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Emigrants from Latin America and Caribbean hailed as major force for economic and social development

The humble, hard-working emigrant from Latin America and the Caribbean, who sends home an average of $250 a month to his family, was hailed as a major force for economic and social development during a two-day conference on remittances that concluded today at the Inter-American Development Bank in Washington, D.C.

Experts estimated that the remittances from 80 million separate transactions - primarily from low-income workers in the United States, Japan, Europe and other countries - now account cumulatively for more than $20 billion a year that is transferred to Latin America and the Caribbean. That amount is expected to cumulatively total $300 billion over the next 10 years.

According to Georgetown University Professor Susan Martin, economists who once considered remittances insignificant are now dramatically changing their views.

She said that each dollar of remittances that an emigrant sends home to his family produces an economic multiplier effect of three to four dollars of economic growth.

Juan Hernández, director of the Presidential Office of Migrant Affairs in Mexico, described the emigrants who send money home as national "heroes." He outlined steps the Mexican federal, state, and local governments are taking to reduce the costs of sending remittances and to channel some of the resources of Mexicans living abroad into local development projects.

Mauricio Granillo, president of the Salvadorian Association of Assistance, said remittances were now being used to improve schools, roads, and medical facilities in rural areas of El Salvador.

Makoko Utsumi, president of the Japan Center for International Finance, said that the hundreds of thousands of Brazilians of Japanese descent who work temporarily in Japan and return home with savings represent not only an important source of resources, but "also of experience."

The returnees have accumulated technical and cultural skills that enable them to serve as intermediaries for attracting greater direct foreign investment into Brazil from Japan, he said.

Donald Terry, the manager of the Multilateral Investment Fund - the host of the remittances conference - said the fund intends to have a demonstration project to benefit every country in Latin America and the Caribbean that has large numbers of emigrants who send home remittances from the United States, Japan, Europe, and other Latin American countries.

The projects will show ways to reduce the cost of the remittances through competition among financial institutions - now those costs are estimated at 15 percent of the amount remitted - and to provide attractive investment opportunities in the home countries of emigrants.

The MIF on Thursday announced the approval of its first remittances project, a $5 million investment in the Fondo Mutuo de Investimento em Empresas Emergentes, a fund that will help emigrants who return from temporary work in Japan to set up small businesses in Brazil.

In other action, Inter-American Development Bank President Enrique V. Iglesias Thursday signed a memorandum of understanding with Mario Laborín Gómez, director general of Nacional Financiera of Mexico, that committed the two institutions to explore ways to offer emigrant communities investment opportunities that will assist the development of small businesses in Mexico.

The MIF, an independent fund administered by the IDB, hosted the remittances conference in cooperation with the in cooperation with the Inter-American Dialogue and the U.N. Economic Commission for Latin America and the Caribbean.

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