The outward migration of labor and the remittances that are generated as a result have been a feature of Bangladesh’s most liberation history. The earliest official records on remittances demonstrate that the country received about US $24 million in remittances overseas in remittances in 1976. Since then foreign remittance recipients have grown at an exponential rate that has been shown in table no 1.

The role of remittances in the economies labor sending countries like Bangladesh is assuming increasing importance. Remittance is shown that a very stable source of foreign exchange (Ratha, 2005) and even as being counter -cyclical (Esquivel et at, 2006). The effects of remittance on the macro economy of a country are universally proved. The incoming foreign exchange helps receiving countries to pay import liabilities, improve their position in balance of payments, strengthen foreign exchange reserves and finance external debt. At the micro level remittances contribute towards increasing the income of receiving households with related effects on the standard of living, while depending upon consumption patterns they have been known to increase the level of savings which is an important source of capital (Ratha, 2005). Thus, in resources scarce countries like Bangladesh remittances have a great potential to produce economic and social impacts. This fact has been recognized as by policy makers and has received attention from researchers. However, as has been mentioned there are hardly any studies on he microeconomic impact of remittances on the households or per capita incomes. Most research has focused on the potential use of remittances as a policy tool and having acknowledged its importance on possible revenues of further increasing the volume of official remittances receipts by directing them through legal avenues and by promoting even greater export labor. Fig 3 which shows remittances a percentage of GDP highlights it growing importance in the economy of Bangladesh.

Remittances have been rising rapidly around the world and are the fastest growing source of foreign exchange earnings for developing countries. The observed literature suggests that remittances can have both positive and negative influences on the growth and development of receiving states. However, the literature has been largely silent on he potential effects.