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LATIN
AMERICA:
Remittances
Rescue Millions from Poverty
Diego
Cevallos
MEXICO CITY, (IPS) - The
money sent home by migrants from
Latin America and the Caribbean
amounted to 45 billion dollars
last year, double the total from
10 years ago. Thanks to these
remittances, an estimated 2.5
million people in the region
have been able to escape
poverty.
Although remittances do little
to reduce poverty for the
population at large, the impact
is huge for those who directly
receive the money from abroad.
At least half of the people in
households with ties to
emigrants would be poor if they
did not receive remittances,
while others who are living in
poverty would be extremely poor.
These are some of the
conclusions reached by the
Social Panorama of Latin America
2005, released Friday by the
Economic Commission on Latin
America and the Caribbean (ECLAC)
at its headquarters in Chile.
The report states that poverty
and extreme poverty in the
region, which affect a total of
301 million people, are slowly
being reduced thanks to
remittances.
Francisco Morales, whose
25-year-old son José sends him
200 dollars a month from the
United States, told IPS that "I
would be in the streets" without
the extra income.
"Here (in Mexico City) there is
no work, and I need medication
for my diabetes. Plus, my
daughter is still studying and
needs help. So that money
contributes to reducing our
poverty," said Morales, a
widower who works as a night
doorman in an apartment
building.
If Mexico, which receives nearly
40 percent of the region's total
remittances, did not have that
income, the poverty rate in
rural areas would be 10 percent
higher, according to the
National Population Council.
The countryside, home to 25
million of Mexico's 104 million
people, accounts for 75 percent
of the country's poor.
The remittances received by the
region doubled in the past 10
years and are still growing.
Mexico and Central America
account for 55 percent of the
total, South America 31 percent,
and the Caribbean 14 percent.
The majority of the funds come
from immigrants living in the
United States. But significant
amounts are also sent home from
migrants in Canada, Spain and
Japan, which is home to more
than 254,000 Brazilians,
according to a 2004 study by the
Organisation of American States
(OAS).
The OAS study also noted that
remittances do not in and of
themselves represent a solution
to poverty, and that in many -
perhaps most - cases, the funds
represent temporary relief from
poverty for families, rather
than a permanent route to
financial security.
ECLAC notes that the economies
of Haiti, Nicaragua, Guyana and
Jamaica are heavily dependent on
migrant remittance flows, which
represent between 29 and 16
percent of their gross domestic
product (GDP).
In other countries, like
Ecuador, Mexico and El Salvador,
remittance flows outstrip
foreign direct investment, and
in some cases they are
equivalent to over 50 percent of
total export revenues.
In fact, the money sent home by
those who leave their countries
- whether as a result of
poverty, international economic
dynamics or family reunification
- is of such crucial importance
to the region that governments
throughout Latin America and the
Caribbean have adopted measures
to facilitate its flow.
At the Special Summit of the
Americas held in Monterrey,
Mexico in January 2004, the
governments of the hemisphere
committed to taking concrete
steps to reduce the cost of
sending remittances by at least
one half.
Some of the region's governments
are also working on establishing
programmes through which part of
the money contributed by
emigrants is channeled into
development projects.
"A lot of governments
practically force their people
to leave and then try to take
advantage of the money they send
back. It's a paradox that
reflects the contradictions,
injustices and major economic
problems in our countries,"
secondary school economics
teacher Tomás Vergara remarked
to IPS.
According to the new ECLAC
report, figures from 11
countries in the region show
that the impact of remittances
with regard to poverty among the
population as a whole is of
little significance.
The greatest effects are
observed in El Salvador and the
Dominican Republic, where the
addition of remittances to
household income reduces overall
poverty by 4.5 percent and 2.2
percent, respectively. In the
other countries of the region,
the resulting decreases are less
than two percent, the report
reveals.
Nevertheless, it adds, a very
different picture emerges when
analysing the impact of
remittances on the households
that receive them.
In the 11 countries studied -
Bolivia, the Dominican Republic,
Ecuador, El Salvador, Guatemala,
Honduras, Mexico, Nicaragua,
Paraguay, Peru, and Uruguay - it
was determined that 50 percent
or more of the people who live
in recipient households would
drop below the poverty line if
it were not for the income they
receive through these money
transfers.
A significant number of
households are lifted out of
extreme poverty thanks to the
remittances sent from abroad,
says the study, and while there
are also households that remain
poor despite receiving
remittances, this source of
income nonetheless reduces the
gap between their total income
and the poverty line.
The limited impact of
remittances on poverty in
general in the region is due to
the fact that the proportion of
households that receive this
financial support is no greater
than 16 percent of the total in
the 11 countries studied by the
regional U.N. agency's report.
Nevertheless, remittances spare
millions of people in the region
from the grip of poverty,
including at least 2.5 million
in the 11 countries evaluated,
ECLAC concluded. |
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