Migrant Tenure and the Venture Investment Use of Remittances to Developing Countries

Abstract

We develop and test hypotheses derived from a theoretical framework grounded in agency, social identity, and acculturation perspectives to explain how migrant tenure abroad changes remittance use for venture investment back home in developing countries. Regression and related analyses of remittances to 29 developing countries from 2001-2010 indicate that remittances from migrants residing abroad for less (more) than a year significantly increase venture founding rates (venture-funding availability). We confirm these findings via complementary analyses using novel survey data from remittance senders living in four European host countries. Our results suggest that migrants who reside abroad only briefly retain stronger home-country identity and relationships leading them to remit to agents specifically directed to help found new ventures providing livelihoods to those same migrants upon return. Migrants who reside abroad for many years acculturate more to and identify more with host countries, leading them to remit to home country agents with broader discretion to invest in ventures generating financial and social returns associated with enhancing the welfare of home-country families and communities.

Keywords: entrepreneurship, developing countries, migrants, remittances, social identity, agency, tenure

JEL Classification: F22, F23, F65, G24, J15, J16, M13, O16, O43