Thursday, 26 August 2010

Remittances, Migration and Other Panaceas: The End of Outward-Looking Development Strategies

In a 1965 essay, the great development economist Albert Hirschman bemoaned the tendency of those in his profession to look for the next panacea. Unfortunately, various panaceas have come in and out of fashion since Hirschman wrote.

During three decades of neo-liberalism, development economists and policymakers have celebrated three inter-related strategies: (1) free markets, (2) private ownership, and (3) private international capital flows. The latter refers to several types of flows—loans by foreign banks, foreign direct investment (i.e., the purchase of more than 10% of the assets of a foreign corporation), portfolio investment (i.e., the purchase of foreign financial assets, such as stocks or bonds), and worker remittances (i.e., the funds that migrant workers send home generally to their families, but sometimes also send collectively through "home town associations" to fund infrastructure projects in their towns of origin). Policy in the neo-liberal era sought to maximize all four of these financial flows. Read more

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