Small island states are increasingly characterised by the growing role of international migration and remittances as components of national and household incomes. Recent household-level survey data on migration and remittances in two Pacific island states, Fiji and Tonga, demonstrate that where formal social protection systems are largely absent, migration and remittances can perform a similar function informally, contributing significantly to development objectives. Remittances also have a positive effect on poverty alleviation and wealth creation, although the impacts on income distribution are mixed. From a policy perspective, these informal social protection and poverty alleviation mechanisms may be more effective in promoting development than policies designed to incorporate remittances into the formal financial systems. Migration and remittances play an increasingly valuable role in small states where domestic development opportunities are limited.
This paper addresses the extent to which migration and remittances contribute to development through both the provision of informal social protection, and to the reduction of poverty and inequality, in two small source countries: Fiji and Tonga. Both countries exemplify the development challenges facing small, highly vulnerable Pacific island states, lacking in formal systems of social protection. The paper also examines the extent to which remittances contribute to the accumulation of wealth thereby providing recipient households with a more secure source of ‘permanent’ income to act as a buffer in times of hardship.
The paper reports results from survey-based research undertaken by the authors in Fiji and Tonga. It also draws from a number of previously published papers we cite, which address specific and more narrowly defined aspects of remittances in each of the two countries, where attention was primarily given to the more technical and methodological aspects of the economic and statistical analysis. This paper also synthesises the results from earlier papers, bringing together for the first time the authors’ findings in the context of the broader social-science literature on migration and development in the South Pacific, including effects on poverty, inequality, wealth, human capital, and social protection.
