International Capital Flows and Small Business Development: Evaluating the Role of International Remittances

To evaluate the importance of remittances in international capital flows, a burgeoning macro-economic literature has displayed their contribution to national, regional and local economic development. Until now, however, there have been few micro-economic studies of the effects of remittances. This paper fills that gap. The aim is to demonstrate how the remittances from profit generated by an entrepreneur in one country can act as capital for developing business ventures in another country. To do this, in-depth interviews are reported with 12 entrepreneurs, seven in the UK who send remittances to Ukraine to support the development of business ventures and five entrepreneurs operating in Ukraine whose business ventures are supported by international remittances from friends and family. The outcome is a clear display of the role played by international remittances in enabling entrepreneurs to develop their international operations.