Remittance Dependency and Strategic Autonomy: How Labor Migration is Shaping Nepal's Foreign Policy Options

Abstract

Remittances account for a significant portion of Nepal’s GDP, making labor migration central to the national economy and embedding it as an important socio‑economic trend in recent decades. This paper argues that this trend of Nepal’s dependency on labor migration and remittance inflow has brought new elements in Nepal’s foreign policy, a dual dynamic that has restructured Nepal's foreign policy behavior from the traditional aspect, constraining strategic autonomy on one side‑ being dependent on maintaining good relations with host countries while simultaneously generating new arenas and opportunities to exercise diplomatic influence on the other side via labor diplomacy and diaspora network. It also explores how Nepal's economic reliance on migrant destination countries, including the Gulf countries, Malaysia, and India, has pushed it to prioritize migrants’ welfare and bilateral labor relations over broader geopolitical ambitions The paper applies a qualitative research design, utilizing secondary data, policy briefs, reviews, and discourse analysis to examine the nexus between remittance dependency and foreign policy behavior. Preliminary analysis of this literature shows that Nepal's foreign policy priorities are increasingly focused on the welfare of its migrant workers and on maintaining good relations with host countries, thereby creating a structural vulnerability, as abrupt changes in overseas labor demand or foreign policy will directly affect domestic stability. However, labor migration also offers opportunities for leverage through soft power involvement, diaspora networks, and labor diplomacy.