Remittances and Small-Scale Coastal Fishing in a Developing Country

Abstract

Remittances to developing countries exceed $550 billion annually. Although many poor rural households that depend on these remittances also harvest local common-pool resources, few studies explore this relationship. We develop a dynamic model of a coastal fishing household with remittance income. Remittances increase fishing capital investment if households perceive current consumption to be scarce relative to discounted future consumption. This can occur if households heavily discount the future or expect fishing yields to recover. In an empirical application to a Malaysian fishery, we find that households with greater remittance receipts from family migrants either had larger boats and more hired labor, or were more likely to invest in labor-saving capital equipment. These relationships hold most strongly among small-scale artisanal fishers, who are most likely to be financially constrained and more heavily discount the future. We discuss the implications for broader remittance policies in comparison to traditional fisheries management policies.

Keywords: Remittances, Migration, Investment, Common pool, Fishery

JEL Classification: O13, O15, Q2, Q22