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Sending money next door in Latin America

Remittances from North to South have been well documented, but little is known about remittances and migration between neighboring countries in Latin America.

Patricia Weiss Fagen and Micah Bump, two researchers from the Institute for the Study of International Migration (ISIM) at Georgetown University, tell the story of the poorest rural migrants, who tend to move between Latin American countries. They studied those who cannot afford to cross multiple borders to make it to the United States, even when their families pool together funds.

Migrants in their study typically cross only a single border, traveling shorter distances that are relatively easy to navigate, leading to more “circular migration”—journeying back and forth of migrants.

Weiss and Bump devoted an entire chapter to remittances between neighboring countries in their comprehensive book about the global phenomenon of remittances, Beyond Small Change , the preliminary version of which was recently published by the IDB.

The book uses case studies to illustrate common characteristics among Nicaraguans remitting from Costa Rica, Haitians remitting from the Dominican Republic, and Bolivians sending money home from Argentina. Migrant populations in these three countries come from rural areas and are poorer, and, thus, less educated and skilled, as compared to migrants in the United States. Additionally, they are not well integrated economically or legally in their host countries and face widespread racial and social discrimination at a level that is much worse than that in the United States.

The economies of the three middle-income countries of Argentina, Costa Rica and Dominican Republic are more fragile than those of developed countries, are prone to greater cyclical shifts, and have less diversified sources of wealth. According to the study, migrants at the bottom of the national income scale in these countries earn far less on average than their compatriots in the same situation in developed countries. Still, migrants' remittances are significant, in terms of both absolute income flows and support for their families in their countries of origin.

According to 2003 statistics from the IDB's Multilateral Investment Fund (MIF-IDB), intraregional remittances accounted for $1.5 billion in 2002. But since most intraregional remittances are neither tracked nor registered, that number omits transfers that migrants bring and send by non-formal means. For instance, more than 90 percent of Haitian migrants either rely on friends or carry money and goods home on their own, according to a national survey on the Haitian population in the Dominican Republic, conducted by the International Organization for Migration and FLACSO (acronym in Spanish for Facultad Latinoamericana de Ciencias Sociales).

Migrants in all three middle-income countries send about 50 percent or more of their earnings home every month, according to the study. That leaves them with little money to spend in their host countries' economies. For many of the migrants interviewed in the study, “relieving poverty at home means living in poverty across the border.”

Not only that. The category of remittances is a broader one than in the United States: most of the informal carries transport merchandise, food and even people along with money to bordering countries. The study pointed out that migrants' tendency to live and work in groups from the same region increases collective support and facilitates informal remittance transfers.

Because intraregional migrants have rural backgrounds, they tend to be less trustful and they have less experience with formal financial institutions than their counterparts in the North. Plus, many Nicaraguans, Haitians and Bolivians lack documentation in both their own and host countries. So even if financial services are available, they are often unable to use them.

According to the study, migrants interviewed in all three counties were unanimous in their disdain for their own governments, and in their rejection of any government involvement in remittance-transfer activity. Nevertheless, there is an important role for countries of origin to help.

Governments can add their weight in favor of human rights protections for their citizens, and can help migrants obtain personal documentation and establish formal identity in their host countries. Host country governments, Weiss Fagen and Bump concluded, “must also do much more to protect the human beings whose labor they acknowledge to be essential to their economies.”

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