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The Role of Entrepreneurs in Facilitating Remittances in Cuba

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Lessons on Foreign Aid and Economic Development

Abstract

In times of crisis, aid can help those in need. However, given the complex and uncertain environment, aid provision faces epistemic and political limitations. Remittances are a major source of aid that can overcome these challenges because it is decentralized and adaptable. This chapter examines remittances between the US and Cuba since 1993 and finds that remittance senders, recipients, and aid providers act as entrepreneurs by leveraging local, context-specific knowledge and social connections to identify needs and invent new, creative ways to provide aid.

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Notes

  1. 1.

    Quotation from a Cuban citizen from interviews conducted in the summer of 2016 (see note 3 for more information on the interviews).

  2. 2.

    See Coyne (2013) for a systematic approach to the limitations of humanitarian aid. For a discussion on how local knowledge and buy-in from individuals on the ground is important for the effectiveness of development reforms and aid (and the barriers that impede reforms), see Boettke, Coyne, and Leeson (2008). On the role of decentralized and bottom-up solutions to disaster recovery, see Storr and Haeffele-Balch (2012).

  3. 3.

    In-person interviews with 17 Cuba citizens and residents of Havana were conducted in the summer of 2016. The average age of interviewees was 53 and included 7 males and 10 females. The interviews averaged 54 minutes. Interviews were conducted using hub-and-spoke methodology in which the first round of interviewees introduced us to the second round of interviewees, which helped us establish trust while still interviewing a diverse selection of individuals. To protect their identity, pseudonyms are used for all individuals that are quoted in this chapter.

  4. 4.

    Private capital flows are defined as capital investment from non-government sources. The Hudson Institute study also measures private philanthropy spending, which includes donations to foundations and non-profit organizations, volunteering, and corporate giving. By contrast, remittances are defined as monetary flows sent from individuals abroad to recipients in their home countries. For the purposes of this chapter, we also include the discussion of in-kind remittances, or physical goods sent from abroad to an individual’s home country.

  5. 5.

    A competing hypothesis suggests that foreign aid has an “amplification effect” on the country’s existing political-institutional orientation, and would thus make dictatorships more dictatorial (Dutta et al. 2013). In the context of foreign aid flows from rich to poor countries in the Middle East, Ahmed (2012, 2013) found that an increase in remittances was associated with an increase in corruption of politicalinstitutions as well as longer duration of autocratic regimes.

  6. 6.

    For a similar framework applied to U.S. disaster management, see Sobel and Leeson (2007), and applied to community-based disaster recovery, see Storr and Haeffele-Balch (2012) and Storr, Haeffele-Balch, and Grube (2015).

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Authors and Affiliations

  1. George Mason University, Arlington, VA, USA

    Stefanie Haeffele & Anne Lynn Hobson

Authors
  1. Stefanie Haeffele
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  2. Anne Lynn Hobson
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Correspondence to Stefanie Haeffele .

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Editors and Affiliations

  1. University of Wisconsin-La Crosse, La Crosse, WI, USA

    Nabamita Dutta

  2. Mississippi State University, Mississippi, MS, USA

    Claudia R. Williamson

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Haeffele, S., Hobson, A.L. (2019). The Role of Entrepreneurs in Facilitating Remittances in Cuba. In: Dutta, N., Williamson, C.R. (eds) Lessons on Foreign Aid and Economic Development. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-22121-8_13

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  • DOI: https://doi.org/10.1007/978-3-030-22121-8_13

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