Pardee-CFLP-Remittances-TF-Report

flows came from migrant workers in the Middle East, 17.2 percent from the EUregion, and 3 percent from North America (Central Bank of Sri Lanka AnnualReport 2011).As previously noted, at the macro level, remittances have been vital in enablingSri Lanka to finance large trade deficits. At the micro level, given that war-tornareas in countries like Sri Lanka often lack well-developed political structuresto channel sufficient investments, remittances provide a more reliable meansrelative to other forms of foreign financial flows to sustain and insure familymembers unable to migrate. By providing coping strategies for householdsaffected and displaced by conflict, remittances can contribute to human security.Diaspora-funded reconstruction programs may also have an advantage inidentifying and addressing local needs compared to donors from other culturessince diaspora members are more familiar with the ground realities in theirhome country. Studies suggest that remittances from migrants have providedadditional financial resources and opportunities to vulnerable sections and familiesin both the Sinhalese and Tamil populations, who have been displaced andaffected by the civil war; these groups have relied on remittances from migrantrelatives for private consumption, rebuilding houses, restarting businesses, andalso for migration (Van Hear 2003; Fagen and Bump 2006; and Orjuela 2008). Forinstance, remittances of one migrant from a Sri Lankan Tamil family displacedby the war partly funded the schooling and farming activities of other familymembers who could not migrate. In another Sri Lankan Muslim family that wasdisplaced by an LTTE attack in 1990, the wife went to the Middle East to workas a housemaid. Her remittances helped the family to repay the loan taken tofinance her departure, purchase some livestock, and also to invest in jewelrythat could be sold in the future if the need for cash arose (Van Hear 2003).Further studies suggest that remittances have enabled some migrant-sendinghouseholds to spend more on food, health, and education in addition to enablingthem to receive a higher level of income from property, physical and financialassets, compared to non-migrant households (Arunatilake et al. 2010). However,these positive benefits of remittances appear to be very limited and uneven intheir impact. Using data from the 2003-04 Consumer Finance Survey and theCentral Bank, Arunatilake et al. (2010) show that only approximately 10 percentof households in Sri Lanka have been the recipients of remittances, with thedistribution of these remittances being concentrated among the richer and urbanhouseholds.Remittance Flows to Post-Conflict States: Perspectives on Human Security and Development 65