Introduction: The Renewed Role of Remittances in the New World Order

Abstract

The impact of remittances on local economic development is one part of a multilayered process involved in the elusive pursuit of economic and social development by people in Third World countries. Since the late 1980s, this pursuit has been made more difficult by what has been called market triumphalism in the new world order, which, instead of improving the position of the Third World, leaves most of its members farther behind the industrialized countries (Peet and Watts 1993; Ihonvbere 1992). Remittances channeled into some of the most backward regions and countries of the Third World are therefore likely to play a continuing role locally. What this role may be depends on such factors as how, by whom, where, and over what period of time the remittances are spent. Development may be viewed as based on two interrelated forces: the external transfer of resources and the internal marshaling of resources (Fig. 1). These forces are as relevant for nations as they are for regions, towns, and individuals. Economic base analysis and international trade theory have convincingly established this. To grow, a town or region must provide a good or service to an external market; the rate of this growth depends on the internal conditions which retain and recirculate basic income inside the region (i.e., the multiplier) (Tiebout 1962; Grossman 1984). While the economic base model oversimplifies, its broad framework (see Pred 1966) encapsulates the dilemma of developing countries today: they need to export goods or services to generate development capital, but they lack the infrastructure and societal mechanisms to effectively retain and use this capital. Notice also that the researcher's perspective influences his or her view about whether growth or development has occurred. The extent of growth and degree of inequality may depend on what spatial scale and what region and time period we choose to study, and on what paradigm-structural, functional, conflict, interactive, and so forth-we base our assumptions (Fig. 1). Regarding the external transfer of resources, traditional theory has taken two paths, either (1) espousing the virtues of comparative advantage (Ricardo 1971 [1817]), factor endowments (Heckscher 1919; Ohlin 1933), and product life cycles (Vernon 1966; Wells 1968); or (2) condemning the side effects of external dependency, whether they be assymetric center-periphery economic relationships (Prebisch 1970; Dos Santos 1973), internal colonialism (Gonzalez-Casanova 1964), or the evils of global capitalism (Frank 1978). All these theories have in common a focus on global problems and solutions. Regarding the internal marshaling of resources, traditional theory emphasizes the deterministic role of economic factors such as occupational specialization, the application of capital to labor, fixed resources, and labor surplus (Smith 1954 [1776]; Malthus 1976 [1798], 21-26); environmental constraints such as geographic isolation and climate (Semple 1911, 1-12; Huntington 1959 [1945]); and backward-