By IPS Correspondents
LA PAZ, Apr 27 2007 (IPS)

Like footballers in Argentina, emigrants start out young, Abdón Linares likes to say about his home province in central Bolivia, where the economy has come to depend heavily on expatriate remittances.

His home province of Cochabamba, an area of highland valleys, is one of the leading sources of emigrants in Bolivia, South America’s poorest country.

The population of Bolivia stands at nine million, while another 2.5 million Bolivians are living abroad, according to Human Rights, Democracy and Development, a non-governmental organisation.

The extremely high proportion of people who leave the country indicates the importance of projects that see emigrants as potential players in the development of their home regions, based on the remittances they send home, which totalled 860 million dollars last year.

A study commissioned by the Inter-American Development Bank’s (IDB) Multilateral Investment Fund and carried out by Bendixen & Associates provided that figure. It also stressed that last year, remittances outstripped revenues from natural gas – of which Bolivia has the largest reserves in South America after Venezuela – by 160 million dollars.

The traditional destinations of Bolivians heading abroad are the United States, home to around 300,000 Bolivians; Argentina, home to more than 250,000; and Brazil, home to some 200,000.

The government of leftwing president Evo Morales has been discussing the need to implement policies that would make use of this significant flow of funds, and channel them into projects to maximise their impact on development, said the Finance Ministry.

IPS received this brief message from the ministry after two weeks of fruitless requests for an interview with Finance Minister Luis Alberto Arce.

In some areas, like Linares’ home province, the income and investment from emigrants have given the local economy a strong boost.

“In these municipalities, where large numbers of local people move abroad, the boost received by agriculture in recent years was due to the investment of money that came in as remittances or was saved up by local people when they lived abroad,” Leonardo de la Torre, a sociologist who has carried out three studies on the diaspora, told IPS.

One of his studies, which focused on the rural towns of Arbieto and Toco in a highland valley in Cochabamba, clearly shows how investment in land and housing, as well as productive capacity, grew as a result of remittances and the money brought back by returning emigrants.

Over the last 15 years, Arbieto and Toco and the surrounding rural areas have become the second-biggest peach-producing zone in the province of Cochabamba and one of the most important in the country. Linares himself, who lived for years in Argentina, is now a peach farmer.

Peach farming “has taken off thanks to the capital of those who emigrated to work in the construction industry in Argentina, and to an even larger extent in the United States, especially since 1990, and the phenomenon does not yet show any signs of slowing down,” said de la Torre.

The construction of 70 two or three-storey housing units in Arbieto – as indicated by the municipal records – was also made possible by the money sent or brought home by emigrants.

Former town councillor Román Belmonte, who also lived and worked in Argentina, told IPS that “I always thought I would return to Arbieto one day, I dreamed that I would return to my country someday, but I always said I had to save up enough money first.”

Economist David Khoudour-Casterás, a researcher of migration issues and remittances in Colombia, underlined to IPS the importance of remittances to the Latin American economy.

The money sent home by Colombians abroad represents around three percent of the country’s gross domestic product (GDP) and is the second-largest source of foreign exchange, after oil and ahead of foreign direct investment and exports of products like coffee or emeralds, he noted.

That inflow of money has helped stabilise Colombia’s balance of payments and has fuelled consumption and construction, although at a high social cost, he added.

According to the Inter-American Development Bank (IDB), day to day expenses absorb 84 percent of the remittances received by families back home in El Salvador, 77 percent in Honduras and 68 percent in Guatemala.

On the other hand, 54 percent of remittances in Brazil and 55 percent in Bolivia go towards investments in general, and real estate in particular, as well as savings accounts and businesses.

By 2005, global remittances had climbed to 167 billion dollars, although unregistered remittances could represent an additional 50 percent, according to the World Bank. Latin America and the Caribbean, one of the main receiving regions, took in 45 billion dollars in remittances in 2004.

But Peruvian expert Teófilo Altamirano pointed out to IPS that although remittances have increased family incomes in the region, they have also “created new social and cultural needs.”

Altamirano also said it was important to be on the alert so that the new inflows of money are not used as an argument by governments to shirk their social spending obligations.

In addition, said Bolivian educator Celia Ferrufino, there are costs that cannot be quantified. She argued, for example, that neither remittances nor relatives can replace or compensate for a parent who goes abroad to work.

“The economic and financial structure generated by the remittances that emigrants send their families make it possible to raise the children who are left behind, but they do not guarantee their integral development,” she said.

As Bolivians emigrate in growing numbers and remittances flow in, the superintendence of banks, the highest-level authority in Bolivia’s banking sector, is now facing the challenge of somehow capturing and harnessing these funds to put them at the service of the productive sector, by channelling them into loans for microenterprise and small companies, for instance.

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