Latin American migrants living in the United States will send some $30 billion back to their countries of origin in 2004, according to an estimate released today by the Inter-American Development Bank’s Multilateral Investment Fund (MIF).
The estimate was based on U.S. Census data and the results of an unprecedented survey among Latin Americans in 37 states and the District of Columbia. Around 10 million of the 16.7 million Latin America-born adults in the United States send money regularly to their families abroad.
The results present a profile of these immigrants, whose money transfers vastly surpass all the foreign aid provided to their homelands by developed nations. Remittances typically go to low-income households in economically disadvantaged areas, raising the standards of living of tens of millions of people across Latin America.
At the same time as billions of dollars flow south of the U.S. borders, Latin American immigrants contribute an estimated $450 billion to the U.S. economy, often doing jobs spurned by others. Taken as a whole, this population’s output would rank as the third biggest economy in Latin America, after Brazil and Mexico.
“The dramatic growth of international remittances is testimony to the hard work and commitment of migrant workers seeking better lives for themselves and their families,” MIF Manager Donald F. Terry said at a news conference held at the National Press Club in Washington, D.C. “It also reflects the increasing integration of labor markets across national borders, as the economies of developed countries require the skills and dedication of workers from other countries”.
Findings and patterns
The survey commissioned by MIF and conducted by the Miami polling firm Bendixen & Associates provides the first state-by state breakdown of remittance flows, which largely reflect recent Latin American migration patterns.
The data shows that, while states with large Hispanic populations are still the leading sources of remittances, significant amounts are flowing from states that are not usually associated with Latin American migration.
California ($9.6 billion), New York ($3.6 billion), Texas ($3.2 billion) and Florida ($2.5 billion) lead the ranking, but Georgia ($947 million), North Carolina ($833 million) and Virginia ($586 million) are among the top 10 states.
During the past decade, industries such as poultry processing, meatpacking, hotels, restaurants and construction attracted Latin American migrants to these non-border states and others in the Midwest. As a result, remittances from the Mid-Atlantic region (Virginia, Maryland and the District of Columbia) are over $1 billion a year, largely to countries in Central America and Mexico.
On average, Latin American immigrants send money home once a month, typically in amounts ranging from $150 to $250. Unlike previous surveys among remittance senders, this one found a great number of people who make money transfers more than once a month, probably a reflection of the fact that services have become cheaper over the past few years.
Latin Americans in “non traditional” states are more likely to send remittances than those living in traditional destination states. Recently arrived individuals earning low wages are more likely to send money to their home countries than their more established counterparts. Nevertheless, a majority of respondents said they have been sending money for more than five years.
Nearly eight in 10 remittances senders use money transfer companies. Others use informal couriers known viajeros, banks and credit union or mail. Only half the Latin American immigrants have bank accounts.
According to the responses, 24 percent of the interviewed were U.S. citizens, 39 percent were legal residents and 32 percent are undocumented. The survey was based on 3,802 interviews conducted between January and April. The states and the district covered in this survey represent more than 99 percent of the population of Latin American-born adults in the United States. It did not include Haitians and immigrants from the English-speaking Caribbean.
MIF and remittances
MIF, which promotes the development of the private sector and efficient markets in Latin America and the Caribbean, has been studying remittances since the year 2000 to gauge their economic and social impact in the region.
Its initial research focused on the big fees Latin American migrants were paying to send money home. Over the past few years, competition among services providers, which now include major U.S. banks, and new technologies have helped bring down costs considerably.
MIF is currently financing projects to help Latin American credit unions and microfinance institutions enter the remittances market, assisting them in forging partnerships with service providers in industrialized countries and in improving their technology and training.
Remittances can provide these financial institutions an alternate source of revenue to expand their lending to microentrepreneurs and small businesses and to offer the families that receive these money transfers more options for savings and investments.
According to Terry, remittances could be a key to “financial democracy” in Latin America, where banks have traditionally been open almost exclusively to upper and middle class clients.
The Inter-American Development Bank is the leading source of long-term multilateral financing for social and economic programs and projects in Latin America and the Caribbean. Its 26 borrowing member countries hold a majority of the voting power. The United States is the largest shareholder among the IDB’s 20 non-borrowing member countries.