Manipulating Remittances: Strengthening Autocratic Regimes with Currency Overvaluation and Remittance Flows

Abstract

This paper investigates the link between remittances and autocratic regime stability. It challenges the prevailing assumption that remittances cannot be directly captured as a source of hard capital by states. It proposes that remittances increase regime durability by incentivizing and enabling currency overvaluation and seigniorage revenue generation in autocratic states that produce non-freely convertible currencies. It uses cross-national time-series data from autocratic regimes in Sub-Saharan African countries from 1975-2015 to test this theory. The analysis shows that remittances increase autocratic regime durability in countries that have monopoly control over domestic currency production.