Sri Lanka's Remittance Economy

A Multiscalar Analysis of Migration-Underdevelopment

Matt Withers

• Publisher: Routledge
• Year: 2019
• Print ISBN: 9781138320048
• eBook ISBN: 9780429843051
• Edition: 1
• Topic: Sozialwissenschaften
• Subtopic: Aus- & Einwanderung

Employing a multiscalar approach to migration outcomes, spanning individual households, local communities, the macroeconomy and global patterns of capital accumulation, this book demonstrates how cumulatively causal processes at structural, institutional and agency levels have forged a precariously remittance-dependent economy in Sri Lanka.

This book combines historical-structural analysis with qualitative research to contend that remittance inflows have reinforced patterns of uneven development in Sri Lanka. At the heart of this argument is a bold critique of remittance capital that inverts the migration–development nexus which has come to dominate international policymaking, with implications for Sri Lanka and other 'remittance economies' throughout the Global South. The author contends that temporary labour migration from Sri Lanka is a process of 'migration-underdevelopment', in which remittance inflows – ubiquitously considered a key source of capital for developing economies – are reinforcing of uneven development at multiple scales and produce unsustainable development outcomes.

Offering a uniquely systematic critique of remittances as a source of developmental capital for countries of origin, such as Sri Lanka, this book will be of interest to academics in the field of development studies, migration studies and Asian studies.

1 The history of
migration-development

The migration–development nexus is anything but a new concern (de Haas 2012). Resurgent academic and policy enthusiasm regarding the relationship between temporary labour migration and economic development has over-shadowed a longer and more ideologically fraught migration-development debate. Perhaps the most influential recent interpretation has been Hein de Haas’s argument that the migration-development debate has ‘swung back and forth like a pendulum’ (de Haas 2012, 8) from ‘optimism’ to ‘pessimism’ and back again. De Haas claims this pendulum has shifted between generalisably positive and negative appraisals of migration’s contribution to development without ever truly settling on the nuanced ‘middle ground’ demanded by the metaphor. Within this narrative, ‘optimism’ is synonymous with neoclassical agency-centric modelling that shaped the emergence of development economics in the 1950s and 1960s and the neoliberal resuscitation of these ideals in policy and practice. ‘Pessimism’, meanwhile, is associated with the broad array of neo-Marxist and dependency critiques of systemic labour migration articulated throughout the 1970s and 1980s that are together housed under the banner of historical-structuralism.¹ De Haas suggests these opposing positions constitute countervailing extremes of the pendulum swing, cancelling each other out as equally unreasonable and pointing to a more nuanced ‘middle ground’ in the New Economics of Labour Migration (NELM) developed throughout the 1980s and 1990s.

This chapter examines the overarching narrative of the migration-development literature with historical and ideological sensitivity, retracing the movements of de Haas’s pendulum while exposing the weaknesses of the metaphor and the ‘middle ground’ it promotes. The chapter follows de Haas’s ideas intimately, both because of their prominence in shaping conventional interpretations of the migration-development debate and because of the obstacles they pose to the formation of critical migration theory. The chapter contests the pretences under which historical-structuralist perspectives have been dismissed and instead locates their diminishing credence within broader ideological delegitimisation under the hegemony of a neoliberal development paradigm ensconced in Washington and post-Washington agendas. Further, it draws attention to the subtle repackaging of neoclassical assumptions embedded in the NELM, critiquing the body of work as a superficial concession to structural concerns that shelters the ontological kernel of neoclassical economics within a more ‘nuanced’ and reputable guise.

Having followed the debate to its present manifestation in policy enthusiasm for migration as a mutually beneficial triple win, the chapter then identifies legitimate shortcomings to historical-structuralism in order to outline a new theoretical direction. Here the necessity of analysing class-relations and institutional characteristics to produce a multiscalar understanding of the factors shaping migration-development outcomes is foregrounded. Central to this approach is the identification of four theoretical concepts – remittance capital, forced migration, place and status – that address cumulatively causal processes at differing scales of analysis that together instil path dependence on temporary labour migration.

The migration-development debate

Todaro, along with Harris in 1970, developed the standard neoclassical theory of migration, in which migration emerges from rational, utility-maximising decision-making at the individual level and is aggregated to offer macro-level explanations (Harris and Todaro 1970). Specifically, it is hypothesised that migration results from the rational calculation of expected earning differentials between rural and urban employment (or, internationally, between sending and receiving economies). Todaro thus offers a simple behavioural model of micro-level migration decisions that supports the macro-level assumption that migration facilitates an optimal resource allocation of human labour between labour-abundant and labour-scarce regions (Abreu 2012). The model presumes an accompanying flow of capital in the opposite direction (i.e. from capital-abundant to capital-scarce regions), chasing higher rates of return. Thus, with migration reallocating labour and investment reallocating capital, there is a presumed process of factor price equalization leading to economic convergence between regions. Here migration is unambiguously a central driver of development and, eventually, global economic equilibrium.

The neoclassical model of migration-development is parochial in its identification of factor price equalisation as the mechanism of developmental convergence, providing no room to conceptualise remittances or non-migrant gains (de Haas 2010). Contributions from development theory, then characterised by the paradigm of modernisation, thus complemented the neoclassical framework by fleshing out accompanying benefits of migration grounded in the transfer of remittances – both monetary and social. Migrants were portrayed as agents of development, capable of accumulating skills and savings through foreign employment, along with sufficient entrepreneurial savvy to commit these assets to productive ends in countries of origin. Such transfers of wealth and expertise were expected to catalyse investment in sending communities, creating employment and producing multiplier effects within the local economy to precondition ‘developmental takeoff’ and industrialisation (Beijer 1970). The ensuing belief that widespread migration would entail the mutually beneficial delivery of rapid economic growth in migrant-sending and migrant-receiving countries thus led to an adoption of pro-immigration policies across the developed and developing world alike (Wickramasekara 2011).

By the time the neoclassical model of migration matured in the 1970s, a radically opposed ‘historical-structuralist’ tradition was emerging out of fragmented contributions within the neo-Marxist dependency and world-systems literature. Accompanying a proliferation of economic heterodoxy across the social sciences, and particularly within development studies, historical-structuralists framed migration as an exploitative process bounded by the historically shaped macro-structures of global capitalism deemed to entrench ‘the development of underdevelopment’ (Gunder Frank 1966). The perspective offers no unified theory of migration’s relationship with processes of capitalist development, but instead houses a number of critical observations within a broader philosophical consensus that migration is an issue of structure above agency. This distinction is articulated methodologically, in rejecting deductive formalism in favour of an inductive historical approach, and ontologically in dismissing the equilibrium principle as entirely inconsistent with the cumulative causation of inequalities reproduced by global capitalist expansion.

It is possible to distinguish two prominent branches of theory within the diverse contributions of the historical-structuralist tradition: those concerned with the structure of migrant-receiving economies and those addressing the structures of migrant-sending regions (Abreu 2012). Notable contributions to the former (Castles and Kosack 1973; Nikolinakos 1975; Piore 1980; Cohen 1987; Sassen 1988) have emphasised the social and economic demand for cheap and exploitable migrant labour inputs within core economies of the globe, structuring migration patterns as a means of sustaining a reserve army of labour to perform the dirty, dangerous and demeaning work that local workers would rather not perform. Meanwhile, drawing on dependency critiques and world-systems analysis, a number of authors (Portes and Walton 1981; Petras 1981; Castells 1999; Morawska 1990) have sought to explain the structural determinants of migration from the labour-sending regions of the global periphery, emphasising the geopolitical configuration of the world economy and associated mechanisms by which capital in core regions seeks to extract surplus value from the labour (and other resources) of peripheral regions.

Piore, in his development of dual labour market theory, outlines a particularly comprehensive analysis of the conditions within developed industrial economies that structurally necessitate the presence of immigrant labour (Piore 1980). Capital, Piore argues, constitutes a fixed factor of production. If demand wanes, it is not capital that ceases to be invested, but labour that is laid off as a variable input. Similarly, there exists a bifurcated labour market of capital-intensive primary workers – who are similarly ‘fixed’ with stable, well-remunerated and socially protected jobs – and a vulnerable labour-intensive secondary sector. This secondary sector constitutes the variable factor of production and, as such, is required by capital to be cheap to employ and easy to expend, thus being characterised by precarity. Piore further posits that demand for local secondary labour (i.e. within the secondary sector) cannot be sufficiently influenced by wage adjustment, as socially conditioned and institutionalised correlations between status and pay determine that wage increases for menial employment threaten to rupture the established hierarchy and provoke corresponding wage hikes throughout the economy. Similarly, maintaining motivation amongst local secondary workers is deemed problematic given the lack of status (being relational) gained from working at the bottom of the employment hierarchy. International labour migration allows capital to address both of these issues, by providing a secondary sector workforce willing to accept low wages (thus maintaining the existing wage-status order) and not primarily motivated by the cultivation of status in the local economy (as temporary migrants are assumed to experience status relative to their home communities) (Piore 1980). Moreover, the presence of migrants socially conditioned as a priori inferior is deemed to create a motivating sense of status amongst local secondary workers. Piore accordingly argues that international migration is not simply a cost–benefit decision made by the individual migrant, but rather a structural necessity of the advanced industrial economy. The relevance of this argument is extended into the realm of the post-industrial economy by Sassen (1988, 1991), wherein bifurcated labour markets are recast in relation to the polarisation of modern service economies in global cities.

On the labour-sending side of historical-structuralism, contributions are derived from neo-Marxist theories of development, specifically Frank’s dependency theory and later Wallerstein’s more holistic model of world-systems analysis. Through this lens the relevant units of analysis are not individuals or countries, but core and peripheral regions of production within the world economy and the mechanisms through which this global division of labour is sustained (Morawska 2012). Alongside existing emphasis on systems of trade and capital investment, migration has been framed as a structural process of unequal exchange through which core economies exploit the periphery and extract surplus value to entrench historical and geographic patterns of development and underdevelopment (King 2012). From this perspective, the penetration of capitalist relations into the (often non-capitalist) global periphery effects disruptions and dislocations within the traditional economy, uprooting populations and catalysing migration. Uneven peripheral development arises from a concentration of foreign and local capital in urban metropoles, progressively undermining traditional livelihoods and necessitating internal or international labour migration to core regions as a survival strategy. In this sense, the expansion of global capitalism both produces migrants through the reshaping of local economies and reaccommodates them under the exploitative duress of core accumulation processes in urban and foreign milieus.

A swinging pendulum?

Neoclassical and historical-structuralist perspectives, as archetypal yet diametrically opposed foundations to the migration-development debate, have been popularly portrayed as ‘optimistic’ and ‘pessimistic’ binaries bookending the extremes of migration theory (de Haas 2012). For de Haas, they represent opposing swings of a theoretical pendulum that has oscillated from one extreme to the other – from neoclassical optimism, to historical-structural pessimism, to neoliberal ‘neo-optimism’ and a potential ‘neo-pessimistic’ backswing – without coming to rest on a nuanced ‘middle ground’ (2012). Unpacking this metaphor helps explain both the waning legitimacy of historical-structuralism over time, but also the subtle repackaging of neoclassical theories as an ostensible ‘middle ground’.

De Haas rightly identifies neoclassical migration models, and related claims of ‘trickle-down’ development via remittance investment, consumption multipliers and human capital gains, as optimistic (2012). His criticism of the neoclassical position is anchored in its adherence to the linearity of modernisation theory and the presumption of positive developmental outcomes, including North– South convergence from factor price equalization – none of which is demonstrated in empirical analyses (de Haas 2010). Although flagging the tendency for neoclassical models to neglect extra-economic factors shaping migrant decision-making (de Haas 2010), there is little critique of the assumptions of rational choice theory or the primacy of income differentials in determining the ‘push’ and ‘pull’ forces from which migration supposedly arises. For de Haas, it is a failure to sufficiently consider the contextual factors and complex social relations surrounding migration that accounts for the undue optimism of neoclassical theory, not the internal logic of the model itself.

The opposite is true of his critique of ‘pessimistic’ historical-structuralist theories, whose deficiency is deemed to be ontological: an alleged disregard for migrants’ agency and social contributions by predetermining that migration is unilaterally negative (de Haas 2012). In making this claim, de Haas portrays historical-structuralist theories as having a rigidity beyond what is articulated within the theories themselves. Structures of capital are ascribed a law-like determinacy quite at odds with the historical inductive methodology that informs such approaches. Simplified as such, the historical-structuralist stance appears to make very definitive claims to migration outcomes – for example, brain and brawn drains, increasing inequality, non-productive remittance use and inflation (de Haas 2007) – that stand to be invalidated by heterogeneous empirical evidence. Thus ‘pessimistic’ historical-structuralist theories come to represent an equally axiomatic pole to the ‘optimistic’ neoclassical approach and an opposing swing in the pendulum metaphor.

According to de Haas, ‘the fundamental question is, therefore, not whether migration has either positive or negative developmental impacts, but why migration has contributed to development in some communities and much less, or even negatively, in others’ (2007, 7). In answer, de Haas argues the need to centre the pendulum on a contextually nuanced approach that can better accommodate diverse empirical findings that underscore the complex realities of migration. In the NELM de Haas identifies an approach that purportedly avoids the ‘simplistic opposition between optimistic and pessimistic views’ (de Haas 2012, 15–16) by drawing attention to a diversity of development contexts, the relative constraints within each determining the potential for positive or negative outcomes from migration. Yet the conclusion that ‘the extent to which migration can play a positive (or negative) role … fundamentally depends on more general development conditions’ (de Haas 2012, 16) tends to corroborate, more than contest, historical-structuralist perspectives. Historical-structuralism does not contend that migration is a priori negative, but rather recognises that migration is interlinked with, and tends to compound, underdevelopment in peripheral regions of the global economy that are already disadvantaged by historical structures of capitalism. As a body of theory, it does nothing to obfuscate or diminish the contributions of migra...

Table of contents

• Cover Page
• Half Title Page
• Series Page
• Title Page
• Copyright Page
• Table of Contents
• List of illustrations
• Acknowledgements
• Introduction
• 1 The history of migration-development
• 2 The political economy of uneven development in Sri Lanka
• 3 In search of the ‘good life’: uneven development and forced migration
• 4 The cost of being exploited: fees, debts and the merchants of labour
• 5 Manufacturing success: status and the re-socialisation of migrant labour
• 6 Remittances and the financing of uneven development
• 7 The unequal ‘wins’ of temporary labour migration
• Conclusion: migration-underdevelopment
• Index