Remittance Dependency: A Structural Cancer in Nepal’s Economy
— Dr. Krishna Pandey, PhD
President, Explore Productive Chamber of Commerce (EPCC)
Kathmandu — For decades, remittance has been portrayed as the backbone of Nepal’s economy. Policymakers frequently celebrate foreign currency inflows as evidence of economic resilience. Yet a deeper structural examination exposes an uncomfortable reality: excessive reliance on remittance is not development—it is economic paralysis disguised as stability.
Remittance does not build factories.
It does not generate innovation.
It does not enhance national productivity.
Instead, it entrenches import dependency, depletes the domestic labour force, and locks the economy into long-term stagnation.
Nepal’s remittance-driven economic model is fundamentally flawed. When a nation’s most productive youth are compelled to leave their homeland merely to sustain livelihoods, the economy is not advancing—it is outsourcing its structural failure.
Remittance income is earned outside the national economy, spent largely on imported goods, and rarely channelled into productive investment. The result is a dangerous illusion of prosperity while domestic industries weaken and collapse.
From an economic standpoint, remittance functions as a temporary painkiller rather than a cure. Prolonged dependence steadily erodes the nation’s productive capacity.
As increasingly acknowledged by critics, remittance has become a cancer for Nepal’s economy—a system endlessly squeezed at the cost of long-term economic health.
More than 80 percent of remittance income in Nepal is consumed rather than invested. It directly finances imports of food, fuel, electronics, and luxury goods, leading to:
Nepal possesses fertile land, abundant water resources, human capital, and strategic geographic positioning. Yet it imports even basic food commodities because domestic production has been systematically neglected in favour of foreign wage dependence.
This is not globalization.
This is systemic economic dependency.
Beyond macroeconomic indicators, the social consequences are severe and often irreversible:
The Only Viable Alternative: Domestic Production–Led Growth
Nepal does not require more foreign labour agreements.
It requires a decisive shift toward production-based national development.
A sustainable economic transformation must include:
1. Substituting imports with domestic production in agriculture, food processing, and basic manufacturing
2. Redirecting remittance inflows toward productive investment rather than consumption
3. Protecting and nurturing local industries through smart, strategic trade policies
4. Creating dignified employment opportunities at home instead of glorifying labour export
5. Aligning education, skills, and innovation with domestic production needs rather than migration pathways
Nations do not develop by exporting workers.
They develop by producing goods, knowledge, technology, and value within their own borders.
Remittance may serve as a temporary support mechanism, but it cannot form the foundation of a sovereign and resilient economy. When remittance replaces production, policy reform, and industrial growth, it evolves from relief into structural decay.
Nepal now faces a clear choice:
continue surviving on foreign wages, or
begin building sustainable prosperity at home.
True development begins when citizens are no longer forced to leave their country in order to live with dignity.
