Boston University’s Center for Finance, Law and Policy and BU’s Frederick S. Pardee Center for the Study of the Longer-Range Future released a report Tuesday to examine remittances sent to aid unstable countries, according to a BU press release.
Titled “Remittance Flows to Post-Conflict States: Perspectives on Human Security and Development,” the report stated the task force members sought to research, analyze and subsequently propose policy recommendations regarding remittances to countries fresh out of conflict.
“Migrant remittances play an increasingly central role in post-conflict reconstruction and national development of conflict-affected states,” the report stated. “Violent conflicts and prolonged ethnic and religious hostilities lead to population displacement; the livelihoods of those left behind vitally depend on remittance transfers.”
Each year, tens of millions of people leave countries in distress and send money back home to relatives, the release stated. While remittances account for a large chunk of financial spending each year, not much research has been done to examine the efficacy of these donations.
The need for remittances, which totaled approximately $430 billion in 2013, often stems from civil unrest, or ethnicity- or religion-based persecution, the release stated. Thus, private remittances are essential to restore stability and maintain security in these countries, but are often road-blocked by strict regulations and economic inflexibility.
According to the report, individual countries’ infrastructure should be given more attention when rebuilding.
“For peace and development to become sustainable, the existence of functioning and self-sustaining government systems becomes crucial,” the report stated. “… For rebuilding the institutional infrastructure, strong partnerships of the international development community with national and local stakeholders become particularly urgent.”
Additionally, the report stated more money should be given to groups that will aid the recovery of a country’s informal economy through micro-loans and savings mechanisms.
“Relatively little research has been focused on the very countries where remittances are the most important,” said Center for Finance, Law and Policy director and BU School of Law professor Cornelius Hurley in the release. “For that reason, we organized a task force to look at these flows to the most vulnerable places on earth, and to make recommendations on how to leverage their potential development impact.”
The remittances affect dozens of countries across the world, such as Afghanistan, Ethiopia, Iraq, Nigeria, Rwanda, Somalia, Sri Lanka and Yemen, according to the release. Members of the task force estimated the remittances made to countries like these total far more than the combined totals of U.S. foreign aid and foreign investment.
“All together, we believe that up to U.S. $150 billion will be sent in remittances to these countries in 2013, from as many as 70 million relatives living abroad, significantly more than the combined totals of foreign aid and investment,” said Donald Terry, who represents BU as a task force member and who is an international remittance expert, in the release.
In the report, BU task force members said remittance institutions should consider broader approaches to their donations to get around obstacles that limit their effectiveness, including institutions preparing to adapt to specific local practices.
“Because of the prevailingly informal nature of remittance delivery mechanisms in post-conflict settings, the importance of remittances in the economies of these regions has been vastly underestimated,” said BU economics professor John Harris in the release. “Yet, remittances could be the largest source of capital for rebuilding post-conflict countries.”
The report was the result of a year’s worth of research on behalf of the task force, according to the release.
BU experts joined forces with other members hailing from institutions such as University of California, Los Angeles, University of Hamburg, Sustainable Development Policy Institute in Islamabad, Pakistan and the European Public Health Association. There were 14 members in total.