in a spatially clustered, concentrated, typically non-random fashion. It can therefore be useful to look at some of the spatial models developed by mainly geographers and demographers.Lee (1966) revised Ravensteins 19th century laws on migration and proposed a new analytical framework for migration. In his view, the decision to migrate and proposed a new analytical framework for migration. In his view, the decision to migrate is determined by the following factors: factors associated with the area of origin; factors associated with the area of destination; so-called intervening obstacles (such as distance, physical barriers, immigration laws and so on); and personal factors. Lee(1966:54-55) argued that migration trends to take place within well defined” streams”, from specific places at the origin to specific places at the destination, not only because opportunities tend to be highly localized but also because the flow of knowledge back from destination facilitates the passage for later migrants.Conditions such as high population density, poverty, lack of economic opportunities, natural disasters are some of the push factors that contribute to deciding in favor of migration. On the other hand, demand for labour,

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availability of land, economic opportunities, freedom of religion, political freedom of safety, are some of the examples of pull factors which attract the potential migrants towards the country of destination. A combination of both pull and push factors ultimately result in migration (Siddiqui, T., 2001:13).The” push-pull” framework is also critiqued by different academics. Massey at al shows that in the present day reality, push and pull factors are not equally operational in creating migration. Now the push factor have become predominant, while the strength of pull factors have weakened due to restrictive admission policies of the receiving post-industrial states (Siddiqui, T., 2001:14).The push-pull model is a static model focusing on external factors that “cause” migration that is unable to analytically situate migration as an integral part of broader transformation process, and therefore seems of limited analytical use (Haas, H. D.2008:11).

(4) The New Economics of Migration

Stark and Bloom (1985) argue that the decision to become a labour migrant cannot only be explained at the level of individual workers; wider social entities have to be taken into account as well. Their approach is called the “new economics of labour migration (NELM)”. One of the social entities to which they refer is the household income is involved. One way of reducing the risk of insufficient household income is labour migration of a family member. Family members abroad may send remittances. According to the new economics of labour migration, these remittances have a positive impact on the economy in poor sending countries as households with a family member abroad lose production and investment restrictions (Taylor, 1999).

(5) The Dual Labour Market Theory

The dual labour market theory argues that international migration is mainly caused by pull factors in the developed migrant- receiving countries. According to this theory, segments in the labour markets in these countries may be distinguished as being primary or secondary in nature. The primary segment is characterized by capital intensive production methods and predominantly high-skilled labour, while the secondary segment is characterized by labour-intensive methods of production and predominantly low-skilled labour. The dual labour market theory assumes that international labour migration stems from labour demands in the labour-intensive segment of modern industrial societies (receiving countries) (Piore, 1979; Massey et al., 1993).This approach is criticized for its neglect of individual and household level motives and decision making process (Mughal, A. G., 2007:21).

(6) The World System Theory

The world system theory considers international migration from a global perspective. This approach emphasises that the interaction between societies is an important determinant of social change within societies (Chase-Dunn and Hall, 1994). An example of interaction between societies is international trade. Trade between countries with a weaker economy and countries with a

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more advanced economy causes economic stagnation, resulting in lagging living conditions in the former. (Wallerstein, 1983; Amankwaa, 1995).This is an incentive for migration.Like the dual labour market approach, this approach is criticized for its neglect of micro level individual and household decision making (Mughal, A. G., 2007:21).

(7) The Relative deprivation Theory

This defends as a highly important factor for exploring migration the fact that the members of the sending country or country of origin are aware of the inequalities in income. The incentive to emigrate will be greater in those societies with a higher degree of inequality (Stark and Taylor, 1989, 1991).

(8) Issue of GlobalizationIn recent years, the issue of globalization is widely discussed in the literature of determinants of migration. It is argued that as a macro factor, globalization has a profound effect upon international labour migration. Globalization of economic activity has internationalized labour markets (ILO: 7). Technological development of recent times has integrated the national economies on a global scale, resulting in growing interdependence of one country over the others. Transaction of goods, services and capital are taking place among states on a much larger scale. Revolutionary changes in information technology and concomitant growth of transportation have created an environment where more and more people have access to information about potential labour markets and migration opportunities. Various theories of market economy also argue in favour of permitting workers to move freely as it promotes regional economic integration. Economic integration is a process of abolishing barriers to trade and investment across national borders. It is desirable because it speeds up growth. Economists have long been arguing the free international migration is one of the three pillars of economic integration; trade and investment are other two (Siddiqui, T., 2001:16).

These eight trends explain why international population movement begins. There are others theories that explain why these movements are maintained, among which are following:The Network Theory:

In recent studies the term network migration has usually been used to describe this process of what used to be described as “chain migration”. Networks can be defined as sets of interpersonal ties that connect migrants, former migrants and non migrants in origin and destination areas through bonds of kinship, friendship, and shared community origin (Massey et al 1993:448). These social bonds and the feeling of being part of one (transnational) community also explain why migrants tend to remit substantial amounts of money to nonmigrants-whereas neo-classical individual-centered approaches towards migration leave no room for remittances (Djajic 1986; Taylor 1999).These networks provide comfort and stability in the receiving nation, assurance of job opportunities and they lower the overall risks of

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movement. The increase and growth of these networks leads to the increase in international movement (Massey et al., 1993).

Institutional Theory

Core countries may need immigrants, but they do not always want them. They create barriers to entry in order to stem the flow of migrants, but they do not always have the desired effect. In fact, these barriers have created “a lucrative niche for entrepreneurs and institutions dedicated to promoting international movement” and a black market. Once migration flows begin, it is difficult for governments to stop them. The available profit to be made from immigrants and their movements are so attractive that the process has become institutionalized. Any official attempt to stop the flow reinforces the strength of black market (Massey et al., 1993).© Migration System Theory

The geographer Mabogunje (1970), the founder of migration system theory, defined a migration system as a set of places linked by flows and counter flows of people, goods, services, and information, which tend to facilitate further exchange, including migration, between the places. Borrowing from general systems theory, he focused on the role of information flows and feedback mechanisms in shaping migration systems. He stressed the importance of feedback mechanisms, through which information about the migrant’s reception and progress at the destination is transmitted back to the place of origin.Mabogunje focused his analysis on rural-urban migration within the African continent. Portes and Borocz (1987) and Kritz et al. (1992) extended this to international migration. International Migration systems consists of countries- or rather places within different countries- that exchange relatively large numbers of migrants, and are also characterized by feedback mechanisms that connect the movement of people between particular countries, areas, and even cities to the concomitant flows of goods, capital(remittances), ideas, and information(Fawcett 1989; Gurak & Cases 1992). Migration system links people, families and communities over space in what we nowadays would refer to as transitional communities (cf. Vertovec 1999).

Chapter-5: Methodology

5.1 Introduction

5.3 The analytical Framework

5.3.1 Research question

The study mainly deals with the broad research question of how international labour migration impacts on poverty in globalization process. Based on the broad research question the study aims to answer the following specific research questions:

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What are the trends of international labour migration, skilled and unskilled labour migration and remittances in current process of globalization in Bangladesh?What are the characteristics of poverty in Bangladesh?Do International labour migrations reduce poverty in Bangladesh?What is the effectiveness of skilled and unskilled labour migration in reducing poverty?What is the trend analysis of the present and future global demand in the skilled and unskilled migrants?What are the policy recommendations for desirable level of international labour (both skilled and unskilled) migration from Bangladesh, particularly in the context of WTO framework?

5.3.2 Hypotheses formulation

Hypotheses were formulated based on research questions and literature review. International labour migration, skilled and unskilled labour migration and impact on poverty were addressed in hypotheses formulations. The following hypotheses were formulated to be tested in this study:

3. Unskilled migrants mainly come from rural areas than skilled migrants.4 Unskilled migrant remit more money than skilled migrants.5. Unskilled migrant migrate shorter distance than skilled migrants.6. Unskilled migrant intend to return home countries than skilled migrant.7. Unskilled migrant migrate without family than skilled migrant.8. Unskilled migrant’s remittances are directed at poorer household than skilled migrants. (Unskilled migrant tend to come from poorer household than skilled migrants).9. Unskilled migrant is more temporary than skilled migrants.10. Unskilled migrant tend to send money through informal channel than skilled migrant.11. Unskilled migrants mainly remit for securing the consumption need of their family member than skilled migrants. 12. Unskilled migrants can reduce pressure on local labour markets than skilled migrants. 13. Unskilled migrant’s poverty impact is more than skilled migrants.

5.3.2 Measures of poverty, International Labour migration,

The concept of poverty and international labour migration have been measured in this research by a set of socio-demographic, economic, physical and social variables. These are as follows: Socio-demographic variables: age, gender, marital status, religion, education, residence,

Economic variable: Employment pattern, household income, household expenditure, Consumption pattern, Economic status, cost of migration, savings, loans, household assets and remittances.

Physical variables: access to land, quality of housing,

Social variable: Human capital formation, Problem faced by families due to migration.

5.3.3 Definition of key terms

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Globalization: Stiglitz, Joseph, defined globalization as “The removal of barriers to free trade and closer integration of natural economics” (Stiglitz, Joseph, 2002).Globalization can be defined as the integration, without borders, of economic, information, science, defiance, education, skills, culture, politics, religions and social systems.

International Labour Migration: International migration, the movement of people across international boundaries, has enormous economic, social and cultural implications in both origin and destination countries (Ozden, C. and M. Schiff, 2006:1)

Skilled and Unskilled Labour: Migration flows are characterized by a basic distinction between skilled (professionals, technicians, etc) and unskilled labour. This distinction is highly relevant because the two groups interact with the labour market differently and receive differential treatment in host countries (Wickramasekera, P. 2002:3). According to Basher Fakrul (2007) skilled workforce ranges from doctors, engineers, college- university teachers, computer exporter to plumber, electrician etc. whereas the unskilled includes labourers, cleaners etc.

The International Standard Classification of Occupation-88 (ISCO-88) is one of the principles international and statistical classification lists, which was developed at the international labour organization (ILO).The current version the ISCO-88 was approved by the ILO governing body in 1998. It is comprised of ten major groups, 27 sub-major groups, 115 minor groups and 389 unit groups. There has been much debate surrounding terminology to describe low skilled persons. Terms such as “unskilled” was initially used by some Members, however, were perceived to hold negative connotations. Some felt that a person without skills is unable to provide a service. Although this issue has not been formally establishes an area for discussion among Members, LDC Members could however refer to the International Standard Classification of Education (ISCED-76) established skill levels based on education levels(South Centre, 2005:10).

In Bangladesh there exists a classification system similar to the ISCO-88, however the BMET has defined four general levels of skills: Bureau of Manpower, Employment and Training (BMET), Bangladesh has classified short-term migrants to Middle East and South East Asia into four categories: professional, skilled, semi-skilled and unskilled. Doctors, engineers, teachers and nurses are considered professional. Manufacturing of garment workers, drivers, computer operators and electricians are considered skilled, while tailors and masons are considered semi-skilled. Housemaids, cleaner and menial labourers are considered unskilled workers. This however does not in any way cover all the trades that Bangladeshi service providers currently export overseas. So the combination of the BMET and ISCO-88 classification are following: when reference is made to highly skilled, it refers to categories one to three of the ISCO-88, medium skilled refers to those workers in categories four to seven, and less or least skilled workers refers to those in categories eight to nine of the ISCO-88. Although the ISCO-88 is not officially use by the WTO in defining the skill levels, it is the most comprehensive categorization of skill levels and trades, and it is the most universally accepted.

Docquier and Marfouk (2005) classify international migrants from each country according to their level of educational attainment: low-skilled(less than 8 years of schooling); medium-skilled (9 to 12 years of schooling); and high-skilled (13 years or more of schooling). Adams

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(2008) uses the Docquier and Marfouk (2005) data to analyze how to the skill (education) level of migrants from different developing countries affects the flow of international remittances to these countries.

Remittances: Several definitions of remittances exist. In its broader sense, remittances refer to cash or kind transfers from one place to another (Bruyn, T.D. and Wet, J. 2006). International remittances are defined as the portion of migrant worker’s earnings sent back from the country of employment to the country of origin (ILO, 2000). According to Basher Fakrul (2007) remittances means transfer of money by the expatriate workforce working in a foreign countries to their own country. Van doom (2001), notes, different types of remittances can be distinguished: international or intra-national; individual or collective; formal or informal; in kind, in cash or only financial.

Poverty: The following definition of poverty developed by the World Bank (---) has been used in this study as a working definition:

Broadly speaking, Poverty refers to forms of economic, social and psychological deprivation occurring among people lacking sufficient ownership, control or access to resources for minimum required level of living (GOB, 1998:146)

Narrowly defined, poverty is generally measured by the percentage of population having income below the minimum expenditure required for meeting the basic needs. A benchmark of the poverty situation in rural Bangladesh has worked out in 1977 classifying absolutely poor as those who could not take more than 90 percent of the recommended calorie intake and extremely poor as those who could not take more than 80 percent of the requirement (A. R. Khan, 1977). Poverty line- I is defined as daily intake of 2122 k. cal per person and poverty line-11 which is extreme poverty is defined as daily consumption of 1805 k. cal per person.

GATS Mode 4The General Agreement of Trade in Services (GATS), an international agreement that is part of the WTO legal framework, became effective in 1995 as part of the Uruguay Round of negotiations. It prescribes the rules for the international trade of services. The GATS aims to increases trade in services by providing transparency in, and the progressive liberalization of, service markets (Ostrovsky, Aaron, A., ----). GATS Mode 4 is the movement of natural persons means temporary movement of people (such as doctors, accountants etc). The term “Natural Persons” is an Orwellian euphemism used in the GATS to describe working class people that are considered to be nothing more than commodities

5.4 Selection of study area and subject.

5.4.1 Study area

Studies were conducted at sites in the so-called remittances cities such as Dhaka, Chittagong and Noakhali in Bangladesh. In addition to using those cities as centre, satellite villages were visited to gain further insight into the impact on rural households. The brief descriptions of

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the study areas that follow are made based on the Bangladesh Population Census-2001 (BBS 2005).

5.5 Data collection and data analysis

5.5.1 Sampling for household surveySampling is a compromise between technical efficiency and time and resources. It, as Sprent (1998: 188) points out,” provides a mechanism whereby we can make an estimate of population characteristic and get, based on probability theory, a numerical measure of how good that estimate is.” Moser and Calton (1983) list several advantages of this method: first, in contrast to a complete enumeration of the population, the data are heaper to collect. Second, it requires fewer people to collect and analysis. Third, it’s save time as a sample is quicker to analyze and process. Fourth, it often permits a higher level of accuracy as the sample size allows a check on the accuracy of the design. Finally, a fewer cases make it possible to collect and deal with more elaborate information from each. In this study from each of these locations interviewees were randomly identified. The criterion for selecting the interviewee was those who have been receiving remittances for at least two years.

The samples were drawn from three different areas of Bangladesh that have a concentration of migrant households (Dhaka, Chittagong and Noakhali) and were based on stratified random sampling techniques.

Or, A purposive sampling was conducted in the absence of documentation and a database of the study population. Snowball sampling was adopted in order to reach the respondents.

The total sample size was 200, comprising -----skilled migrants and --------unskilled migrants.. In this study skilled sample of ---- percent and an unskilled sample of ---percent.

5.5.2 Conducting the survey

The survey was conducted during January 2009 to March 2009; it will be asked why such a survey method was used as the prime method of data collection for the present research. Considering a number of factors such as a scope, availability of funding, time and precision a survey by structured questionnaire was chosen for collecting data from migrants in Dhaka, Chittagong and Noakhali. The survey was conducted through a detailed semi-structured questionnaire. Each interview took at least 30 minutes to 45 minutes. In most of the cases household heads were selected for an interview. But in some cases it was not possible to interview in household heads due to their busy work schedule and in such instances data were collected from their spouses or other household members. In many cases information on the household was collected from more than one household member to crosscheck provided data. Due to the general lack of privacy in neighbors or friends of households often interrupted the interviewing, which was otherwise strictly controlled. Although a detailed survey questionnaire was used for data collection, necessary notes were also taken during interviewing on a blank sheet of the questionnaire. This became very useful during editing survey questionnaire at end of the day. The survey was conducted under supervision of a local field supervisor.

5.5.3 Qualitative study

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5.5.4 Study instruments

Survey questionnaire For conducting the research a set of questionnaire was developed based on the research objectives after consultation with research supervisors before going in to the field.Semi-structured questionnaires, focus group discussion and case studies were used for data collection.

Semi-structured questionnaire

It can not be ignored that historically the survey method of investigation has been linked with the use of a fixed format questionnaire which is designed so that the information on it can be relayed in a computer reasonably fast and straightforward manner (Marsh 2003). For conducting the research a set of questionnaire was developed based on the research objectives after consultation with research supervisions before going in to the field. The questionnaire then translated into the Bengali dialectThe final questionnaire (Appendx-1) had section covering various aspects .It deals with information socio-demographic characteristics of the respondents, households Characteristics. It also deals with employment pattern of income and expenditure of migrant and household’s assets. In order to obtain directly comparable material, the questionnaire had structured questions but open-ended questions were also includes to gain wider insights into the poor perceptions.

The use of semi structured questionnaires was aimed at capturing the demographic and socio-economic characteristics of the household and the demographic characteristics of skilled and unskilled migrant workers and/or other respondents.It was necessary to use semi-structured questionnaires containing open-ended questions in many instances due to the absence of previous research data on those variables. Nevertheless, after the completion of data collection, some answers were coded as categories for analytical purpose. In some instances, open-ended questions were also used to capture the qualitative information accompanying the quantitative data.The questionnaires were pre-tested with returnee migrant workers, and necessary revisions were made before field visits, especially the shortening of questions to prevent respondent fatigue.

Focus group Discussions

To supplement the quantitative data collected through the sample survey, qualitative data were collected by conducting focus group discussions with returnee migrant’s workers.

Using focus group discussions with skilled and unskilled migrants as a tool for collecting data has been proven very effective, especially where migrants as individuals are not willing to disclose sensitive information on issues such violence , problems etc., but are happy and wiling respondents in groups when issued do not become personalized. Focus group discussions with migrants become an effective tool for collective identification of problems and collective recommendations for solutions.

Case studies

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To complement and supplement the quantitative and qualitative findings, case studies were conducted. Case studies are presented to complement the quantitative findings, capture best practices and highlight cases with negative impacts on migrants due to policy failure.

5.5.5 Techniques of data analysis

There are a number of phases of data preparation and analysis in arriving at the results of study. The data obtain through the survey have been edited and coded simultaneously. Through editing it was verified whether questionnaires were correctly field in and the skip patterns were followed. It was verified whether there is a consistency among the recorded responses. Open ended responses are recorded verbatim and these verbatim responses have than be categorizes by their commonness and frequencies. Coded data have been entered into a computer database using Statistical software SPSS (Version 13.0). Then data were run for cross tabulation rechecked to find out inconsistencies and error of coding. This phase of data preparation ensured that few, if any, minor numerical errors in coding would inadvertently by incorporated into later procedures creating the possibility of misleading results.

Chapter-6: Findings

Socio-Demographic Characteristics of Migrants

A comparative picture of the socio-economic characteristics of skilled and unskilled labour reveals the following:

Age :

Table-1: Age structure of the migrants

Age Group Skilled Labour Unskilled labour All migrantsNo. % No. % No. %

Up to 20 years21-30 years31-40 years41-50years51 years +Total

GenderTable-2 Gender of the migrants

Gender Skilled Labour Unskilled labour All migrantsNo. % No. % No. %

MaleFemale Total

Marital status Table-1: Marital status of the migrants

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Marital Status Skilled Labour Unskilled labour All migrantsNo. % No. % No. %

UnmarriedMarriedWidower Separated/divorcedTotal

ReligionTable-1: Religious Faith of the Migrants

ReligionSkilled Labour Unskilled labour All migrantsNo. % No % No. %

MuslimHinduChristianTotal

EducationTable-1: Level of Education of the Migrants

Level of Education

Skilled Labour (Occupation based)

Unskilled labour(Occupation based)

All migrants

No. % No. % No. %No schoolingClass 1-5Class 6-10S.S.CH.S.CDiplomaBachelorOthersTotal

Table: Economic status of the household in which the migrant was born and brought up

Economic status

Skilled Unskilled All MigrantsNo. % No. % No. %

PoorLower MiddleMiddleHigherTotal

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Table: Residence before MigrationArea Skilled Unskilled All migrants

No. % No. % No. %RuralUrbanTotal

Process of MigrationTable: Reasons for MigrationReasons Skilled Unskilled All Migrants

No % No. % No. %Due to povertyFor economic upliftmentTo diversify family incomeDesire to work abroadLack of employment opportunity in home countryUnsatisfactory work in BangladeshFamily pressureBurden of single parentingOthersTotal

Awareness of migration process and job description

Skill composition

Awareness of migration process Awareness of the job descriptionInadequate Adequate More

than adequate

Inadequate

Adequate More than adequate

SkilledUnskilledTotal

Table: Cost of MigrationCost of Migration (In Taka) Skilled migrants Unskilled migrants All Migrants

No. % No. % No. %Up to 50,00050,001-75000750001-100000100001 and aboveTotal

Or, Cost of Migration Skill composition No. Average Lowest Highest TotalSkilledUnskilled

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Total

Sources for Cost for Migration Sources of money Skilled Unskilled Total

No. Sum % No Sum % No Sum % Loan from relatives Own Savings Loan from money lenders Selling Land/Jewellery/House Mortgaging of land Mortgaging of jewellery Loan from bank/finance Company From family Loan from NGO OthersTotal

Medium of migrationMedium of Migration Skilled Unskilled All migrants

No % No % No %Foreign Employment AgencyRelatives and NeighborsBrokerFamily MembersBOESLOthers(Tourist and Student visa)Total

Employment, Occupation, Income, expenditure and savings

Country of Employment Country Skilled Unskilled All migrants

No. % No. % No. %Saudi ArabiaUAEBahrainKuwaitUSAUKMalaysia Total

OccupationTable: Change in employment status between pre-and and post-migration periods Skill composition

No of persons

Before Migration During migrationEmployed Self- Unemployed Employed Self- Unemployed

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employed employedSkilledUnskilledTotal

OrTable:Type and Level of Employment Before and During Migration Period

Type of employment Before During No. % No. %

Skilled:Field engineer ArchitectureAccountantRestaurant ManagerElectrical EngineerPayroll masterCopywriterAdministrative staffPlumberShop foremanDriverAll-round Maintenance manTrailer Driver Air-con mechanicPipe –fitterWarehousemanPoultry SupervisorElectricianCarpenterWeldersSteel manHeavy equipment operatorSales personNurseGarments and Factory workerUnskilled:Housemaids,Cleaner Menial labourersOthersTotal

Or, Work Situation Before and After Migration

Table :-

Socio-economic

No of persons Before Migration During migration Working Not working Working Not working

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group No. % No. % No. % No. %SkilledUnskilledTotal

(a). Monthly income of migrants before and during their overseas stay(in Taka)

Income(Tk) Before migration During migrationSkilled Unskilled AllMigrants Skilled Unskilled All MigrantsNo % No % No. % No % No % No. %

Less than 50005001-1000010001-2000020001-4000040001-6000060001-8000080001-100000More than 100000

0r,Monthly income of migrants before and during their overseas stay (in Taka)

Skill composition

Before Migration During Overseas stayMinimum

Maximum

Average

Total

Minimum

Maximum

Average

Total

SkilledUnskilledTotal

Or, Monthly income abroad

Skill composition No. of persons Average Lowest Highest TotalSkilledUnskilledTotal

15 (b) Proportion of remittance to total household incomes

Proportion Skilled Migrant Unskilled Migrant Before During Before DuringNo. % No. % No. % No. %

Less than 5%5 to 20%21 to 40%41 to 60%61 to 80%81 to 100%Total

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16. Total Remittances Flow

Year Skilled Migration Unskilled migration Grand

TotalAverage Highest Lowest Total Average Highest Lowest Total2008

Migrants Cost of living abroad(Monthly, Bd Taka) Proportion Skilled Unskilled All Migrants

No. % No. % No. %Less than 50005001-1000010001-2000020001-4000040001-6000060001-8000080001-100000More than 100000

18. Migrants Saving abroad (Monthly, Bd Taka)Proportion Skilled Unskilled All Migrants

No. % No. % No. %Less than 50005001-1000010001-2000020001-4000040001-6000060001-8000080001-100000More than 100000

Duration of Stay

Duration of the stay Skilled Unskilled All MigrantsNo % No % No %

Less than 1 year1 to 3 years3 to 6 yearsMore than six years

Remittances sent home(Monthly, Bd Taka)

Proportion Skilled Unskilled All Migrants No % No. % No %

Less than 50005001-1000010001-2000020001-4000040001-6000060001-80000

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80001-100000More than 100000

Remittances flow in kinds Item Name Skilled Unskilled Total no.

of itemsTotal Tk.No. of

ItemApproximate Market value(Tk)

No. Of Item

Approximate Market value(Tk)

(1) Cassette (2) VCP/VCR (3) VCD Player (4) Computer (5) Television (6) Camera (7) Video Camera (8) Clothes/ Shoes (9) Blanket (10) Home App./Kitchen Utensil (11) Gold (12) Briefcase (13) Radio (14) Watches (15) Others (Specify) Total

Medium used to remittances transmission Table- Medium used to transfer remittances

Remittances Transmission

Skilled Unskilled All MigrantsNo % No % No %

By handBankWestern Union or similarMoney transfer Mobile PhoneSelf HundiPost Office OthersTotalUse of Remittances sent from Abroad

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23. Table: Mode of remittances Utilization

Category Skilled Unskilled

Total %Amount(Tk) % Amount(Tk) %ConsumptionHealth careEducationLand PurchaseHome construction& repairRelease of mortgage landTaking mortgage of landRepayment of loan for migrationInvestment in businessSavings/Fixed Deposit/ Security bondSocial ceremonies and dowryCommunity development activitiesOthersTotal

Nature of housing before Migration and present

Type Before migration During migrationSkilled Unskilled All

MigrantsSkilled Unskilled All

MigrantsNo. % No. % No. % No. % No. % No. %

PuccaSemi-PuccaTinSemi-Kutcha KutchaTotal

Land size before migration and at present

Size ofLand Holding(Acres)

Before migration During migrationSkilled Unskilled All

MigrantsSkilled Unskilled All

MigrantsNo. % No. % No. % No. % No. % No. %

No land<0.050.05-0.490.50-1.49 1.50-2.492.50-7.497.50+

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26. Food consumptionPoverty Level

Before migration During migrationSkilled Unskilled All Migrants Skilled Unskilled All MigrantsNo. % No % No % No. % No % No %

Chapter -8: Summary and Conclusion (Policy Recommendation)

Strategy for the future :( (Ray, Sougata and Others, 2008:9).Strategy 1: Changes the Mix of Destination countriesStrategy 2: Changes the mix skill ladderStrategy 3: Increase penetration and capture grater share of the labour market in destination countries.Strategy 4: make manpower export on organized industryStrategy 5: Improve talent supplyStrategy 6: Changing the mix of the remitting channels-ensuring greater flow of remittances through official channelsStrategy 7: Building Brand Bangladesh

(Strategy of Bangladesh govt. foreign ministry) GATS Mode 4 related Policy recommendationNegotiating points

From the analysis of potential demand for workforce in developed markets as well as Bangladesh’s supply capacity, CPD highlights the following negotiating points:1. There should be a reference to the Article 3 of the Annex on Movement of Natural Persons Supplying Services under the Agreement which specifies,” In accordance with part 3(111) and part 4(1111) of the agreement, Members may negotiate specific commitments applying to the movement of all categories of natural persons supplying services under the agreement.” The text in LDC modalities reinforces the text of Annex, specific to the LDC’s.

2. Since ISCO-88 can be the basis of development of a multilaterally accepted classification of service providers, Bangladesh should pursue the following points: a. As a primary alternative the ISCO-88 can be accepted in its current formb. The secondary alternative could be that the members work towards the required modification of the ISCO-88 to accommodate country specific classification and their harmonization.c. The adoption of a multilaterally accepted classification of service providers is necessary to comply with the stipulations of Article 3 of Annex on Mode 4, which recognizes all categories of service providers.

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d. Adoption of classification of service providers is also necessary for implementation of paragraph 9 of the special Modalities (Raihan, A., 2005: 38).3. In the negotiations Bangladesh should highlight the poverty alleviation linkage of TMNP and relate it with the paragraph 2 of Special Modalities” The importance’s of trade in services for LDC’s goes beyond poor economic significance due to the major role services play for achieving social and development objectives and as a means of addressing poverty, upgrading welfare, improving universal availability and access to basic services, and I ensuring sustainable development, including its social dimension”. This linkage could serve as leverage for Bangladesh in the upcoming negotiations (Raihan, A., 2005: 38).4. The benefit from the framework of special Modalities largely depends on how effectively Bangladesh plays a pro-active role in the upcoming negotiations. It has been made clear that LDC’s should prepare requests for the countries of their interests. Furthermore, to include a classification of service providers based on ISCO-88, Bangladesh should make specific proposals. Thus Bangladesh could undertake three specific activities in the short run:a. Prepare requests to be submitted to a number of countries on Mode 4 based on ISCO-88 categories.b. Prepare a proposal adopt a list of classification of service providers, which would remove the distortion between the current coverage of service providers under the GATS and Article 3 of Annex on Mode 4 and Paragraph 9 of the special modalities.

5. While Bangladesh and other LDC’s will identify the categories of their interests, it is important that there is a demand for those categories in countries of LDC’s interest. Without comprehensive mapping exercise of current and future demand for work force in the categories of interests, it would not be possible for importing countries to offer something by taking cognizance of those requests. It is not expected that countries of LDC’s interest would start immediate process of identification of categories. UNCTAD and WTO can undertake research exercise in this regard. Bangladesh should propose in the WTO and UNCTAD to undertake study on mapping of country specific employment according to multilaterally accepted classification of services providers. This exercise should be undertaken for OECD and other countries Raihan, A., and Mahmood, M., (2004:15). Bangladesh and other LDC’s should submit requests on mode 4 as early as possible. The noise outside the negotiation tables is important but will be effective only if there is an active participation in negotiation process by the countries. The countries also should consider offering market opening in some areas, which are already open under autonomous liberalization. The offers can be tailored to protect national interest (Bhattacharya, D., 2005.

Domestic Policy Issues

To strengthen the arguments for opening up the developed country markets for TMNP, the government should identify current capacity of supply of manpower in each identified categories of TMNP.

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Bangladesh should develop a comprehensive plan with different time dimensions for promoting export of service providers through TMNP.Analysis shows that unskilled and professionals are the two groups who send more remittance compared to other two groups. Current focus of the manpower export is concentrated mainly on low skilled people. The focus should be broadened and export of professional service providers should be included into the plan.

Active market search is essential for enhancing benefit from TMNP. Bangladesh missions should identify niche opportunities in the recipient countries.

Identification of market and negotiations for market access should be linked with skill development plan. Otherwise, the opportunities will remain unrealized.

A plan for absorbing returned migrants into the national economy should be pursued vigorously so that the new situation under open TMNP could have a more positive impact on the national employment situation.

Data on export of service providers, which are gathered by the BMET, is the major source, but not the only one. Although the remittance data show earnings from US and UK, the head count data does not show the number of people who went to those countries. It is important to identify all channels of temporary migration and compile reliable migration data. This is essential for the design of any medium to long-term strategic manpower export plan Raihan, A., and Mahmood, M., (2004:17).

Identification of New Destinations of Bangladeshi Service Providers

(Raihan, A and Mahmood, M., 2004.P- 12).

Note1. Massage from the Ambassador, Einar Hebogard Jensen- Ambassador of The Royal Danish Embassy, Dhaka in Vision 2015 Bangladesh as a Leading Manpower Exporter, January, 2008.References:

Acosta, P. (2006),”labour supply, School Attendance and Remittances from International Migration: The Case of El Salvador, Policy Research Working Paper 3418. World Bank, Washington D.C.

Acosta, P., and Others (2007a),”What is the Impact of International Remittances on Poverty and Inequality in Latin America?” Policy Research Working Paper 4249. World Bank, Washington D.C.

Acosta, P., and Others (2007b),”The Impact of Remittances on Poverty and Human Capital: Evidence from Latin American Household Surveys”, Policy Research Working Paper 4247. World Bank, Washington D.C.

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Adams (2008),”The Demographic, Economic and Financial Determinants of International Remittances in Developing countries.” Policy Research Working Paper 4583. World Bank, Washington D.C.

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