Remittances and SME Development: Reflections from South Asia

Abstract

The recent surge in the scale of remittances has attracted attention of both policymakers and academics in both developed and developing countries. Remittances are more predictable and stable than both the foreign develop- ment investment (FDI) and official development assistance (ODA) flows. As remittances are received by the families, they are especially more effective. Leveraging the remittances for enterprise development can thus provide a viable option to accelerate economic growth in the South Asian region and address the challenge of poverty alleviation through labour-intensive, productive and innovative employment generation. The contributions of diaspora to global economic development due to their potentials of link- ing their home country with their host countries have been increasingly acknowledged. Diasporas are opening new trade opportunities for small and medium enterprises (SMEs) in their home countries and creating new conduits for export from host countries. However, it is important to create favourable conditions in their home countries to attract diaspora engage- ment through investment, knowledge, skills and technology transfer.