The Impact of the Global Financial Crisis on Remittancing : Implications for Developing Countries

Remittancing is increasingly seen as the bedrock of the diaspora's contribution and engagement with the home country. Remittancing is, however, vulnerable to the fortunes of migrants who are in turn susceptible to fluctuations in the economies in which they are based. These locations tend to be the more developed or industrialized nations in the world. Unfortunately, these are among the nations that have been most adversely and directly hit by the global financial crisis of 2007-2009. This discussion aims to assess the real and potential impact of this downturn at the macro and micro level. It investigates the impact of the GFC on remittancing and the implications for the increasing dependence on this source of development funds. It is proposed that the downturn has highlighted the risks of basing development on financial returns from the Diaspora and that a reliance on remittancing indicates the continuing inability of many countries to provide opportunities at home. Nonetheless, the performance of remittancing, compared to other economic indicators, does suggest that this is a resilient source of income which can be scaled up for long term household and national development. The chapter therefore, argues for more diversification in the way such funds and importantly, diaspora talents and resources are utilized. To this end, it calls for specific attention to the boundary-crossing capabilities of diasporas and involving this group more entrepreneurially in areas such as private diplomacy, marking one way in which developing countries can build resilience in the face of global economic and political uncertainty.that are also dependent on this income source