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Remittances and Immigration

By Andrew Wainer on October 24, 2012
© Huffington Post

Prior to election-day, Barack Obama and Mitt Romney participated in separate forums hosted by Univision which specifically addressed the concerns of the fast-growing Hispanic electorate. In spite of all the discussion and analysis of the sought-after "Latino vote", polls indicate that Latino voters' top concerns match other working and middle-class groups: jobs, economic growth, and health care.

In terms of national issues, the one issue that sets Latinos apart is immigration. You can bet that it will be a major topic in the run up to the elections. Certainly, both candidates will face tough questions on their immigration policy stances, but a key part of the immigration debate will probably not be broached.

Bringing your family to the United States to raise them as Americans is a story we all know. It's a centuries-old part of the nation's folklore, even if it's still hotly debated. But what's less understood about immigrants is that they also often support family left behind in their home countries. In addition to supporting themselves and their families here in the United States, immigrants are bulwarks against hunger and poverty for their families in Mexico and Central America.

The international component of immigration policy -- both as the source of unauthorized immigrants and as recipients of immigrant remittances - is largely absent from discourse on immigration policy. Unauthorized immigration to the United States is driven by economic conditions overseas and many immigrants come to the United States in order to help their families - often poor - back home.

Nowhere is this more evident than in the Northern Triangle - El Salvador, Guatemala, and Honduras - which comprises the largest source of unauthorized immigrants to the United States other than Mexico. There are approximately 2.5 million immigrants from the Northern Triangle in the United States. In 2011, they sent home more than $10 billion in remittances. Remittances are monies sent home by immigrants to their families in their countries of origin. In Central America there represent the mainstays of several national economies.

Remittances comprise 17 percent of gross domestic product (GDP) in Honduras, 16 percent in El Salvador, and 10 percent in Guatemala and they dwarf both foreign direct investment and overseas development assistance. It's widely understood in both the United States and Central America that if immigrant remittances disappeared, it would be a major blow to the regions' economies and the well-being of millions of poor families.

Between 20 percent and 30 percent of families in these countries receive remittances, usually averaging between $200 and $400 per month. Remittances allow families to send their children to school, eat more nourishing meals, visit the doctor, and pay their rent. World Bank research indicates that in Latin America, a 10 percent increase in the remittances-to-GDP ratio results in a 3.7 percent decrease in moderate poverty and a 2.9 percent decrease in extreme poverty.The United Nations-affiliated International Fund for Agricultural Development (IFAD) states "Families receiving remittances are--by virtue of the remittances--no longer among the poorest of the poor."

Today, remittances are mostly used for survival--they prevent millions of families from falling into (deeper) poverty, but they don't change the economic status quo. It seems to be that remittances' greatest potential - fueling productive investment that generates jobs and income and reduces immigration pressure - is untapped.

It could be better employed by U.S. development agencies and regional governments to provide alternatives to unauthorized migration for the next generation of Central Americans. There's scant evidence that border enforcement has impacted undocumented immigration to the United States. The poverty rates in El Salvador, Guatemala, and Honduras are 38 percent, 51 percent and 59 percent respectively. Poverty and the lack of economic opportunity will drive immigrants north no matter how high we make the border walls. Remittances can't solve Central American poverty itself, but they can be part of the solution for providing opportunity to would-be immigrants.

Northern Triangle governments need a national framework for investing remittances into productive enterprises. Remittance recipients need training and support on how to invest in sustainable enterprises. Without collaboration between the diaspora, U.S. development agencies, and regional governments, the impact of remittances will remain limited.

U.S. development agencies are well positioned to facilitate the productive use of remittances into its development agenda to better harness remittances for development in Central America. There are U.S. development programs like this in Africa, but their implementation in Mexico and Central America - the source of more than 80 percent of all unauthorized immigration to the United States - is lagging.

The legalization versus enforcement debate is an important part of the discussion of immigration policy, but without inclusion of the international drivers of migration, the immigration debate will miss an opportunity to expand our understanding of the causes - and potential solutions - to undocumented immigration.

Andrew Wainer is a senior immigration policy analyst of Bread for the World Institute and author of the report, "Exchanging People for Money: Remittances and Repatriation in Central America." Andrew can be reached at awainer@bread.org

 

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