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 Business News | October 2007 
Immigrants Sent $68 Billion Home in 2006: Study
 Caribbean360.com
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Over 29 million people emigrate abroad from Latin America and the Caribbean; and for small and economically dependent countries migration constitutes one quarter of their population. Until recently, the United States was the main destination; however, increasing migration to Europe and intraregional mobility has changed this pattern. Italy and Spain are two of the main destinations in Europe, whereas Argentina, Costa Rica and the Dominican Republic are the main intraregional places of destination.
Latin America and the Caribbean received US$68 billion in remittances in 2006, mostly going to Mexico, which received US$24.3 billion. South America follows, receiving nearly US$24.2 billion. Though the region's economy is volatile and experiences boom-and-bust cycles, remittance flows have remained steady for many years. Transfers are on average 20 per cent of income per capita, although in some Central American countries such as El Salvador this number is higher. On a macro level and as a country's average in Latin America and the Caribbean, remittances equate to 3 per cent of GDP and 13 per cent of exports.
Remittances sent to rural regions represent about one third of all flows. These amounts have been increasing as migrants move to different parts of their home countries. An interesting example is Mexico: remittances from the State of Chiapas are the fastest growing in the nation and most of them are sent to rural areas. However, the percentage of remittances to the rural areas of Latin America is greater among migrants working within the region in neighboring countries. Bolivians in Argentina are predominantly rural migrants who send money to areas near main urban centres. Nicaraguans in Costa Rica transfer money to the southern parts of their home country.
Money transfers to Latin America and the Caribbean today are predominantly, if not exclusively, processed by licensed money transfer operators. Over the past three years other competitors (within the United States and Spain to Latin America corridors) such as banks and card-based operators have emerged as players offering account-to-account transfers. However, within intraregional corridors, significant informality in fund transfers still exists. The cost of sending remittances to this region is among the lowest in the world, averaging 5 per cent to send US$200, largely because of the extent of competition.
As in other parts of the world, financial access in Latin America and the Caribbean is relatively poor, even among recipients of emittances who tend to save more; and, with some exceptions, there is little access to formal banking institutions. Credit unions and microfinance institutions are stepping in to offer services to recipients and thus increase the cross-sale of financial products. The end result is greater financial intermediation and transformation among clients. Examples include Mexican rural banks (Cajas Populares), or Jamaican building societies, which benefit thousands of clients. |
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