1. A sustainable poverty-eradication policy boost From Remittance to Microcredit Valentino Piana Paulos Kesete Penang, 5th December 2007

2. www.economicswebinstitute.org Cutting-edge research & implementation consulting Table of contents 4. Advantages at the country level and in the structure of the world 1. Microfinance as a tool for human and economic development 2. The sources of funds for microfinance 3. Remittances: an interesting complementary source of funds 4.1. The structure of power in Asia in 2003 4.2. The main flows of remittances in Asia 5. Conclusions

3. www.economicswebinstitute.org Cutting-edge research & implementation consulting 1. Microfinance as a tool for human and economic development help the poor to help themselves activate the entrepreneurship of the family and the community arrive to places and social groups often overlooked by other financial actors enhance small projects, usually with a low environmental impacts ABOUT 100 MILLIONS OF CLIENTS (SOURCE; MICROCREDIT SUMMIT 2006)

4. www.economicswebinstitute.org Cutting-edge research & implementation consulting 2. The sources of funds for microfinance Microfinance institution Clients International donations Governments finance Loans Remittances Private donations Note that in 2003, remittances were higher than FDI in 66 countries out of 154

5. www.economicswebinstitute.org Cutting-edge research & implementation consulting 3. Remittances: an interesting complementary source of funds Micro repayments Stable flows Efficiency We are already making an experiment in Ecuador Money back Control over use Activate family entrepreneurship Shorter time horizon for coming back home ADVANTAGES FOR MFIADVANTAGES FOR MIGRANTS

6. www.economicswebinstitute.org Cutting-edge research & implementation consulting 4. Advantages at the country level and in the structure of the world New local entrepreneurship International knowledge transfer Improvement in the balance of payments Especially if channelled to microfinance, remittances are systemic countervailing factor to trade domination. ADVANTAGES FOR THE RECEIPIENT COUNTRY ADVANTAGES FOR THE STRUCTURE OF THE WORLD In March 2006, we presented at Princeton University a formalized model of bilateral power among nations

7. www.economicswebinstitute.org Cutting-edge research & implementation consulting 4.1. The structure of power in Asia in 2003 India China Malaysia Singapore Indonesia The Philippines Japan Vietnam Thailand Dependence Dependent Source Interconnection Destination Dependence Dominant Source Interconnection Dominant Destination Interconnection Source Dominance Source Dependence Destination Dominance Mono out Integration Mono In-integration Dominance Dependent Destination Interconnection Integration

8. www.economicswebinstitute.org Cutting-edge research & implementation consulting 4.2. The main flows of remittances in Asia Singapore Indonesia The Philippines Japan India China Malaysia Thailand Vietnam

9. www.economicswebinstitute.org Cutting-edge research & implementation consulting 5. Conclusions Channelling remittances to microfinance is a relevant opportunity. But to influence the structure of the world bold policies are needed. We at EWI are working in two further directions: Proximity international trade Bilateral import promotion We are networking researchers, policymakers & businessmen to foster the change

10. www.economicswebinstitute.org Cutting-edge research & implementation consulting Feel free to write to us! Thank you for your kind attention. pkesete@yahoo.com director@economicswebinstitute