Remittance Economy: Migration-Underdevelopment in Sri Lanka

Abstract

Sri Lanka's integration at the lower tiers of a (re)globalising world economy has entailed the mass migration of low-skilled and domestic workers employed as temporary contract labour throughout the oil-economies of West Asia. Foreign employment of this kind began after neoliberal economic restructuring in 1977 and, by facilitating remittance transfers, has since become a dominant livelihood strategy for households and the largest source of export earnings for the economy. Dominant policy-level assumptions of a mutually-beneficial ‘triple win’ between migrants and their countries of origin and destination posit temporary labour migration will produce positive economic outcomes for all involved. Yet while labour-receiving economies clearly benefit from exploiting reserve armies of labour and care, the developmental implications of remittance transfers for migrant households and sending economies remain empirically ambiguous and relatively under-theorised. Employing a multiscalar analysis of migration outcomes – spanning individual households, local communities, the macro-economy and global patterns of capital accumulation – this thesis demonstrates how cumulatively causative processes at structural, institutional and agency levels have left Sri Lanka a precariously uneven and remittance-dependent economy. Sri Lanka’s dilemma hinges on a central contradiction: uneven development has forced marginalised populations into foreign employment, only for their remittances to maintain the model of development they themselves are excluded from. The dualistic nature of remittance capital, as both an individual income transfer and an aggregate foreign exchange inflow, is fundamental to this dynamic. Fieldwork findings from over 100 interviews with migrant returnees suggest that a combination of rigid economic geography, exploitative recruitment networks and the social importance of status consumption have resulted in few lasting benefits from foreign employment. Most migrants achieved subsistence rather than ‘success’, while those from more disadvantaged communities often return indebted. Whilst remittance transfers have generally produced one-off or transient benefits for migrant households, their aggregated inflows have cushioned Sri Lanka’s trade deficit and buoyed the rupee to underwrite international loans that sustain uneven development by financing large infrastructural projects orientated explicitly to capital and the urban economy. Although evoking the pretence of stability, Sri Lanka’s remittance-driven development has complex implications for trade and production, to the effect of undermining domestic industry and limiting local spillovers from remittance consumption. With increasing remittance inflows needed to buffer a widening current account deficit and maintain macroeconomic stability, Sri Lanka has become entwined in an unsustainable and seemingly intractable path dependence on temporary labour migration as a substitute for substantive economic development.