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Remittances and aid in small states: the stability trap

Naren Prasad and Swetha Ramachandran

Published
28 Jul 2026

Remittances stabilise households from below; aid stabilises governments from above. Together, they may trap small states in a fragile equilibrium that softens the pressures for reform. Are aid and remittances reducing dependence, or just helping small states manage it more comfortably?DisclosureThe views and opinions expressed are those of the authors only and do not necessarily reflect the position of their employers.About the author/sNaren PrasadDr Naren Prasad is an economist and Head of Education and Training at the International Labour Organization in Geneva. He has held senior roles with UN agencies including UNESCO and UNRISD. He holds a PhD in Economics from Université Panthéon-Assas (Paris, France).Swetha RamachandranSwetha Ramachandran holds a PhD in Political Science from The Graduate Institute of International and Development Studies, Geneva. Her doctoral research focused on the political economy of donor behavior and aid allocation.

Remittances stabilise households from below; aid stabilises governments from above. Together, they may trap small states in a fragile equilibrium that softens the pressures for reform. Are aid and remittances reducing dependence, or just helping small states manage it more comfortably?Disclosure The views and opinions expressed are those of the authors only and do not necessarily reflect the position of their employers. About the author/s Naren Prasad Dr Naren Prasad is an economist and Head of Education and Training at the International Labour Organization in Geneva. He has held senior roles with UN agencies including UNESCO and UNRISD. He holds a PhD in Economics from Université Panthéon-Assas (Paris, France). Swetha Ramachandran Swetha Ramachandran holds a PhD in Political Science from The Graduate Institute of International and Development Studies, Geneva. Her doctoral research focused on the political economy of donor behavior and aid allocation.

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Indexed from Devpolicy Blog · fetched 28 Jul 2026 · last updated 28 Jul 2026.

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