For several decades there has been extensive migration from the small island states of the South Pacific and the eastern Caribbean to metropolitan countries, resulting in absolute population decline in some states and new social, economic and political relationships between these island regions and distant worlds. Early research on the consequences for island development of return migration and remittances dwelt upon the unproductive nature of expenditures and the various problems return migration and remittances cause. Questioning this view, a new conceptualization of the influences of migration, circulation and remittances on recipient families, communities and societies in the island states of the South Pacific and the Caribbean is presented. Regional similarities and differences are recognized, yet commonalities of island microstates' experiences emerge. Remittances are a very significant private transfer of capital and return migrants represent people endowed with human capital, capable of enriching the social and cultural capital stocks of their island communities. In both insular regions, the consolidation of transnational linkages emphasizes the significance of diaspora relations for migrant households at home and abroad and offers some prospects for sustainable development, beyond those offered solely by domestic economic opportunities. Copyright Joint Editors and Blackwell Publishers Ltd 2000.