Opinion: Remittances and the International American Dream
By Andrew Wainer on August 28, 2012
© National Journal
Almost 2 million young people who entered the United States as children have the opportunity beginning this month to become legal immigrants, fulfilling the aspirations of their families who came to the country without authorization. It’s a classic – if roundabout – story of the American Dream and the major immigration policy reform since the 1986 Immigration Reform and Control Act.
If you talk to immigrants about their motivations for coming to the U.S., providing more opportunity for their children is at the top of their list. The Deferred Action for Childhood Arrivals program is a major step toward this goal.
Bringing your family to the U.S. to raise them as Americans is a story we all know – it’s a centuries-old part of our folklore, even if it’s still hotly debated. 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, immigrants are bulwarks against hunger and poverty for their families in Mexico and Central America.
Nowhere is this more evident than among the people from the countries of the Northern Triangle – El Salvador, Guatemala, and Honduras – who comprise the largest group of unauthorized immigrants to the U.S. other than Mexicans.
There are approximately 2.5 million immigrants from the Northern Triangle in the U.S., and in 2011 they sent home more than $10 billion in remittances. Remittances comprise 17 percent of the gross domestic product 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 U.S. and Central America that if immigrant remittances disappeared, it would be a major blow to the region's 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 states, “Families receiving remittances are—by virtue of the remittances—no longer among the poorest of the poor.”
Legalizing students eligible for the Dream Act will help them both integrate into America’s economic mainstream and allow them to better support those in their countries of origin. But while legalization is good news for immigrants in the U.S. and their families in Latin America, remittances could be used more effectively.
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. Perhaps the remittances’ greatest potential – fueling productive investment that generates jobs and income and reduces immigration pressure – is untapped.
U.S. development agencies and regional governments could employ better remittance practices to help provide alternatives to unauthorized migration for the next generation of Central Americans. In spite of the billions in remittances sent to the Northern Triangle by immigrants, poverty rates remain high. The poverty rates in El Salvador, Guatemala, and Honduras are 38 percent, 51 percent and 59 percent, respectively.
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 American Dream has always been an international aspiration. With better integration of U.S. migration and development policies, the realization of immigrants’ American Dream could be used to reduce poverty and the socioeconomic pressures that drive unauthorized migration in the future.
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 firstname.lastname@example.org.
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