People with nonfarm income less likely to migrate internally: BIDS

• 4 lakh people move to Dhaka every year
• 70% of Dhaka's slum-dwellers moved there fleeing some sort of environmental shocks
• Migration from unions with more SMEs are lower than the unions with fewer SMEs
• Creating non-farm opportunities at the local level is crucial to reduce city-bound migration

The members of a household are less likely to migrate internally if their share of non-farm income is high, finds a study by the Bangladesh Institute of Development Studies (BIDS).

The non-farm income refers to earnings from non-agricultural self-employment, non-agricultural labour, domestic remittances, rental, etc. 

"The longer-term strategy for rural development should involve creating job opportunities for the rural labour forces. Hence, creating non-farm income opportunities at the local level is central to the idea of reducing the influx of people to the urban areas," said Kazi Iqbal, a senior research fellow at BIDS, while presenting the study findings in a BIDS seminar on Wednesday. 

The seminar titled "Local Non-farm Opportunities and Migration Decisions: Evidence from Bangladesh" was held in the BIDS conference room and streamed through a virtual platform.

The researchers identified the location of the small and medium enterprise (SME) clusters and found out that migration from the unions with a larger number of SMEs are lower than the unions with fewer SMEs.

The non-farm opportunities at the union level increase the share of non-farm income of the households and this, in turn, reduces the chances of migration of a member of the household, the research revealed.

Previously, there was no robust empirical evidence on the relationship between the households' non-farm income and their migration decisions, and the BIDS study provides the first robust evidence of this relationship for Bangladesh by combining two sets of secondary data - Household Income and Expenditure Survey (HIES) 2016 and Economic Census 2013. 

While answering a question on whether the labourers should come closer to the industry or the industry should go closer to the labourers, Kazi Iqbal said, "So far many developing countries including Bangladesh have been following the first strategy, which can be justified at the initial level of development."

"However, as the economy grows and cities become crowded, the second strategy is more desirable for balanced growth and welfare. The private sector has little incentive to move their industries to remote areas where the cost of production is higher." 

"Hence, the government interventions are required in terms of policy supports and investments to incentivise the private sector to relocate their industries to the rural and semi-rural areas," he added. 

He also said when lockdowns were announced during the Covid-19, the workers who work away from their homes suffered a lot. Creating work opportunities closer to the places where workers live can only avoid such disasters in the future. 

At least four lakh people move to Dhaka every year, according to the World Bank, while the International Organisation for Migration (IOM) estimates that 70% of Dhaka's slum-dwellers moved there fleeing some sort of environmental shock.

Replying to a question about the favourability of creating more non-farm opportunities amid the labourer shortage in the agri-sector and growth of smart farming, BIDS Director-General Dr Binayak Sen, said, "The agricultural productivity of China has increased through the household's responsibility system. They strongly emphasised rural non-farming activities."

"The non-farming activities in China were not a highly productive sector, but it absorbed a huge number of labourers.  Then, they shifted to export-oriented sectors," he continued.

"We have a high population density like China. We have to emphasise these three areas considering the population density. It is possible to increase non-farm activities and keep smart farming simultaneously," he added.  

Regarding a question on the optimal regional distribution of the industrial units that will maximise growth and welfare - the researchers opined that the effect of setting up RMG factories in rural areas will be much higher on economic growth and poverty as most workers in the Dhaka factories are migrants from the rural areas.