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Remittances: myth and reality

Remittances: myth and reality

If there is one widely held belief about post-war Kosovo society, it is that the economy is fuelled by transfers from a generous diaspora. The diaspora and its wealth is one of the most powerful collective myths in Kosovo today, shared by foreigners and Kosovars alike.

When economists discuss remittances, it is usually as a variable beyond the control of policy makers, which is assumed to be a stable and dependable source of finance. Economists analyse remittances as a type of social transfer, providing an informal safety net for Kosovar households. They also see it as a form of balance of payments support, helping to plug the large gap in Kosovo's current account deficit. Together with international aid (declining) and foreign direct investment (never very significant), remittances supposedly explain how Kosovo is able to fund the difference between its imports and exports.

However, for a phenomenon acknowledged being central to the Kosovo economy, remittances have received remarkably little serious analysis. The moral economy behind remittances (who is under an obligation to whom) is rarely examined. The issue of remittances is curiously divorced from any discussion of migration, although it is fairly evident that there must be a causal link between the two. As a result, one of the most destabilising changes in Kosovo society for generations – the end of mass migration – risks being entirely overlooked by those who think about and plan for Kosovo's economic development.

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