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A sustainable poverty-eradication policy boost
From Remittance to MicrocreditFrom Remittance to Microcredit
Valentino PianaPaulos Kesete
Penang, 5th December 2007
www.economicswebinstitute.orgCutting-edge research & implementation consulting
Table of contents
4. Advantages at the country level and in the structure of the world
1. Microfinance as a tool for human and economic development
2. The sources of funds for microfinance
3. Remittances: an interesting complementary source of funds
4.1. The structure of power in Asia in 2003
4.2. The main flows of remittances in Asia
5. Conclusions
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1. Microfinance as a tool for human and economic development
help the poor to help themselves
activate the entrepreneurship of the family and the community
arrive to places and social groups often overlooked by other financial actors
enhance small projects, usually with a low environmental impacts
ABOUT 100 MILLIONS OF CLIENTS (SOURCE; MICROCREDIT SUMMIT 2006)
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2. The sources of funds for microfinance
Microfinanceinstitution
Clients
International donations
Governments finance
Loans
Remittances
Private donations
Note that in 2003, remittances were higher than FDI in 66 countries out of 154
www.economicswebinstitute.orgCutting-edge research & implementation consulting
3. Remittances: an interesting complementary source of funds
Micro repayments
Stable flows
Efficiency
We are already making an experiment in Ecuador
Money back
Control over use
Activate family entrepreneurship
Shorter time horizon for coming back home
ADVANTAGES FOR MFI ADVANTAGES FOR MIGRANTS
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4. Advantages at the country level and in the structure of the world
New local entrepreneurshipInternational knowledgetransferImprovement in the balance of payments
Especially if channelled to microfinance, remittances are systemic countervailing factor to trade domination.
ADVANTAGES FOR THE RECEIPIENT COUNTRY
ADVANTAGESFOR THE STRUCTURE
OF THE WORLD
In March 2006, we presented at Princeton University a formalized model of bilateral power among nations
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4.1. The structure of power in Asia in 2003
India
China
Malaysia
Singapore
Indonesia
The Philippines
Japan
VietnamThailand
Dependence
Dependent Source Interconnection
Destination Dependence
Dominant Source Interconnection
Dominant Destination Interconnection
Source Dominance
Source Dependence
Destination Dominance
Mono out Integration
Mono In-integration
Dominance
Dependent Destination Interconnection
Integration
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4.2. The main flows of remittances in Asia
Singapore
Indonesia
The Philippines
Japan
India
China
Malaysia
ThailandVietnam
www.economicswebinstitute.orgCutting-edge research & implementation consulting
5. Conclusions
Channelling remittances to microfinance is a relevant opportunity.
But to influence the structure of the world bold policies are needed. We at EWI are working in two further directions:
Proximity international trade
Bilateral import promotion
We are networking researchers, policymakers & businessmen to foster the change
www.economicswebinstitute.orgCutting-edge research & implementation consulting
Feel free to write to us!
Thank you for your kind attention.
director@economicswebinstitute
