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Remittances continue to set records and exceed expectations

In 2003, Mexican emigrants living in the United States have sent home $14.5 billion in remittances.  This amount, 20 percent higher than that predicted by the Mexican government, will benefit about a quarter of the Mexican population.

Mexico is now number one in the world among countries receiving remittances. Actually, Mexico’s remittances have surpassed tourism revenue and foreign investment, becoming the second source of foreign currency after oil exports.

A recent study financed by the Multilateral Investment Fund (MIF) on the recipients of remittances finds that they are reaching “all levels of Mexican society; there has been a substantial increase in the number of middle-class emigrants sending home remittances, and the payments are flowing to every part of the country.”  This assertion contrasts with the usual perception that remittances are exclusively aimed at the poorest social stratum; moreover, it shatters the stereotype of the emigrant as an unskilled worker from the central high plateau, a region traditionally vulnerable to patterns of emigration. Staff reductions in some companies and the effects of globalization are some of the factors causing the middle class to migrate. 

The study, carried out by Bendixen Associates and the Pew Hispanic Center and recently presented at a conference in Mexico, concludes that “remittances are no longer a safety valve; today, they’re a fuel pump,” alluding to the significance of emigrant remittances for the Mexican economy.

Another significant finding of the Bendixen study is that the terrorist attacks of September 11, 2001 did not curb foreign exchange flows from the United States to Mexico, nor did the heightened security measures along the southern border of the United States discourage future emigrants.  “Security measures tend to have a limited and ephemeral impact,” the study concludes.

In contrast with other Latin American countries where remittances are mostly handled by informal means, a large number of Mexican recipients—45 percent—obtain their remittances through banks or credit unions.  In Guatemala, 7 percent of recipients use banks or credit unions and in Ecuador, 17 percent do.  Nevertheless, as the study points out, the Mexican phenomenon is a temporary one, since the recipients “are not necessarily tied to the banking system.”

In recent years, the MIF has been promoting the use of formal institutions to process remittances, in order to lower transaction costs and encourage saving and investment.  Surveys and studies undertaken by the MIF are useful for designing a more exact map of the flow of remittances in the region, as well as developing a clearer profile of the senders and recipients of these payments and where the funds ultimately end up. 

Prior to this recently executed study in Mexico, similar studies were carried out in Ecuador and Guatemala.  For the near future, the MIF is planning a study on locations in the United States where the greatest number of remittances to Latin America originate, and another study on remittances in Brazil.

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