Although the amount of remittances sent depends on the economic situation in the sending countries and the way in which it affects the income of the migrants residing there, at the time of making their remittances, migrants also tend to take into consideration other factors specific to the receiving point. Thus, factors such as the value of the remittance once received, or the economic growth in its country of origin, can become important in deciding the amount to send, or even as has been seen in the case of Brazilian migrants (Box 1), can determine a change of country of residence.
Value of the remittance received. Considering that in most cases remittances are used to cover immediate expenses of their families, migrants are usually interested in maintaining the purchasing power of the resources received. Among the main factors that influence the value of remittances are, on the one hand, the exchange rate between the local currency and that of the sending country, and on the other, the general evolution of the prices of the products that are sent. acquired with the resources sent, that is, the level of inflation.
During 2011, on average, local currencies in Latin American and Caribbean countries lost value against the dollar by a regional average of approximately 4.5%, although exchange rates varied depending on the country, as Box 2 demonstrates. In cases where the local currency lost value against the US dollar, remittance recipients benefited as the value of remittances received increased compared to the previous year. In contrast, recipients in those countries where their currency strengthened against the dollar were affected by a decline in the value of remittances received.
On the other hand, average inflation in the countries of the region reached 4.8%, which, in general, reduced the purchasing power of these flows, although more important increases were observed in the inflation rates at the subregional level. in the Caribbean (6.2%), in Central America (5.7%) and in the South American countries (5.2%), than in Mexico (3.4%).
Al agregar los datos a nivel regional, ambos efectos contrapuestos demuestran que los flujos de remesas no se vieron fuertemente afectados por las variaciones del tipo de cambio ni por la in- flación. Sin embargo, a nivel de subregión y a nivel país se observan ganancias o pérdidas en el valor de las remesas dependiendo del caso, como producto de estos dos factores. Por ejemplo, en el grupo de países suramericanos, a pesar de un aumento en el volumen de remesas enviadas de 4%, se observó una pérdida de valor de las remesas del -3,6%; en Centroamérica, no obstante el aumento en valor de 7%, el poder de compra de las remesas se mantuvo con un leve incremento de valor del 0,4%; en los países caribeños, si bien el volumen enviado aumentó en 5,9%, el poder de compra de estas incrementó solo en un 0,8%, mientras que en México el aumento en volumen de 6,9% de remesas, los receptores de remesas vieron el valor de los montos recibidos aumentar en un 17,5%.
Economic growth of recipient countries. An important factor that influences the decision to migrate is economic growth in the countries of origin and with it job opportunities. As conditions in the countries receiving remittances improve, their inhabitants have fewer incentives to migrate and even, as has been observed in the case of Brazil (see Box 1), if conditions are very positive, incentives are created for migration. return of migrants.
Despite the drop in recent years in the ratio of remittances to GDP in several countries in the region, such as Haiti, Guyana, Honduras, El Salvador, Nicaragua, Jamaica and Guatemala, these flows are still equivalent to more than 10 % of GDP. In fact, for half of the Latin American and Caribbean countries, these remittances represent more than 5% of GDP, which demonstrates their importance for the economies in the region.
In addition to the relevance of remittances at the macroeconomic level, they represent a very important source of income for the millions of recipient families that depend on these transfers in the region, even in those economies with higher GDPs. Income from remittances has contributed to reducing poverty levels in the countries of the region and has allowed many families to achieve a higher standard of living, helping to finance their spending on consumer goods, education, health and housing and, in some cases, also investment in small family businesses. Without this regular flow of resources that migrants send to their families, many host families would fall below the poverty line.
(Box 2)
(Graph 10: Remittances to Latin America and the Caribbean (2007–2011))
Despite the drop in recent years in the ratio of remittances to GDP in several countries in the region, such as Haiti, Guyana, Honduras, El Salvador, Nicaragua, Jamaica and Guatemala, these flows are still equivalent to more than 10 % of GDP. In fact, for half of the Latin American and Caribbean countries, these remittances represent more than 5% of GDP, which demonstrates their importance for the economies in the region.
In addition to the relevance of remittances at the macroeconomic level, they represent a very important source of income for the millions of recipient families that depend on these transfers in the region, even in those economies with higher GDPs. Income from remittances has contributed to reducing poverty levels in the countries of the region and has allowed many families to achieve a higher standard of living, helping to finance their spending on consumer goods, education, health and housing and, in some cases, also investment in small family businesses. Without this regular flow of resources that migrants send to their families, many host families would fall below the poverty line.
Box 3: Transparency in the cost of remittances
Considering the relevance of remittance flows for the economies of the region, efforts to lower the cost of these shipments are of the utmost importance. Likewise, progress must be made in making this market more competitive and more transparent. For this, it is necessary that the senders of remittances have adequate information about the costs of such shipments and the different characteristics of these services.
For this purpose, the Multilateral Investment Fund (MIF), a member of the Inter-American Development Bank (IDB) Group, the World Bank (WB) and the Center for Latin American Monetary Studies (CEMLA) took the initiative to create “Envía Central America” with the collaboration of the Central American Council for Consumer Protection (CONCADECO). On the website www.enviacentroamerica.org you will find free information, updated every month, on how much it costs to send amounts of US$200 or US$500 from the United States to Costa Rica, El Salvador, Nicaragua, Panama, Guatemala, Honduras. and the Dominican Republic, and also in the intra-regional corridor from Costa Rica to Nicaragua. The information contained in this online platform is broken down by commission, exchange rate, type of operator, speed of transfers,
According to information available on the “Envía Centroamérica” website, the average cost of sending remittances of US$200 to Central America and the Dominican Republic as of December 2011 reached 6%, which includes all costs. applicable to these transactions, both the commission and the exchange differential. As a whole, to cover the prices of their remittances to their relatives in their countries of origin, immigrant workers in the United States from the six Central American countries and the Dominican Republic spent around US$212 million in the fourth quarter of the year. 2011. The Send Central America tool allows you to evaluate the different options on the market to send remittances, compare their prices and the characteristics of the service offered. That way,