Remittances and Development in Latin America

Abstract

Flows of workers' remittances have become a major source of external finance for developing countries and are particularly important in Latin America and the Caribbean, where they are estimated to have reached $40 billion in 2004. Not surprisingly, academics, policymakers and development practitioners in general have been devoting increasing attention to the potential development impact that these flows may have on receiving countries. This paper contributes to this debate along four dimensions. First, it reviews the evolution of remittances flows to Latin America, using Balance of Payments data, and compares these statistics with estimates of remittances income based on Household Surveys. Second, the paper describes the varying profile of remittances recipients in ten Latin American countries. Third, the paper reviews the few macro- and microeconomic studies that have estimated the impact of remittances on poverty and inequality. Finally, the paper expands some of the existing works to investigate the extent to which that impact is different in Latin America and varies across countries in the region. Copyright 2006 The Authors Journal compilation 2006 Blackwell Publishing Ltd.

A Spatial Analysis on International Remittances, Food Consumption and Deprivation in Indonesia

“…Thus, the result strengthens the previous findings of Adams and Page (2005), Acosta et al (2006), and Adams and Cuecuecha (2010) that international remittances are undeniably linked with poverty as this study shows a strong indication that international remittances are more likely to be received by poorer households.…”

“…Such confirmationmight strengthen the previous findings of Adams and Page (2005), Acosta et al (2006), Adams and Cuecuecha (2010) that international remittances significantly contribute to reduce poverty. This is particularly the case in Indonesia where Adams and Cuecuecha (2010) found that the remittances are being used to spend more on consumption goods (food), as they argue that householdswho receive remittances areconsiderably poorerthus the remittances are mainly used to spend on the very basic necessity: food.…”

“…Previous studies of Adams and Page (2005) and Acosta et al (2006) show how international remittances create significant impacts on the reduction of poverty in the countries that receive remittances. Adams and Page (2005) construct a new data set on international migration, remittance, inequality and poverty from 71 developing countries and found that a 10% increase in the share of international migrants in a country's population may lead to a 2.1% reduction in the share of people living on less than $1 a day.…”

“…They also suggest that a 10% increase in percapita official remittances may lead to a 3.5% reduction in the share of people living on the poverty line. Acosta et al (2006) in their study on remittances and development in Latin America, using household survey data from ten Latin American countries, suggest that, on average, a 1% increase in remittances-to-GDP ratio leads to a 0.35% to 0.40% reduction in the poverty headcount.…”

Migration, remittances, poverty, and human capital : conceptual and empirical challenges

“…In the case of the latter, when the survey is not available upfront one may consult the balance of payment statistics (BOP). As a rule of thumb, remittances obtained from the BOP equal 1.5 times those obtained from the household survey, with a correlation of .90 (Acosta, Calderon Fajnzylber and Lopez, 2006a). Nevertheless, a given country may be an outlier, so one may check also with other sources, for example a comprehensive estimate of bilateral stocks of migrants for 226 countries and territories compiled by Global Trade Analysis Project (GTAP, 2005), the OECD's Database on Immigrants and Expatriates (OECD, 2005) containing detailed information on the foreign-born population for almost all member countries of the OECD, the Docquier and Marfouk (2004) as well as Beine, Docquier and Rapoport (2006) databases on migration by education (and age of entry) from developing countries to OECD countries or Bhargava and Docquier (2006) Database on the International Migration of Physicians.…”