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Remittances and their microeconomic impacts: evidence from Latin America
The flow of remittances to Latin American and Caribbean countries is the highest and fastest growing in the world, exceeding foreign direct investment and net official development assistance to the region. Remittances surpass tourism income and almost always exceed revenues from the largest export in these countries, accounting for at least 10 percent of gross domestic product in six of them. Furthermore, remittances are the least volatile source of foreign exchange in many of these economies, thus playing a crucial role in economic development. ; In what follows, I provide a general overview of the remitting patterns of migrants to the U.S. who are from Costa Rica, the Dominican Republic, Haiti, Mexico, Nicaragua, and Peru. Subsequently, I summarize some microeconomic evidence of the impact that remittances have on various spheres of economic development, as is the case with employment, business ownership, education, and health care investments in two LAC economies. These findings underscore the importance of remittances as a resource for the accumulation of human capital investments in education and health and as a determinant of employment patterns in remittance-receiving households in developing economies.
AUTHORS: Amuedo-Dorantes, Catalina
On the remitting patterns of immigrants: evidence from Mexican survey data
Understanding the remitting practices of immigrants has taken on new urgency for banks seeking to tap the potential of this burgeoning market as well as for economists, who note that remittance inflows into developing nations often match or exceed traditional sources of foreign currency earnings. ; To gain an understanding of who remits, how much and why they remit, and what transfer mechanisms they use, the authors review the basic trends in remittance transfers from Mexican immigrants in the United States?who account for about one-third of U.S. immigrants?to their families in Mexico. ; Using survey data from the Mexican Migration Project and the Encuesta Sobre Migracin en la Frontera Norte de Mxico, the authors examine the demographic characteristics and the remittance and banking behavior of Mexicans who have migrated to the United States. The surveys encompass nearly 11,000 documented and undocumented immigrants. ; The authors? analysis indicates that immigrants? motives for remitting to their home communities are at least as varied as their reasons for migrating. Altruism, investment, and mitigating risk appear to play important roles in explaining immigrants? remitting behavior. The propensity to remit seems to be greater among immigrants who are undocumented, those who have left dependents in Mexico, those with lower levels of education and English skills, and the unbanked, the authors conclude. Over the 1993?2000 period, the use of money transfer firms to make remittance payments declined from 77 percent to 66 percent of all transfers while banks? market share increased from 4 percent to 17 percent.
AUTHORS: Bansak, Cynthia; Amuedo-Dorantes, Catalina; Pozo, Susan