The Least Developed Countries Report 2012

Harnessing Remittances and Diaspora Knowledge for Productive Capacities

image of The Least Developed Countries Report 2012
This Report reviews the LDCs' recent economic performance and examines how to enhance developmental impact of remittances and tap into the knowledge pool of its citizens abroad. Given the increasing magnitude of remittances in LDCs, the Report explores both the beneficial as well as possible adverse impacts of this type of private external flow. While remittances are the most visible effect of migration, there are other forms of Diaspora engagement within the home country such as Diaspora knowledge networks that can facilitate technological catch-up in LDCs and therefore enhance development of productive capacities. Through innovative forms of network-based industrial policy, LDCs could offset some of the adverse impacts of brain drain on their economies. The Report concludes with a policy review section containing lessons from international experiences in this area of interest to LDCs.

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Remittances and the LDCs: Magnitude, impacts and costs

In recent years, remittances as a potential source of development finance have received greater attention from international policymakers. There is also a growing body of economic and social research highlighting the determinants, impact and significance of remittances in developing countries. In addressing these issues in an LDC context, the present chapter starts from the perspective that remittances may have multifaceted and significant impacts on recipient households, as well as at a regional and macroeconomic level. Remittances should therefore be regarded as an additional facet of LDCs’ multi-pronged efforts to mobilize adequate sources of development finance.

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