Assessing Agribusiness as an Investment Choice for Return Migrants in Rural Nepal

In the context of globalization, while Nepal has benefited from foreign labor markets, it also faces challenges regarding the investment decisions of returning migrant workers after their return. This study examines household investment in agribusiness and livelihood diversification in rural Nepal using multinomial logit estimates based on data across eight districts from two provinces. The results indicate that return migrants strongly drive agribusiness investment, either exclusively or in combination with other businesses, whereas households with members currently abroad, although engaged in agribusiness, are more inclined toward non-agribusiness activities or no investment at all. This suggests that remittances are not properly reinvested in agribusiness, highlighting that remittances are mostly used for consumption purposes, and households with migrant members are better off without investing in agribusiness, thereby challenging assumptions that migration stimulates rural entrepreneurship. However, household education and networks promote diversification in businesses significantly, while agriculture-specific skills support sole agribusiness investment. Further, more active members, with greater labour force availability, are more likely to diversify through non-farm activities, and individually managed farms also diversify to reduce risks. In contrast, female-headed households are reluctant to invest in agribusiness despite being active in subsistence agriculture. In this context, policies should encourage returnee engagement in agribusiness, improve rural infrastructure, strengthen market linkages, and expand financial access to foster diversification and resilience in rural economies.