Remittances and migration are key factors in economic development in Latin American and the Caribbean. One in three Latin American households has a family member living abroad. Additionally, approximately 70 percent of migrants from the region send remittances home.
On February 27, 2014 the Inter-American Dialogue hosted a discussion on 2013 remittance flows to Latin American and the Caribbean. The discussion featured Manuel Orozco, Senior Fellow at the Dialogue, Dilip Ratha of the World Bank, Pedro de Vasconcelos of IFAD, and Daniel Ayala of Wells Fargo’s Global Remittance Services. Dialogue President Michael Shifter moderated the discussion.
According to Ratha, migrant remittances to the developing world totaled US$410 billion in 2013. A new report by the Inter-American Dialogue, Current Perspectives on Remittances to Latin America and the Caribbean in 2013, found that Latin America and the Caribbean received US$60 billion in remittances in 2013.
However, remittances to the region have not grown substantially since 2007 due to political and economic factors. US immigration rates, and more precisely, mass deportations, have had a significant effect on remittances to Mexico, Guatemala, Honduras, and El Salvador. “This trend is also seen in Spain,” Orozco noted, “where the economic crisis has led to an unemployment rate of 35 percent for Latin American immigrants,” an exodus of migrants, and a consequent decrease in remittances.
Though panelists agreed on the importance of remittances, differences emerged in their priorities and methods for leveraging remittances for development. While Mr. Ratha stated that reducing costs should be a primary development aim, Orozco suggested that financial inclusion programs, such as bankarization and savings mobilization, may be a more efficient means of achieving development goals. Mr. Ayala expressed concern that the greater costs associated with regulation and compliance under the new Remittance Rule would eventually be passed down to migrant consumers.
As labor mobility becomes increasing important in the international economy, remittances are a major economic phenomenon, and the trends identified in this discussion merit close attention by the development community as well as by the private sector.
