Remittance flows are the largest capital inflows into Sub-Saharan Africa, exceeding both foreign direct investment and official development assistance. Why and how have some African states been successful in harnessing labor remittance flows for long-term investment and national development, while others have failed to accomplish these objectives? Moreover, and tracing the historical and contemporary role of these largely informal financial flows across cases, what role have variations in state capacity, political leadership, and external technical assistance played in explaining this divergence in development outcomes for the case studies selected for this study?
As much as this project aligns with my interests, its subject wasn’t inevitable by any stretch. It was the end result of an extended period of discussion with Prof. Medani regarding my interests in illicit markets, organized crime, economic development and the informal economy more generally—in particular, the final two in relation to each other. With the aforementioned as my broad academic interests, I originally got to know Prof. Medani off my appreciation for his newest work Black Markets and Militants: Informal Networks in the Middle East and Africa, describing the role of economic globalization in youth recruitment by militant groups through informal remittance networks in Egypt, Sudan and Somalia. Wishing to continue his research into informal networks, we agreed on the importance of charting the formalization of said remittance networks into the present day, subject to state capacity, political leadership and external political influences. To draw general conclusions from a group of countries with potentially similar macroeconomic conditions where possible, we decided to extend the sample space to Sub-Saharan Africa generally.
In particular for my own long-term research/career aspirations, I wished to better understand any key theory/typologies behind informal markets, and the degree to which such necessary market structures—in the absence of well-regulated, strong macroeconomic structure in many developing countries—is integral to understanding economic development as a whole. I also looked forward to better understanding library research and a firm grip on navigating online library resources for exactly what I need—or something close enough.
Prof. Medani’s suggestion that I organize a literature review on mobile money services (MMS) breathed new life into my project at a time when I was having trouble finding more good source material for remittances specifically! Whereas I had researched the role of remittances in state capacity and political leadership outcomes, finding weak consensus for any direct effect, Prof. Medani’s encouragement that I cover this exciting new technology in the remittance trade allowed me to better understand how state capacity affected the trade itself. Another highlight was learning the specifics of the informal remittance trade: any informal economic institution based on trust, that is surprisingly stable and self-enforcing given how common fears of financial transactional security are in advanced economies, interests me strongly. I look forward to further research on how development efforts can work with, not against, these fascinating informal channels to guarantee a higher living standard for billions more.
An immediate challenge arose in the relative difficulty of finding empirical, stats-based remittances literature that could approximate some value of the informal, therefore untracked, remittance trade that distorts GDP figures in major remittance-receiving countries. As my research wore on, however, I recognized the advantage of relatively lacking empirical literature as I could better discern necessary empirical literature from less-necessary theoretical literature, which offered some key insights on the effects of state capacity/political leadership on remittances, though not much more. Another challenge arose with my research conclusion that state capacity and political leadership have a far weaker overall impact on remittance flows than vice-versa, as displayed in my literature review of how MMS access depends on the degree to which a country’s banking sector can regulate said access, as opposed to more affordable regulation by the telecommunications industry.
First and foremost, that ARIA has agreed to fund my research is a badge of pride and, if I may, prestige for potential employers/admissions officers who can observe my commitment to my subject matter. This demonstration of my research experience is a net benefit to my academic experience as a whole, and was a nice way to spend a whole summer working on my own terms. As I’ve conducted more and more research, I’ve better understood my interest in development economics as a whole, and wish more than ever to continue down this path career-wise. I’m very glad that ARIA has helped me better define my long-term career ambitions in a relatively low-risk, high-creativity environment.
To the Charles and Betty Maldoff family, a heartfelt thank-you for allowing me this fantastic opportunity this summer. My research would still be a dream, stuck with no guarantee somewhere in the distant future, without your generous contribution to McGill Arts students’ experiences of self-discovery at this critical point in our lives. Thank you very much and have a wonderful rest of your year!
