Use and misuse

jkd — Mon, 11 Dec 2006 17:53:50 -0500

Quite right, and let's take this a step further down the road. Even if remittances are used for what one might view as "less than fully efficient, or productive, or even healthy," where is that money going? To local businesses in LDCs, is where. So even if the proximate recipients of the remittance aren't "benefitting" in a perfectly rational or efficient way, their community most certainly is, as local businesses then support further local development, etc. An interesting parallel development to ever-increasing North-South remittances is the nascent Social Lending sector within the North (e.g., Zopa and Prosper). The basic concept is similar but not quite the same, but both ideas (if/when successful) have the effect of removing some of the levers of control on financial decision-making from larger entities (World Bank, development agencies; Citigroup, HSBC) and transferring it to individuals. Clearly there are some reasons why these might not be uniformly optimal changes or ways of doing things, but it will be interesting to see how it all plays out.

On Remittances as a Platform

williamkramer — Mon, 11 Dec 2006 15:51:17 -0500

Let me add my thoughts to Bal Joshi's fine post of 12/6 and AnnaLee Saxenian's reply of 12/8. I couldn't agree more with most of the points made in both. The notion of remittances as a development platform is just right, in my view, and Ms. Saxenian strikes a fair balance on "good" and "bad" remittance impacts. When remittances become just another form of dependency, they get in the way of real development. I take note, however, of what might be a few hidden traps buried in Bal Joshi's post.

Bal offers three primary justifications for them. First, it reduces costs; second, it increases sender control, "lowering waste and misuse"; third, it offers "the sender more options" for productive use, such as savings, build-up of capital, etc.; and fourth, it fosters creativity in the pipeline. My concern comes in points 2 and 3, as both are, to my perhaps over-sensitized ears, reminiscent of the "top-down" and "north to south" control that has so plagued development policy in the past. A considerable amount of criticism of the BOP agenda (particularly as relates to Prahalad's enthusiastic portrayal of creating the capacity to consume) has revolved around "misuse" of this new-found buying power. This approach can, and often does, take on a moralistic tone; however well intentioned, this kind of guidance is usually counterproductive. Economic empowerment is all about choice, and yes, some of the choices will be less than fully efficient, or productive, or even healthy.

(This post continues past the break; click "Read More" to continue)

NextBillion.net - Development Through Enterprise - On Remittances as a Platform - Comments

Use and misuse

On Remittances as a Platform