This article examines the role of family remittances in Central America, analyzing two dimensions of the flows—macroeconomic and household—identifying the links between these flows and development through finance, and offering recommendations to leverage these flows to mitigate shortcomings in the region’s economic growth. 

Over the past thirty years, family remittances have emerged as the most significant economic activity among migrants, making a substantial contribution to the development of their home countries. These person-to-person private financial flows, directed to families back home, bring numerous benefits of their own.¹

Central American migrants have sent money to their relatives for decades. Largely due to an outdated model of economic growth that fails to deliver substantial wealth to their societies, many have migrated to support both their families and themselves. 

Leveraging remittance flows through financial access, education, and investment would enhance economic development, benefiting entire communities and reducing the desire to migrate. The urgency of scaling up this strategy would alleviate economic disparities and prevent future migration—particularly as migration is slowing down in the short term, and remittances may decrease as well. 

A. Migration and Remittances 

Migration from Central America has increased over the past decade, primarily due to various factors associated with different forms of state fragility. These factors have influenced the decision to migrate. For instance, a 2019 study by Creative Associates showed that 25 percent of individuals from these countries considered emigrating. In 2021, in El Salvador, this number increased from 24 percent to 36 percent.²

As of 2024, the intention to migrate continues to exhibit a double-digit trend, with remittances playing a crucial role.   

Generally, people who have considered migrating report being exposed to difficult economic situations and having been victimized to a greater extent than those who have not considered emigrating. They also have larger transnational family ties than those who have not thought about migrating.³

Across the region, the individual experiences and characteristics associated with thoughts of migrating include being young, living in a low-income household, being a low-skilled or informal worker, being unemployed, being a skilled worker with at least a high school education, having an unfavorable outlook on the future economic situation, having been victimized, and having transnational ties. Young people are twice as likely to consider migrating as their older counterparts.⁴

A range of economic issues influences whether residents from these countries consider migrating. Living in a household earning less than $400 per month that can’t make ends meet makes people 1.24 times more likely to consider migration. Believing that conditions are worse today than they were last year makes people 1.67 times more likely to think about migrating.

Labor market conditions also matter, particularly for those working in the informal economy or in agriculture. Regarding transnational ties, having a relative abroad does not increase a person’s likelihood of considering migration, but receiving remittances does. In all three countries, receiving remittances holds greater statistical significance than having a relative abroad. However, the statistical interaction⁵ between receiving remittances and having a relative abroad is significant, yielding a 71 percent chance that the person has considered migrating.   

In 2024, a similar study looking at determinants of the intention to migrate pointed out that economic indicators (material or aspirational) continued to correlate with migration. Crime and remittances were no longer correlated to migration. The former because there has been a substantive decline in homicides in the region, and the latter because the pool of remittance recipients has increased, which may dilute variation in migration intent, although the underlying relationship persists. 

However, receiving remittances has become an economic lifeline—and, in many cases, a source of prosperity—for a large segment of the region’s population.

B. Characterizing Remittances to Central America 

The flow of remittances to Central America, which totaled over US$45 billion in 2024, exhibits unprecedented growth, demonstrating at least two key dimensions. First, at the macroeconomic level, they represent 23 percent of the region’s GDP, meaning that one in four U.S. dollars in the national economy constitutes migrant transfers.

This growth in remittances far exceeds the growth in migration, despite the outflow of more than 2 percent of the population since 2018.

Second, person-to-person transactions account for six million households receiving these funds, which increase income and savings while sustaining nearly half of all households in Central America. The tables below indicate more than a tenfold increase in volume over nearly twenty-five years, with significant growth in the post–COVID-19 period, rising from 10 percent of the region’s GDP in 2010 to 23 percent in 2024.

Beyond macroeconomic indicators, it is important to understand remittances in their various dimensions, particularly in terms of the number of senders and the transactions accompanying them to households.

Each migrant remits approximately sixteen times per year, averaging US$240 per transaction until 2016. However, since 2020, this amount has increased annually, surpassing US$300 per send.⁶

In most cases, the money is transferred through a combination of cash and digital transactions, but is typically received in cash at local financial institutions or depository banks. The table below shows that the principal amount sent has increased at an annual rate of 5 percent.

Just as the principal amount remitted has increased, so has the number of remittance senders. This increase is more noticeable during the post–COVID-19 period, when an influx of migration to the United States took place. In four years, the number of senders grew to two million people. Nicaragua alone—due to its political crisis—showed an increase of nearly 400,000 new senders during that same period (see section on Nicaragua below).   

The extent of these person-to-person flows is particularly evident when considering the number of households receiving money compared to all households in the region. In practical terms, while remittances may constitute 23 percent of GDP, today, half of the households in Central America are receiving these flows. In turn, money has a far greater distributive impact than GDP, which often stems from enclave economies with a limited labor force. In the current economic model—shaped on one side by global commerce through free trade dominated by a handful of companies, and on the other by a large informal economy—remittances represent the missing middle. They help mitigate the deficiencies and obsolescence of the prevailing growth approach. 

Sending money to Central America remains a competitive marketplace—often more competitive than other sectors. Migrants rely on more than twenty remittance service providers to send money, sending money either by visiting a physical location to pay in cash or by initiating the transaction electronically through a bank account or a mobile wallet. Half of transactions are initiated and paid in cash, whereas 9 percent are originated and paid through digital methods.^7,8

About Remittances to Nicaragua: The Perversity of Dictatorial Rule

The perversity of repression in the Nicaraguan case has included the expulsion of almost a million people between 2018 and 2024 and set a pattern of sending of money to address their family’s needs back in the country.⁹ Like migration, remittances grew significantly, rescuing their families from the poor country conditions resulting from a regime that neglected to care for the well-being of its population.

The impact of remittances has been significant. First, the volume of money increased by more than 300 percent—from $1.5 billion in 2018 to $5.1 billion in 2024—representing 30 percent of national income. Without the 50 percent growth in remittances seen in both 2022 and 2023, annual economic growth would have been close to 0.5 percent.

Second, these funds have reached nearly one million households, accounting for more than half of Nicaraguans (as of now, there are 1.6 million households in the country). Since 2019, the majority of households receiving remittances have predominantly received them from the United States, resulting in an income that is 150 percent of the average salary in Nicaragua. (The average remittance sent from the United States is more than US$340, sent fifteen times a year.)

Third, remittances provided macroeconomic stability—a fact that the International Monetary Fund has acknowledged, which noted that the country has performed well because of migrant money. Remittances not only created economic relief for most Nicaraguan households during times of political and economic crisis but also indirectly improved the regime’s tax revenue at a time when its tax collection policy relied on extorting businesses. The share of remittances in total revenue increased from 10 to 20 percent. This trend also raised tax revenue and provided an opportunity for the regime to leverage it to exert its strategy of state capture: while people had no other choice but to send their families abroad to look for work and send money, the dictatorship continued its practice of external borrowing to promote investments in public works executed by companies that belong to the family’s circle of power.¹⁰

Overall, across Central America, remittances have exhibited significant growth, signaling important dynamics, mitigating risks in times of economic recession, and building savings.

As the section below points out, remittances are a key factor in addressing economic independence because they foster savings and the ability to formalize them in the financial sector.

C. Financial Inclusion in the Intersection Between Remittances and Development 

Family remittances are part of a process of transactions connected to a value chain that intersect various economic points influencing development. This section explains how remittances go through a series of paths that cut across development, creating a remittance value chain. The remitting process occurs within the context of three broad dynamics, each associated with distinct tracks of economic activity: (1) a commodity for which there is an intermediation, (2) a source of foreign exchange, and (3) a share of household income.

First, the marketplace and regulatory frameworks governing money transfers operate within the context of currency transfers as a good or commodity subject to supply and demand.

Second, because remittances are foreign currency entering the local economy, they constitute a significant portion of national foreign savings. For Central American economies, these flows account for at least one-quarter of all foreign savings.

Finally, remittances as a share of household income should be understood within the context of household expenditure, savings, and investment.

Migrants also engage in a range of other activities including tourism, trade, investment, and philanthropy.

• These dynamics form a value chain linked to both economic and social development.
• Regulation and the marketplace
• Remittances and foreign exchange
• Remittances, household income, and assets
• Other economic activities in the migrant value chain: tourism, trade, transportation, telecommunication, transfers of donations

The influence of money transfers on economic development has effects on the well-being of those sending and receiving remittances. “Development” here refers to the context and factors that transform the human condition of people, including elements that create better standards of living, such as education, asset building, and health. According to the United Nations Development Program (UNDP), development is: “about creating an environment in which people can develop their full potential and lead productive, creative lives in accord with their needs and interests” (UNDP 2006). A working definition of development may be understood as a condition that enables individuals and society to enjoy a healthy quality of life, be free, have opportunities for upward mobility, and improve their material circumstances.¹¹

A central way to understand the relationship between remittances and development is to explore how these transfers influence livelihoods and assets through income and expenditure of migrants and families, and, in the aggregate, have an effect on national economies. Using financial transactions as the unit of analysis, of which remittances are part, one can identify the ways in which basic household economic activities, such as expenditure, savings, and investment, are influenced by the outflow and inflow of migrant earnings into the receiving household. In this way, remittance transfers appear as part of a value chain that influences income, expenditure behavior, and asset building among migrants and families.

Overall, these transfers represent a share of immigrants’ earnings and a regular expense resulting from family obligations. The transaction itself represents a financial transfer that adds value to an immigrant’s credit scoring, or financial access in some cases.

As such, the transfer relies on an intermediary business known as a remittance service provider to perform the transaction. Currently, over 40 percent of transactions originate digitally or through an electronic payment mechanism, while the rest continues to be transferred in cash.

In the vast majority of cases, more than 80 percent of payments are made in cash. Regardless of how the money is received, remittances enable receiving household members to escape poverty and significantly contribute to building their assets. Specifically, remittances increase disposable income, which in turn creates conditions for people to raise their expenses, save, and invest.

Remittances, household income, and assets

Money transfers influence the development and well-being of those receiving remittances, and this influence is reflected in the last mile of the value chain. In most countries, recipient families demonstrate a positive relationship between receiving remittances and financial activities: transfers increase disposable income, which in turn boosts household savings.

Moreover, the greater the transfers received, the more families have savings, bank accounts, and are engaged in other financial activities. When the supply of financial services meets demand, the local economy can better absorb these flows, allowing them to be reinvested in local communities.

The significance of remittances and disposable income lies in their effect on savings. The accumulation of savings is a central component in achieving financial independence. Financial independence is realized as individuals can meet five goals: disposable income, liquid and fixed assets, financial access, and money management. Savings are fundamental to financial independence because they provide the foundation for asset building. With savings, individuals can make smarter long-term purchasing decisions, navigate sudden changes in their financial situation more easily, and plan more effectively.

Savings accumulation provides individuals and households with additional stability and can lead to other beneficial financial behaviors, including investing and using formal financial services. As income increases, so will savings. In this context, examining the experiences of remittance recipients reveals that as people receive remittances, their income increases, creating disposable income. Through remittances, these recipients can increase their income by at least 90 percent.¹²

These increases, in turn, lead to greater savings or savings accumulation.

However, in most cases, savings are more likely to be stored outside the formal financial system rather than in a financial institution.¹³

The table below illustrates these facts, particularly in Central America. Nearly 60 percent of people save, and those who save tend to receive more remittances; furthermore, those receiving remittances tend to save higher amounts. However, in most cases, their money in a financial institution is limited.

The data shows that at least four in ten remittance recipients do not own a savings account.¹⁴

However, this disparity is more pronounced among women, even among those receiving remittances.

Therefore, a key development goal is to increase financial access to remittance recipients, and particularly to women to balance savings capability with formal financial access.

D. Leveraging remittances for development: some recommendations 

This article recommends that it is essential to leverage remittances by formalizing savings among remittance recipients and mobilizing these savings through the financial sector for credit to businesses in the local economy by way of tackling the informal sector as well as new strategic sectors such as those associated to the knowledge economy.

Given that a determinant of migration is working in the informal economy and sending money helps mitigate the low earnings from that sector, the vast informal sector could receive more attention.

The informal economy comprises more than two-thirds of the labor force and the business sector combined. It is euphemistic to refer to the private sector in Central America when most enterprises consist of one-person businesses whose earnings do not generate substantial wealth—typically less than the equivalent of two minimum wages.

At the same time, addressing informality has proven difficult and largely unsuccessful: Central America has not managed to reduce the size of its informal sector in the past forty years. It is a systemic, chronic problem that cannot be resolved through a single strategy, as it is closely linked to human capital. Those in the informal economy are generally unskilled, uneducated, and underpaid, rendering them uncompetitive.

Keeping these issues in mind, the article proposes several areas of policy intervention that can together generate savings, which can be mobilized into credit to finance thousands of businesses and jobs, ultimately producing higher revenue.

The proposed approach consists of using financial inclusion among the six million remittance recipients—leveraging the region’s human capital to (a) increase its competitive capacity across informal and formal businesses, (b) formally employ its labor force abroad, and (c) use migrant foreign savings (savings derived from remittance recipients’ income) as a financing base.

This effort seeks to invest in the region’s human capital by digitalizing and modernizing the informal sector, increasing financial access for formal businesses, and promoting knowledge entrepreneurship as a means to offer educational services.

A. Savings formalization among remittance recipients on a nationwide scale 

The flows in remittances generate disposable income for at least 6 million households (in a region with 11 million households). Moreover, because remittances increase disposable income, they also increase savings and offer opportunities to build wealth.

However, to date, opportunities to build wealth have primarily been pursued through migration due to limited incentives for investing savings. During the pandemic, those who stopped receiving remittances were more likely to migrate, resulting in a significant outflow of migrants between 2021 and 2023.

Thus, motivating them to invest their income into savings is a central element of economic development.

A development perspective and an approach to mitigating the source factors of migration and growth include leveraging all sources of wealth that can contribute substantially to increasing earnings. Therefore, it is important to integrate the economic contributions of migrants, such as remittances, to link them to strategies for asset building–particularly local savings formalization and mobilization (through financial education and credit), digital financial access, and investments in human capital, like education.

Migrant investments, donations, and remittances can be leveraged to build both human and economic capital in those more migration-dependent countries and localities. There is a critical remittance and migration-related value chain associated with savings: its formalization and the opportunities it offers for asset-building.¹⁵

Several experiences suggest that the increase in disposable income from remittance transfers enhances savings capabilities.¹⁶ Our research and work in the Central America region show that person-to-person financial advising can help formalize savings among at least 20 percent of remittance recipients annually. Formalizing savings not only helps people to build wealth (which is negatively correlated to the intention to migrate)¹⁷ but also helps communities by making capital available for local entrepreneurs, informal or formal.

In formalizing savings and mobilizing them into credit in the local economy, entrepreneurs will access a new competitive and productive space. At the core of savings mobilization is the targeting of entrepreneurs in a largely informal and uncompetitive setting. The informal economy lies at the intersection of underdevelopment, the root causes of migration, and migrant capital.

In this sense, expanding credit to new sectors, such as education and skills development, for which no substantive financing has existed before, will increase productivity.¹⁸

A case study: Savings Formalization as Financial Inclusion in Guatemala¹⁹

Interventions providing financial advice demonstrate that economic vulnerability²⁰ is a persistent issue that women, youth, people in rural areas, and in the informal economy confront, but that remittances mitigate such vulnerability temporarily.

Despite economic vulnerability, people save, regarding their income condition, and that remittances increase their disposable income, promoting financial inclusion through financial education helps reduce economic vulnerability and increase the chances of building assets. Asset building can contribute to protecting against external shocks but also support their economic position once remittances end: the remittance cycle typically lasts 15 years.

The following case study is based on research conducted in various countries worldwide and particularly highlights the experience of women remittance recipients in Guatemala regarding financial advice. Utilizing financial advice as a tool for inclusion, nearly 20 percent of individuals in Guatemala formalized their savings after receiving one-on-one counseling—that is, almost two in ten beneficiaries formalized their savings at a participating partner financial institution, impacting about 36,000 individuals annually.

The financial intervention increased savings formalization among homemakers, leading women to deposit more than half of their stock savings. Notably, three months later, income increases among women who formalized their savings exceeded 30 percent.

As these numbers show, financial advising efforts have a development impact, especially among women, so far as they are the majority receiving support (64 percent of all beneficiaries), and can build assets or strengthen their asset capabilities, expanding into a wider savings base.

The analysis conducted included a logit regression model to explore the impact of financial advising on conversion by looking at four factors:

• Amount in savings
• Vulnerability
• The decision to adopt or own a savings account
• Response to evoking gratitude

The results show that those less vulnerable are more likely to formalize their savings.

Additionally, anyone who decides to open an account and whose sense of gratitude was evoked, regardless of how much savings they have, was also likely to open a savings account. This result confirms that financial advising contributes to building assets among groups in society. Those who decided to open a bank account and experienced gratitude are between 1.6 and 2 times more likely to formalize their savings. The amount of savings is not statistically significant, and those less vulnerable are 0.7 more likely to formalize their savings.

The Intention to Migrate and Savings Formalization

One critical insight and lesson from this work indicates that the percentage of those who formalize savings with the intention to migrate is lower (14 percent) than that of those who do not formalize savings (15 percent). Those with the intention to migrate tend to be of Mayan descent, male, or individuals who have recently started receiving remittances or are in the informal economy. Our research has suggested that formalization correlates negatively with the intention to migrate.

B. Tackle the informal and unemployed labor force, mobilizing savings into credit for entrepreneurs 

Mobilizing formalized savings into credit to modernize informal microenterprises is a key development strategy. Economic performance in the region is shaped by low productivity levels associated with a large number of businesses and workers operating informally. Most businesses are unipersonal enterprises functioning in saturated merchandise markets, lacking municipal or government registration (largely due to excessive financial and time-related costs), facing no access to financing, having no significant links to value chains with limited market access, and contributing no taxes. Consequently, government revenues are low, and competitiveness is severely limited, resulting in nearly zero profit margins for these businesses. Thus, economic growth is structurally constrained.

Despite evidence showing that business formalization increases employment and revenues,²¹ oftentimes governments, donors, and the private sector struggle to focus on this issue systematically and strategically. However, any approach to economic development and mitigating migration depends on establishing a firm strategy of business and labor formalization. At a minimum, a development strategy should focus on ways that formalization maximizes revenue opportunities.

A conservative approach would focus on mobilizing formalized remittance savings into investments to support a certain number of microenterprises in order to enhance their competitive capacity, particularly in high-migration areas.

As the table shows, there are fewer than 800,000 formal businesses and 3 million informal ones. A modest effort to formalize a fraction each year would increase wealth regionally. The strategy should focus on those more likely to succeed as revenue-generating business operations, with the goal and capacity to create one additional job. Thus, at the national aggregate level, they could absorb one out of five new workers entering the labor force.

A focus on the informal sector is necessary and urgent, particularly since economic growth has not increased following the pandemic.

Central to the region’s economic development and migration mitigation is a stabilization program that targets a critical mass of the labor force, its private sector, and the most vulnerable populations. Businesses in the informal economy make a small contribution to national income but employ more than half of the labor force. Modernization of entrepreneurship is essential to help societies adapt to the changing dynamics of the post-pandemic period, which has intensified the focus on working in knowledge and digital economies.

One key area of attention is further integrating businesses into the digital economy, such as through financial payments (the low hanging fruit of modernization), and internet-based data storage and processing across all economic sectors and intermediaries (such as money, information, or connectivity). Skills training and technical and financial support should be aligned to strengthen workers and businesses in digital and knowledge economies, ensuring that microenterprises can access digital tools. See section below.

C. Increase economic complexity: invest in the knowledge economy 

Promoting a more qualified labor force through training in key areas and strengthening the knowledge economy is a central step of economic development and to mitigate migration as a necessity. Central America’s challenge is partly associated to its limited economic complexity, which today is in fact at the core of productivity and wealth.

According to Harvard’s Center for International Development, economic complexity is a “measure of the knowledge in a society that gets translated into the products it makes. A country is considered ‘complex’ if it exports not only highly complex products (determined by the Product Complexity Index), but also many different products. The more complex a country’s economy, the stronger its infrastructure and the more adaptable it is to market changes.” As mentioned above, the region’s integration to the global economy has concentrated in activities that still are enclaved or whose labor force has not adopted all that capital to compete in national scale. Specifically, the country’s ability to produce complex outputs is still quite limited. Looking at its exports, a central measure of economic competitiveness and complexity, Central American exports are concentrated in a few economic activities (90 percent of the region exports to the U.S. are comprised of no more than 10 commodities, textiles capturing more than half of such total exports).²²

In fact, according to the Index of Economic Complexity, in 2022 Guatemala, El Salvador, Honduras and Nicaragua are ranked 74, 67, 97 and 112 out of 145 countries, that is, is countries with limited economic complexity (compare Costa Rica ranked in 50 place).

Investments in the knowledge economy can contribute fundamentally to reducing the lack of complexity and reduce the informal economy. Using formalized savings to promote investments in the knowledge economy offers a great opportunity for development.

This perspective of investing credit (leveraged from remittance savings) in services in the knowledge economy is fundamentally important because it addresses various strategic needs; specifically, it tackles both low productivity (which yields low incomes, typically below US$400 a month) and highly informal economies—both statistical determinants of out-migration and poor economic growth.

Such approach integrates migrant capital investment and savings from remittances into the financial sector, further mobilizing these resources for local development in education, skill formation and (nostalgic) trade.

Moreover, making investments in savings and education as a business strategy will lead to an expansion of opportunities to work and compete in the knowledge economy. In a project in Guatemala providing business coaching to 190 microenterprises working in the Western Highlands on knowledge services, the impact on the local economy was substantive. For example, knowledge economy entrepreneurs who received technical assistance to increase their competitiveness exhibited more demand for employment and showed greater income increases. Wages paid by entrepreneurs are 12 percent higher than the average income for employees in other categories of business, and 170 percent higher than the income for an agricultural daily laborer. Furthermore, these businesses on average invest an additional US$7000 to improve their operations.²³

Investing in education to complement the existing public education system in areas of high migration, also tackles those youth at risk of migrating. It is important to realize that a large percentage (over 20 percent) of Central Americans encountered, detained or apprehended at the US Southwest border are minors (over 5 percent of which were unaccompanied minors).

Continuing Inclusion and Development in the Midst of Slowing Migration and Remittances

Leveraging family remittances for development is a critical tool to mitigate structural economic challenges in the region. Economic vulnerability among certain groups, on one hand, and the outcomes resulting from financial inclusion interventions, on the other, highlight the need to scale these initiatives and expand them to broader investments in human capital. By mitigating vulnerability, leveraging remittances can chart a path to financial independence.

Scaling up is essential at a time when migration is slowing down and signals point to a deceleration in remittance flows. Migration figures coincide with a decline in the intention to migrate, largely due to demographic trends resulting from a labor force facing increased economic burdens. The size of the labor force (people ages 15–64) in 2024 relative to the total population is smaller than ten years earlier—or stands at the same level—at an average of 64 percent, where the participation rate in the economy is also under 65 percent. Overall, the size of the labor force would be higher were it not for migration, especially between 2018 and 2023, when 2.5 million people left for the United States, which receives 85 percent of Central American migrants.

Finally, these flows have become the strongest external macroeconomic indicator, surpassing exports in Guatemala and accounting for 83 percent of all exports in the other three countries. Their macroeconomic weight and distributive impact are significant, as evidenced by the tax contribution, which constitutes a substantial 29 percent of total state revenue in Honduras.²⁴

 

Endnotes 

1. International Fund for Agricultural Development (IFAD). Sending Money Home: Contributing to the SDGs, One Family at a Time. Rome: IFAD, 2017. Orozco, Manuel. Migrant Remittances and Development in the Global Economy. Boulder, CO: Lynne Rienner, 2013.

2. Orozco, Manuel. Survey of Salvadorans About Their Intention to Migrate. October 2021.

3. Saliendo Adelante: Why Migrants Risk It All. www.saliendo-adelante.com.

4. Creative Associates. Saliendo Adelante: Why Migrants Risk It All. 2019. www.saliendo-adelante.com.

5. In statistical analysis, two variables interact when a particular combination of variables yields results that would not be anticipated based on the main effects of those variables.

6. Orozco, Manuel. A Commitment to Family: Remittances and the COVID-19 Pandemic. 2021.

7. Includes companies like Western Union, MoneyGram, RIA, Remitly, Viamericas, FelixPago, Dolex, Intermex, and Xoom as the leading remittance service providers handling 90 percent of flows.

8. Includes a network of more than 30 banks in Central America, including Banrural, Banco Industrial, Ficohsa, Atlántida, and Banpro, as well as non-bank financial institutions such as Airpak and Amigo Paisano.

9. Orozco, Manuel. “2025: Menos migración a Estados Unidos, disminución de remesas y la amenaza de deportaciones.” Confidencial, January 2025.

10. Orozco, Manuel. State Capture in Nicaragua. Washington, DC: Inter-American Dialogue, 2024.

11. Orozco, Manuel. Remittances in the Global Economy. Boulder, CO: Lynne Rienner, 2013.

12. Data collection in the seven countries was conducted from 2010 to 2012. Over 81,000 cases were analyzed. See Orozco, Manuel, and Mariellen Jewers. The Impact of Migrants’ Remittances and Investment on Rural Youth. Rome: IFAD, 2019. IFAD Research Series No. 6.

13. Newman, Carol, Finn Tarp, Kathleen Van Den Broeck, Chu Tien Quang, and Luu Duc Quai. “Household Savings in Vietnam: Insights from a 2006 Rural Household Survey.” Vietnam Economic Management Review 3, no. 1 (2008): 34–40.

14. People may take up to ten years to open a bank account. In the early 2000s, fewer than 40 percent of remittance recipients owned a savings account.

15. See, for example, chapter 6 in Orozco, Manuel. Migrant Remittances and Development in the Global Economy. Boulder, CO: Lynne Rienner, 2013.

16. Orozco, Manuel. Understanding Income in El Salvador. Washington, DC: Inter-American Dialogue, 2016.

17. Inter-American Dialogue. Opportunities for My Community Project: A Strategy for Guatemala. August 2018.

18. Financing for education is typically only available for college education in private universities. However, financing education is key to economic growth and development.

19. This section is based on data collected from the Inter-American Dialogue’s work on financial inclusion in Guatemala. It shares findings from interventions offering financial advice to women and remittance recipients in the departments of San Marcos, Quetzaltenango, and Guatemala. Data analyzed for this report comes from the Prosperity and Progress in Intermediate Cities project, which worked with 36,000 beneficiaries between 2023 and 2024.

20. Economic vulnerability measures a person’s lack of economic clout in at least three dimensions: disposable income (typically, having an income above the average), financial liquidity (savings equal to one month of income), and formal financial access (an active savings account from a financial institution). These allow people to leverage income and savings for access to additional capital, such as credit. People lacking one or more of these dimensions are typically vulnerable.

21. Khamis, Melanie. “Formalization of Jobs and Firms in Emerging Market Economies Through Registration Reform.” IZA World of Labor 2014, no. 67 (May 2014).

22. Orozco, Manuel. “The Real Root Causes of the Central American Migration Crisis.” Foreign Affairs, 2022.

23. Coaching interventions have a strong effect on business competitiveness and performance. Business coaching is tailored to each entrepreneur’s needs and schedules. Support typically strengthens knowledge services and technology within the value chain and operations. For example, one tourism entrepreneur increased profits after operating at a deficit by improving cost procedures using Excel forms and acquiring government permits, thus expanding his client base. Another entrepreneur created product combos for low-sales days, turning slower days into profitable ones.

24. Revenue calculations on remittances are based on 95 percent of flows being spent and subject to value-added tax in each country.