Remittances and Latin America

Last year Latin American and Caribbean migrant workers sent back about $53 billion to their countries in remittances coming mostly from the United States and Western Europe, according to a survey released by the Inter-American Development Bank.

“About 75% of [Latin American and Caribbean] remittances are sent from the United States (US$40billion) while remittances from Western Europe, particularly, Spain, Italy, Portugal, and the United Kingdom now account for almost 15% of the market (US$7.5 billion),” the survey reads.

Latin American and Caribbean countries get more money in remittances than any other region in the world. And this vast sum of money dwarfs other cash inflows.

“This amount exceeded, for the third consecutive year, the combined flows of all net Foreign Direct Investment (FDI) and Official Development Assistance (ODA) to the Region,” according to the survey.

Roughly a third of the money went to Mexico. The second biggest country share was Brazil’s–slightly more than 10 percent.

Andean countries (Colombia, Ecuador, Peru and Bolivia) got more than $9 billion, about 15 percent of the total, the same as Central America.
As the U.S. Congress deals with immigration, any decision is bound to affect not only people in the States, but across the Americas as well. Money from migrants is a substantial part of many economies.

For six countries–El Salvador, Guyana, Haiti, Honduras, Jamaica and Nicaragua–remittances represent more than ten percent of GDP. Another six–Belize, Bolivia, Dominican Republic, Ecuador, Guatemala and Paraguay–get remittances that account for between five and ten percent of GDP.

Fifteen countries get more money from remittances than from tourism. The list includes the two biggest economies in the region, Mexico and Brazil.
For El Salvador, Guatemala, Honduras and Nicaragua, money from workers abroad is more than 50 percent of exports. In Haiti and Jamaica the value of remittances exceeds that of all exports.

Remittances to Argentina rose almost eightfold, from $100 billion in 2001 to $780 billion last year. “It is estimated that more than 250,000 people have left Argentina since the economic crisis of 2001. Migrants’ main destinations of choice have been Spain, Italy, the United States, and Israel. Except for the U.S., those countries were preferred due to ancestral ties,” according to the survey. And last year for the first time more money came in from Argentinians abroad than flowed out from foreigners working in Argentina.

Likewise, many left after Ecuador’s banks collapsed in 1999. “In the last four years, an estimated million Ecuadorians left their country for Spain, the United States, and countries in Central America,” the survey reads. “Remittances are the second largest financial source from abroad, after oil exports, and equaled to 170% of banana exports in 2005.”

In Mexico, despite the U.S. border crackdown, money from workers abroad increased 50 percent since 2003 and more than doubled since 2001. Even with high oil prices, in 2004 remittances reached 70 percent of oil exports.

Overall, remittances to the region grew roughly 130 percent in four years, from $23 billion in 2001.