- The Washington Times - Tuesday, October 22, 2002

The tens of billions of dollars being sent by family members in the United States to relatives in Latin America and the Caribbean become a primary catalyst for economic development there.

The trend has become especially pronounced during the past five years, and within the next decade, remittances to the region could reach an annual sum of $300 billion, according to recent estimates by the Inter-American Development Bank.

This transfer of capital back to Latin America and the Caribbean will factor more heavily into the economic fabric of the region and also into political changes in the years to come, analysts say.

"During the year of 2001, immigrants that originated from the Latin America and Caribbean region sent an estimated $23 billion to their respective countries of origin, a quantity that surpasses the normal flow of foreign aid to that region," according to a report from the Multilateral Fund of Investments, which was presented in Kingston, Jamaica, last month at a conference.

The event was organized by the fund, a body that was created in 1993 and operates under the auspices of the Inter-American Development Bank.

This meeting of the financial body, which aids in financing the private sector in Latin America and the Caribbean, brought together specialists from the region who debated the economic effects of increasing remittances.

This vital contribution to the economies of the region was discussed in light of the recent economic crises in Argentina, Brazil and Uruguay. The analysts said the money is having a positive effect on the region's macroeconomic and political stability.

According to data from the development bank, the sum of these shipments represents a third of the foreign capital that this region annually receives.

Furthermore, in some countries the total surpasses the revenue that is generated by exports, tourism and other national economic sectors.

In 2001 Mexico received the greatest amount from its citizens living abroad: $9.27 billion. This equaled the annual revenue stemming from the country's tourist industry, which is one of region's most profitable.

Remittances also matched the value of Mexico's agriculture exports and represented two-thirds of the gains coming from the oil industry, which is monopolized by the oil giant Pemex.

In addition, in at least six countries Haiti, Nicaragua, El Salvador, Jamaica, Ecuador and the Dominican Republic total remittances sent exceeded 10 percent of gross domestic product.

The greatest effect in these countries is seen in Haiti, where the sum is about 17 percent of national production, while that of El Salvador, Nicaragua and Honduras is about 13 percent. And in Ecuador, the Dominican Republic and Peru, this sum is an even 10 percent.

In general, most of the people from Latin American and the Caribbean residing abroad who send money home live in the United States and, to a lesser degree, Western Europe.

The rising trend of remittances is being achieved even though the jobs that these immigrants typically hold are low paying. Some have to work two or three jobs to be able to survive.

Nevertheless, immigrants to the United States are able to send an average of $200 to $300 monthly to their families.

According to the data from the development bank, six out of every 10 Latin American residents in the United States have been sending monthly aid to their native countries for the past five years in this fashion.

The assistance that these immigrants provide to their families vary from 6 percent to 16 percent of their monthly income, although this amount also depends on the social and economic situation of their relatives.

Analysts agree that the rise in the amount of aid being sent to Latin America and the Caribbean partially reflects the economic situation prevalent throughout the region.

This precarious economic situation has spawned a higher index of criminal activity in countries like Venezuela and Colombia and recently in Argentina, where urban instability has been accompanied by a rise in unemployment and poverty.

The amount of money sent from the roughly 2.2 million Salvadorans in the United States to their homeland, increased this year by 6 percent. During the first six months of this year, Mexico experienced a 10.7 percent increase.

Other countries that are showing a growth in the amount of remittances are Bolivia, Ecuador, Peru and Colombia.

In addition, it is important to consider the stringent requirements posed by the U.S. Immigration and Naturalization Service because many of the immigrants are living and working illegally in the United States.

Because of their illegal status, many of the immigrants find it difficult to open bank accounts and have to resort to informal activities to send money to their countries. These informal transactions take the form of hand-to-hand exchanges between friends and relatives.

Among the Latin American and Caribbean citizens, Mexican immigrants living abroad sent the most money back to their countries. According to information from the development bank, last year Mexico received $9.27 billion, with Brazil a distant second with $2.6 billion.

However, private Mexican sources estimate the amount reaching that country to be $8.9 billion annually, and a Mexican financial body, the National Commission for the Protection and Defense of the Users of Mexican Financial Services, set the amount at about $6.65 billion in 2001.

Nevertheless, these diverging statistics only express the inexact manner in which these monetary shipments were tabulated.

The reason Mexico and Brazil rank the highest among Latin American and Caribbean countries in the amount of annual remittances is related to the population size of both countries.

According to the fund, a key issue dealing with the maximization of these remittance transfers, is cost reduction, improvement of the time, efficiency and accessibility, and the secure channeling of these funds through credible financial institutions, analysts at the conference said.

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide