Business

Slowdown in Remittances Sent Home Creates Unforeseen Economic Investments for Some South American Countries

Slowdown in Remittances Sent Home Creates Unforeseen Economic Investments for Some South American Countries

LatinaLista — There have been many consequences as a result of the crackdown on undocumented workers, none of it positive.
So it stands to reason, that since the main reason all undocumented workers from Mexico and Latin America are here is to work to send money home, that those remittances faithfully sent home to their loved ones would be jeopardized.
And they are. Owners of remittance businesses, like MoneyGram, have seen their businesses plummet. MoneyGram manager John Warner has reason to wonder if his business can survive: In the first quarter of 2006, growth was at 27.5%; today it stands at 3.4%.

While that kind of news is like the proverbial ax waiting to fall for U.S. remittance businesses, the country’s enforcement climate has created an unforeseen positive impact for the undocumented’s families back home.


It used to be remittances sent home enabled families to afford those items everyone takes for granted: a new TV, kitchen appliances, a new home, car, clothes, etc.
Unless someone was saving to build a house, remittances didn’t last very long. Today, thanks to the threat that every paycheck may be their last one, undocumented workers are sending less remittances home but the ones that are sent home are not being spent on new HD TVs.
According to a study sponsored by the Inter-American Development Bank, only half of today’s remittances are buying those consumer goods — the rest are going towards, of all things, investments.

In fact, the “not knowing what the future holds” has impacted, in a positive way, how undocumented immigrants and their families handle their money these days.
For example, in Mexico, 40% of the estimated $23 billion in remittances received last year was invested in housing, businesses and savings accounts. Of course, 57% still go towards those popular consumer goods but that’s a drop from 2003 when 78% of remittances went towards those same items.
The unforeseen boon to Mexico and Latin America because of this financial instability is that it has forced the people, WHO CAN AFFORD IT, to reprioritize and make their money pay for itself.

…Mexicans have been using remittances in four main areas, in addition to consumer goods and services. Construction, 8% (previously 5%); setting up small businesses, 5% (previously 1%); education, 13% (previously 7%), and savings, 14% (previously 8%).

In the long-term, these kinds of investments will not just make these families wealthier and more marketable but also strengthen their country’s economies.
When that happens, it will be up to these countries to reach out to their poorest residents and create the kinds of opportunities that force so many of them to embark on the most dangerous journey of their lives, in search of those opportunities that equalizes their standard of living with the rest of the world.
But until that happens, the poor will continue to come, regardless of immigration policy, not because they want to but because — they have to.

Business

More in Business

Migrant Workers Farm Crops In Southern CA

Labor unions need Latino members to survive

Latina ListaOctober 7, 2014
streetvendorburns_850_593

Chicago’s Tamale Underground

Latina ListaSeptember 22, 2014

Business leaders create a complicated twist in the debate over immigration reform

Marisa TreviñoApril 5, 2012

New cable programming highlights nation’s need to uphold affirmative action

Marisa TreviñoFebruary 21, 2012

New report shows Latinos have unprecedented success in lawncare and landscape industry — but for how long?

Marisa TreviñoNovember 22, 2011

Alabama Arrest of German Mercedes-Benz executive under immigration law underscores how little history changes

Marisa TreviñoNovember 21, 2011

New report reveals Latino and black homebuyers with good credit were targets of subprime lenders

Marisa TreviñoNovember 17, 2011

Latino Appointed New Veterans Services Director

Marisa TreviñoNovember 8, 2011

Latina Lista giving away 2 free tickets to attend National Hispana Leadership Institute’s annual conference

Marisa TreviñoOctober 31, 2011