Development & Aid, Economy & Trade, Headlines, North America

ECONOMY: Latin, Caribbean Workers Keep Sending More Money Home

Emad Mekay

WASHINGTON, Feb 28 2003 (IPS) - Remittances by Latin American and Caribbean (LAC) expatriates in rich nations rose by more than 17 percent last year, making the region the world’s leading destination for workers’ transfers, but also highlighting the economic failures that push labour-seekers to more developed nations.

Latin American and Caribbean (LAC) immigrants living in industrialised nations sent more than 32 billion dollars home in 2002, a 17.6 percent increase over 2002, the Washington-based, Inter-American Development Bank (IDB), said Friday.

"The volume of remittances has grown dramatically,” the IDB’s Multilateral Investment Fund Manager (MIF) Donald F. Terry said in a statement. ”The rate of increase nearly doubled in 2002.”

This represents a dramatic hike of an already substantial growth rate in the previous two years, bringing the increase in LAC remittances since 2000 to almost 40 percent.

Remittances to every LAC country, except Bolivia, increased by at least 10 percent in 2002, led by Colombia (28 percent), Jamaica (27 percent), and Peru (24 percent.)

LAC remittances are responsible for more than 60 percent of the worldwide growth in remittances over the past three years, said the Bank.

By volume, remittances to the area already exceed amounts received from official development assistance and almost matched the foreign direct investment received in 2002, it added.

But the increase may not bode well for the already stuttering economies of the region, says Vicki Gass of the Washington Office on Latin America (WOLA).

”That signals the dependence of family members who’ve been forced to leave their countries of origin because of the economic and social situation,” said Gass.

In the region, she added, ”You have very little access to health care and education services, even though in many countries it’s guaranteed by their constitution.”

Of 103 billion dollars sent by expatriates and immigrants to developing countries in 2003, LAC countries alone received about 31 percent, of which 78 percent, 25 billion dollars, came from the United States.

South Asia received 20 percent of the world’s remittances while the Middle East and Africa combined came third at 18 percent.

Japan, Spain and Canada are other major sources of remittance flow for Latin American and Caribbean countries, said the development bank.

According to MIF estimates, if the flows continue to grow at a moderate rate of seven percent a year, Latin America and the Caribbean could receive more than 400 billion dollars in remittances during this decade.

The amounts sent home in 2002 spurred nearly 100 billion dollars worth of economic activity, based on studies indicating a multiplier effect of 3:1, said the IDB.

Manuel Orozco, an economist with the pro-free market think tank The Inter-American Dialogue, said the figures do not necessarily indicate failing economies or dependence on rich nations, and signal only ”in part” an economic recession in workers’ home countries – a view hotly contested by Gass and other development campaigners.

”People immigrate not only because of economic necessity but also because of the fact that you have people all over the world. There are links that already exist,” said Orozco. ”In that sense it’s not an issue of states failing to cover their basic needs.”

But Gass quoted a study by the U.N. Economic Commission for Latin America and the Caribbean (ECLAC) released late last year that found more than 221 million poor people in Latin America, a figure it says is likely to increase over the next 10 years.

ECLAC says that between 1990 and 2001, the number of poor people rose by 10 million at an accelerating rate, as the LAC region witnessed its highest ever equity gaps between rich and poor.

The decade corresponded to ”the period of implementing economic restructuring programmes, as well as starting bilateral trade agreements like the Caribbean Basin Trade Partnership”, said Gass.

Such programmes were inspired by U.S. trade policy as well as economic liberalisations programmes of the World Bank and the International Monetary Fund.

Among other reasons for the large numbers of Latin immigrants is poverty, violence and undemocratic systems, Gass added.

”If you look at the case of Central America, for example, you have two of the poorest countries in the hemisphere: Nicaragua and Honduras,” she said.. ”You have El Salvador, which is one of the most violent countries.”

”If Latin America hadn’t had the remittances, they would have been in even more dire straits because of the economic policies being implemented,” she said.

”There’s an incredible amount of dependency on both foreign direct investments as well as these remittances. It’s a large portion of their GDP.”

According to the IDB, Mexico continued to be the largest recipient in the region, reaping 10.5 billion dollars, or about one-third of the funds transferred to the LAC and eight percent of worldwide transfers.

Central American countries received 5.5 billion dollars, Caribbean countries 5.45 billion and Andean nations 5.4 billion.

In six countries, remittances accounted for more than 10 percent of the gross domestic product (GDP): Nicaragua at 29.4 percent, Haiti (24.2), Guyana, whose diaspora at nearly 600,000 people is almost as large as its population, (16.6), El Salvador (15.1), Jamaica (12.2) and Honduras (11.5).

Latin Americans, says the bank, tend to send between 200 and 250 dollars a month home, except for Mexicans who send at least 300 dollars.