A better quality of life?

Remittances have an important role to play in the economic development of a country. Yet their impact is primarily seen at the regional and local level as a source of income to improve the wellbeing of thousands of households in migrant-sending countries.

More than 30 million Latin American migrants live and work abroad. Approximately 18 million live in the USA; 16 million send between US$200 and US$300 back to their families every month.

The Inter-American Development Bank (IADB) estimates that Latin American and Caribbean migrants sent home US$45.8 billion in 2004, making Latin America and the Caribbean one of the highest remittance-receiving regions in the world. Mexico alone received US$16.6 billion in 2004 - more than any other country in the world and a 25 percent increase from 2003. The second largest amounts received in the region were by Brazil (US$5.6 billion) and Colombia (US$3.9 billion).

IADB research shows that remittances have an enormous potential to contribute to poverty reduction and economic development if invested in infrastructure and employment activities, for example, in migrants' home communities.

Research findings include:

• In Central America approximately 90 percent of remittances are spent on basic family needs, including education and healthcare. The remaining 10 percent is saved or invested.
• Households receiving remittances tend to have better nutrition and access to health and educational services compared to households that do not. Remittances improve the wellbeing of those who receive them; they also create a form of social hierarchy between those who receive and those who do not.
• The poorest regions of Mexico are not the main regions sending migrants or receiving remittances.

Mexico provides a good success story

Zacatecas is a state with over 100 years history of migration to the USA and the highest percentage of its residents living abroad of any Mexican state. For over 15 years Zacatecan migrants have been using remittances to finance social infrastructure projects back home, such as drinking water systems, school renovations, electrification and road construction. From 1993 to 2004, Zacatecan hometown associations (groups of migrants from the same community) spent over US$164.8 million from remittances on 1,500 community projects; the Mexican government matched these investments with approximately US$483 million.

In Mexico there is a lot of literature on the social impact of remittances (such as the separation of families or the loss of young men) or on their economic impact (on family finances and the fact that 31 percent of municipalities in Mexico are experiencing significant depopulation). Few studies examine both the social and economic impacts; neither do they look at what the future holds for sending and receiving communities.

Policy implications include:

• Research carried out in the last ten years in Jalisco by the University of Guadalajara and in Zacatecas by the University of Zacatecas shows the need for new public policy that encourages proposals by migrant organisations.
• Support is needed for those most vulnerable to international migration - women, children and the elderly. This requires collaboration between government agencies, educational institutions, non-governmental and international organisations.
• Remittances should not be seen as a substitute for government policy and action. Migrant organisations and the projects they finance with remittances can support regional development alongside government input in the form of training, organisation and finance.

IADB and World Bank figures in this issue of id21 insights differ because the IADB reports remittance flows from more countries in Latin America and the Caribbean than the World Bank.

Rodolfo García Zamora
Universidad Autónoma de Zacatecas, Doctorado en Estudios de Desarrollo, Edificio A de Posgrado, Avenida Preparatoria s/n, Colonia Hidráulica, Zacatecas, C.P. 98065, México
rgarciaz@prodigy.net.mx
www.estudiosdeldesarrollo.net
www.migracionydesarrollo.org

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