Spending less to send more home
Latin American expatriates continue to save for their families abroad despite new economic challenges
John Chen
Issue date: 9/2/09 Section: News/Features
Willie, from Quetzaltenango, Guatemala, is a graduate of one of the country's handful of universities. However, his degree in chemical engineering has largely gone to waste due to a shortage of jobs in his country. Next year, Willie plans to travel to the United States with the hope that he will be able to find a job and send money back to his family in Guatemala. This means Willie will join approximately 12 million other Latin American immigrants in the United States who support their families through international remittances.
Remittances refer to transfers of money by an expatriate to his native country. In the United States, remittances commonly come from male immigrants working construction or service jobs who send part of their wages back to their families in Latin America. Because remittance money is often transferred informally and is therefore difficult to analyze statistically, experts can only estimate that global remittances total over $230 billion, including over $40 billion from the U.S.
According to a 2007 report by Sofia Biller from the University of Iowa's Center for International Finance and Development, almost $50 billion of the $167 billion officially tracked remittances went to Latin America, with nearly $22 billion going to Mexico alone. These remittances well exceed official foreign aid to many developing nations. In fact, remittances account for 54 percent of the GDP in Haiti and $4.3 billion in Guatemala. In the United States, it is estimated that 70 percent of migrant workers remit funds on a regular basis; of these, 60 percent are considered to be living in poverty and half are under 35 years of age.
This year, though, things have changed. Officials at the Mexican central bank have announced that cash remittances sent by Mexicans living abroad fell by 18 percent compared to 2008. Remittances from the U.S. in general are expected to drop 11 percent. As the economic crisis continues, downturns in industries such as construction are largely responsible for this decrease, evidenced by the fact that 12 percent of Hispanic immigrants in the U.S. are currently unemployed.
Despite this, coming to the United States is still often the best choice for many Latin Americans like Willie. In fact, 25 percent of unemployed immigrants still send money home by dipping into their savings and reducing personal consumption. Still, some have speculated that remittance flow may actually reverse directions as families in Latin American countries send money to their unemployed relatives living abroad.
Remittances refer to transfers of money by an expatriate to his native country. In the United States, remittances commonly come from male immigrants working construction or service jobs who send part of their wages back to their families in Latin America. Because remittance money is often transferred informally and is therefore difficult to analyze statistically, experts can only estimate that global remittances total over $230 billion, including over $40 billion from the U.S.
According to a 2007 report by Sofia Biller from the University of Iowa's Center for International Finance and Development, almost $50 billion of the $167 billion officially tracked remittances went to Latin America, with nearly $22 billion going to Mexico alone. These remittances well exceed official foreign aid to many developing nations. In fact, remittances account for 54 percent of the GDP in Haiti and $4.3 billion in Guatemala. In the United States, it is estimated that 70 percent of migrant workers remit funds on a regular basis; of these, 60 percent are considered to be living in poverty and half are under 35 years of age.
This year, though, things have changed. Officials at the Mexican central bank have announced that cash remittances sent by Mexicans living abroad fell by 18 percent compared to 2008. Remittances from the U.S. in general are expected to drop 11 percent. As the economic crisis continues, downturns in industries such as construction are largely responsible for this decrease, evidenced by the fact that 12 percent of Hispanic immigrants in the U.S. are currently unemployed.
Despite this, coming to the United States is still often the best choice for many Latin Americans like Willie. In fact, 25 percent of unemployed immigrants still send money home by dipping into their savings and reducing personal consumption. Still, some have speculated that remittance flow may actually reverse directions as families in Latin American countries send money to their unemployed relatives living abroad.
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