Latin Americans send large amounts of money back home

March 27, 2003

Free Market Foundation

Remittances by Latin American “guest workers” employed in Europe, North America and Asia have swelled dramatically in recent years, according to a report from the Inter-American Development Bank. Last year, the amount sent home by the workers nearly equalled the amount of foreign direct investment channelled into Latin America.

Remittance payments sent to Latin American and Caribbean countries topped $32 billion in 2002 up from $23 billion in 2001 and a 60 percent increase since 2000.

Mexico is the leading recipient with $10.5 billion remitted in 2002.

For six countries Nicaragua, Haiti, Guyana, El Salvador, Honduras and Jamaica workers’ remittances accounted for more than 10 percent of gross domestic product.

Analysts had expected the payment totals to drop after the September 11, 2001, attacks as the U.S. economy entered a prolonged downturn and were surprised when they did not.

They were also amazed at the prospect of the trend accelerating and forecast that remittances will likely exceed all direct foreign investment and development assistance, combined, in the next several years.

Source: Joel Millman, Latin Americans Boost Home Coffers, Wall Street Journal, March 17, 2003.

For text (WSJ subscription required) http://online.wsj.com/article/0,,SB104785685524799400-search,00.html
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FMF Policy Bulletin/18 March 2003