Labour migration as a development strategy : policy lessons from the Philippines and Kerala (India) for Nepal

Labour migration emerged after World War II as a national development strategy for developing countries and resulted in a surge of migrants moving across borders and sending back remittances. For developing countries the benefits of labour migration, including the opportunity to deploy surplus unemployed and under-employed workers abroad and to earn remittances. At the household level, such remittances enable families to pay for basic needs and services, including health and education; at the national level, they are the source of capital for productive investment. However, labour migration costs often outweigh the benefits, and these include death and injury overseas while working in dangerous, dirty and demeaning jobs; the “brain-drain” or loss of highly skilled professionals; and the rise in remittance-fuelled conspicuous consumption. This thesis investigates whether this is the case for Nepal, a land-locked, labour surplus, low-middle-income Asian economy. While it is noted that labour migration and remittances have contributed to poverty reduction in Nepal, there is evidence to indicate that it is also paying a high price in terms of deaths and injuries, and growing remittance dependency. Adopting a broad, qualitative, institutional political-economic framework, this thesis analyses the policy options available to Nepal to minimise the costs and maximise the benefits of labour migration. To do this, it investigates labour migration and remittance management in the Philippines and Kerala (India), as well as current practices in Nepal, employing a comparative case study approach. Drawing on the market and policy failure literatures, the thesis argues that Nepal can learn some lessons on how to upgrade its legislation to better protect migrant workers’ rights and welfare in line with the Philippines approach; and develop more attractive arrangements to ensure remittances are more productively invested in development projects in line with Kerala’s approach. However, the lacklustre performance of the Philippines and Kerala to mobilise labour migration for development indicates that merely emulating their policies will not be enough to tackle the identified market failures. Therefore, the thesis recommends that Nepal undertake a participatory governance process in the form of multi-stakeholder policy dialogue to identify the best approaches to balance benefits and costs and ensure labour migration contributes to Nepal’s longer-term development