Remittances and Development in Post-Conflict States

The Center for Finance, Law & Policy in collaboration with the Pardee Center has established a Task Force to research, analyze, and propose policy recommendations regarding the role of remittances in post-conflict states and their potential to serve as a source of development.

Vast amounts of capital are transferred around the world through remittances. Remittances can be a major catalyst for economic development particularly in post-conflict regions that are characterized by widespread displacement and institutional breakdown. As remittances in post-conflict settings have been studied very sparsely, the Task Force has the opportunity to frame and define this important narrative. The interdisciplinary composition of the Task Force is an asset for the project, enabling a multi-faceted and comprehensive perspective.

Violent conflicts, civil wars and engagements by rebel militias impact local livelihoods, social and family relations, networks of social security and institutions of community governance. The post-conflict settings of heightened vulnerability and economic exclusion highlight informal coping strategies and alternative income generating mechanisms. In conditions like these, remittances have a vital importance in improving social capital endowments as well as facilitating connections between informal and formal sectors, thereby contributing to poverty alleviation and rehabilitation of the affected communities. Local mechanisms for savings, micro-loans and entrepreneurship are essential to the productive use of remittances. The risk spreading qualities of remittance flows can enable diversification of local livelihoods and contribute to sustainable use of natural resources. Remittances also affect institution-building, community participation and social solidarities, relevant to restoring peace and cohesion in post-conflict settings. Remittances are important to all aspects of human security, including economic and food security, health, environment, and community.

Currently, there is a lack of proper understanding of the role of remittances in the post-conflict processes of rehabilitation, development, and productive investment. Because of the largely informal nature of remittance delivery mechanisms in post-conflict settings, the role of remittances in the economies of these regions has been vastly under-estimated. Government policies and banking regulations may further impede the functioning of remittance flows. Yet, remittances could be the largest source of capital for rebuilding post-conflict regions. The impacts of remittances are not only economic but also social and political, as remittance flows entail a transfer of new skills, norms and technologies, and affect transnational power configurations. Both individual and collective remittances reshape the intensifying diaspora resource flows and networks, often most pronounced in the chaotic post-conflict contexts. Investigation of remittance flows therefore entails attention to different types of networks, borders and boundaries. These could be seen as broader analytical tools illuminating the relationships between various domains and scales. By encompassing individuals, groups, organizations, ideas and technologies, the conceptual focus on networks and flows highlights a non-local and multi-scale topology.

A few areas of research that have been identified as relevant to the study of remittances in post-conflict development are outlined below (see also attached literature references). There may exist relatively extensive knowledge about remittances in ‘ordinary’ circumstances, but the challenge is to identify how these issues are different or unique in the context of post-conflict remittances. What makes the environment of post-conflict remittances unique, what specific challenges do these settings pose for productive development, and why have post-conflict remittances not already been studied extensively? The three broad categories which the Task Force will investigate are:

  1. Assessing and measuring remittances in post-conflict environments: sources, magnitudes, issues with reporting and reasons for under-reporting of remittance flows; questions of measuring and assessment. Strategies of risk spreading in post-conflict settings of displacement. Transnational diaspora networks.
  2. The mechanics of remittance flows and networks: tools, technologies and financial services. That includes various tools and technologies of transmission of remittances in post-conflict contexts, as well as the network aspects of remittance flows, including material, institutional, and ideational. Also issues of improving local access to remittances through attention on market, financial services, adjustments in regulatory and policy environments, payment products, transfer tools and technologies, and institutional capacities and partnerships.
  3. Consequences and impacts of remittances in post-conflict areas: evaluating potential for local development, effects of remittances to the informal economy, networks of reciprocity and mutual help. Remittances at the interface of formal and informal finance and economies. Impacts of remittances on institution building and community governance, democratic participation and social justice. Socio-cultural issues, including changes in kin and family patterns, gender and household relations, class structures, new forms of knowledge, skills and attitudes.

Task Force Members will submit papers and/or case studies assessing the role of remittances in post-conflict settings according to his or her area of expertise. These materials will be used to demonstrate the potential for remittances to be employed as a tool to redevelop post-conflict areas.
All articles will be published in a final report, available for free in hardcopy and online. A public event highlighting this issue will be held in early November. Please stay tuned for details.

Suggested reading:

Beyond Small Change: Making Migrant Remittances Count.