Diasporas for Development: The Remittance Platform

AnnaLee Saxenian — Fri, 08 Dec 2006 12:55:56 -0500

I want to commend Bal Joshi for an insightful posting on the role of remittances as a platform, rather than a product. The Chinese and Indian diasporas are a good example of remittances as a platform. Networks of overseas Chinese and Indians have channeled information about global market opportunities and technical trends, as well as cash, to their home country colleagues--and created self-sustaining development trajectories in regions like Bangalore and Guangzhou. On the other hand the evidence from Armenia suggests that if remittances are the end product, they can be counterproductive. The Armenian diaspora has contributed so generously that it has allowed the government to avoid the economic and political reforms that are essential to longer term development. This is what economists refer to as infernal, low level development traps.(I say this as a member of the Armenian diaspora.) Remittances, in my view, make most sense as part of a longer term strategy for development. Or in Joshi's words, as a platform.

Diasporas for Development: The Remittance Platform

Rob Katz — Wed, 06 Dec 2006 09:43:37 -0500

Guest poster Bal K. Joshi is the co-founder and managing director of Thamel Dot Com, Kathmandu, Nepal. He is also a partner in Thamel International.

By Bal K. Joshi
From my perspective, recent public dialogue about the development impact of migrant remittances is a little limited. Traditional cash-to-cash money transfers can lack macroeconomic leverage, especially when the funds are used for consumption rather than investment. However remittances can be more then simply funds transfers. Several years ago, we at Thamel Dot Com (TDC) in Nepal asked ourselves a basic question: Are remittances a "product" or a "platform" for development?

At the time, Thamel Dot Com had launched Nepal's first e-commerce portal and was providing Nepalese diaspora with a suite of products and services, including news and information, money transfer and the ability for people living outside of Nepal to remotely purchase goods and services in Nepal for local delivery. Our money transfer service mirrored that of other money transfer companies—remittances were viewed as a "product". Over time, we came to the conclusion that cash-to-cash money transfer, as a product, is not very interesting...or economically dynamic. We became much more interested in our cash-to-products transactions. This interest came from the fact that the financial margins are better when we "productize" remittances; and also because the economic impact is higher when remittances are directly turned into the value for which they are intended.

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Diasporas for Development: The Remittance Platform

Diasporas for Development: The Remittance Platform