Thirteenth Global Studies Conference

Abstract

Why are some countries more prosperous than others? What factors enable a developing country to become a developed country? And can these variables be manipulated? These are some of the most formative questions of our time. From economic development literature has come some basic theories and principles about how economic growth can be achieved, one such thematic area of study is the relationship between natural resources and economic prosperity. However, less attention has been paid to another potential source of windfall profits for a country, remittances. This gap in the literature is significant when you consider remittances account for upwards of 20% of GDP in some countries. In this study, I address this gap in literature by comparing the similarities between the effect of natural resources on economic growth and the effect of remittances on economic growth (both at the individual household level and the national level). By process tracing the effects of remittances in El Salvador and Uruguay, and referencing natural resource literature, I argue that economic prosperity in El Salvador is negatively impacted by the resource curse-like effects of remittances. This holds significance implications for policymakers in high remittance receiving countries and encourages further study into the nuances of the relationship between remittances and economic prosperity. In conclusion, this project, by closely examining the process by which remittances act like natural resources, offers a new and important perspective in modern development literature.