Beyond Consumption: How International Remittances Fuel Physical and Human Capital Accumulation in Rural Indonesia

Abstract

This study examines how international remittances shape long-term livelihood strategies and asset accumulation among rural households in eastern West Kalimantan, Indonesia. Despite extensive evidence on the economic benefits of remittances, limited qualitative research explores how families interpret, negotiate, and allocate these resources within their social and cultural contexts. Using a qualitative case study design, data were collected from 18 participants through in-depth interviews, participant observation, and focus group discussions. Thematic analysis was applied to identify recurring patterns in household decision-making. The findings show that remittances function as the most reliable and stable income source, enabling households to meet essential needs and gradually shift toward long-term investments. Remittances substantially contribute to physical asset accumulation, particularly housing improvements and land purchases, which families perceive as symbols of security and social progress. Significant portions of remittances are also allocated to children’s education, reflecting aspirations for intergenerational mobility. Although some households attempt small-scale enterprises, these efforts often face sustainability constraints due to limited markets and managerial capacity. Remittance allocation is shaped by negotiated decision-making, gendered financial roles, and strong community expectations that prioritize visible investments such as home renovation. The study concludes that remittances operate not only as financial capital but also as social and cultural resources that reinforce identity, aspirations, and household resilience. These insights underscore the need for policy interventions that support capacity-building and enterprise development to maximize the developmental impact of remittances.