International Migration in Latin Americaand the Caribbean

Contributions from Mexican Meeting

INTERNATIONAL SYMPOSIUM ONINTERNATIONAL MIGRATION AND DEVELOPMENT

Turin, June 28-30, 2006

Elena Zúñiga Herrera

Mission

• To bring up some of the conclusions andresults of the Expert Group Meeting onInternational Migration and Development in Latin America and the Caribbean

Mexico City, Nov. 30- Dec.2, 2005

Sponsorship of the meeting

CONAPO-Mexico

United Nations Population Division

UNFPA

CELADE- Population Division of ECLAC.

Main questions

How can international migration be made towork for development?

How had international migration in the LAC region worked for development?

What has happened in the past 20 years as regards migration and development?

High Increase of Migration

Most Latin American Countries are sending countriesThe volume of LAC flows of migrationhave greatly increased in recent yearsPatterns of origin and destination haveundergone a process of transformationThe U.S. is the primary destination, followed by other developed countries

0.92.2

4.4

9.311.0

0.7

1.3

2.0

3.03.2

0.1

0.4

1.2

2.1

2.7

0.3

0.6

1.1

2.0

2.3

0

2.5

5

7.5

10

12.5

15

17.5

20

1970 1980 1990 2000 2005Year

Milli

on p

erso

ns

Mexico Caribbean Central America South America

Population of Latin America and the Caribbean Resident in the UnitedStates, 1970, 1980, 1990, 2000 and 2005

Source: Estimates based on Bureau of Census, 15-percent sample 1970, 5-percent sample 1980,1990 and 2000, Current Population Survey (CPS), March 2005.

10.3 Million in March 2004

Rest ofLatin America -- 24%

2.5 million

Africa & Other -- 4%0.4 million

Europe &Canada -- 6%

0.6 million

Asia -- 9%1.0 million

Mexico -- 57%5.9 million

Undocumented Are Largely Latin American

Source: Jeffrey S. Passel, Pew Hispanic Center. Latin American Migration to the United States: Trends and Impacts.

Stunted DevelopmentEconomies become foreign market-oriented

Assymetries between them and developedcountries mantained or increased

Many countries suffered serious economic crises, with a strong impact in poverty levels

Some of them defaulted or almost defaulted on their debt

Many had to renegotiate far-reaching reform packages that severely limited employment growth, lowered wages and incomes, and curtailed growth of domestic markets.

Poverty in Latin America and theCaribbean 1990 and 1999

Source: World Development Indicators 2003, The World Bank

12.113.2

28.2 28.3

02468

101214

1990 1999

Year

Mill

ion

pers

ons

0.05.010.015.020.025.030.0

Percentage

Population Percentage

Some examples

Poverty in Ecuador rose from 34% to 71% between 1995 and 2000

Mexican economic crisis of December 1994 increased extreme poverty from 21% to 37% between 1994 and 1996

Economically Active Population and PaidEmployment in Mexico, 1970-2000

Source: Hernández Laos, Enrique; Desarrollo Demográfico y Económico de México 1970-2000-2030, CONAPO, 2004, p. 28

05,000

10,00015,00020,00025,00030,00035,00040,00045,000

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

Thou

sand

Per

sons

Economically Active Population Paid Employment

Migration helps reduce pressure on labor markets

Educational CompositionEducational Composition1980s Arrivals1980s Arrivals

0%

10%

20%

30%

40%

50%

60%

70%

80%La

tin A

mer

ica

Mex

ico

El S

alva

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Gua

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Hon

dura

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agua

Pan

ama

Cos

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Dom

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Trin

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Chi

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Bachelor's GraduateSource: Brain Drain and Latin America, Çaglar Özden

Percentage Educated in the USPercentage Educated in the US1980s Arrivals1980s Arrivals

0%

20%

40%

60%

80%

100%

Latin

Am

eric

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Nic

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Bachelor's Degree Graduate DegreeFuente: Brain Drain and Latin America, Çaglar Özden

$0.00$5,000,000,000.00

$10,000,000,000.00$15,000,000,000.00$20,000,000,000.00$25,000,000,000.00$30,000,000,000.00$35,000,000,000.00$40,000,000,000.00$45,000,000,000.00$50,000,000,000.00

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

Remittances to Latin America and theCaribbean,1980-2004

Remittances Play Critical Role as Source of Foreign Exchange

Source: Orozco, Remittances in the Latin American and Caribbean Region.

50

100

150

200

250

30019

90

1992

1994

1996

1998

2000

2002

Perc

enta

ge

TourismAgricultural exportsOil exportsMaquiladora trade balance

Mexico. Remittances as percentage ofOther Sources of Foreign Income, 1990

- 2003

Source: Drawn up on the basis of data from Banco de México, Indicadores económicos y página WEB, several years.

Importance of remittanceHelp provide foreign currency

Contribute a major share of national income

They have a macroeconomic impact thattends not to decrease with economicdownturns

Remittances have multiplying effects and the potential to generate wealth, not just to receptors (homes and communities)

Households With Bank Accounts

41

3431

19

46

17 1619

16

34

05

101520253035404550

Guatemala Honduras El Salvador Mexico Ecuador

Per

cent

age

RecipientsNon-Recipients

Source: Multilateral Investment y Honduras, Septiembre 2003; Receptores de Remesas en Ecuador, Mayo 2003. Washington, DC: MIF-IADB/FOMIN-BID.

Remittances contribute to enabling financial citizenship

Fund-Inter-American Development Bank, Receptores de Remes

Migration and poverty

• Remittances contribute to reduce poverty levels, but strategies to overcome this serious social problem demand structural changes that facilitate sustainable productive expansion and the population’s economic and social mobility.

-1.9

-2.6

-2.6

-7.9

-6.7

-7.2

-10 -8 -6 -4 -2 0

Incidence oftotal poverty

Incidence oftotal poverty -

urban

Incidence oftotal poverty -

rural

Percentage Salvador Honduras

El Salvador and Honduras. RemittanceImpact on Poverty Reduction

Source: Crecimiento Exportador y Remesas en Centroamérica: Efectos macroeconómicos y en la pobreza, Marco V. Sánchez C.

El Salvador and Honduras

• Poverty in El Salvador y Honduras has fallen considerably as a result of remittances, butthere has not been a significant increase in total production

•Flows of private capital, including remittances, have led to an appreciation of the real exchange rate, reducing the effect ofcommercial reforms on the profitability of theexport sector

El Salvador and Honduras

The capacity to generate foreign currency in those countries depends primarily onremittances-rather than on export capacity.

Although the appreciation of the exchange ratehas benefitted sectors that produce non tradinggoods and services, the increase in internalconsumption has not had a dynamic effect ontotal production or aggregated employment.

The sustained growth of remittances couldreproduce this productive inertia in the long termthrough the appreciation of the exchange rate, which would adversely affect the export sector.

In a situation in which the “remittance disease”persists, the productive apparatus might proveincapable of rapidly adjusting to a fall in remittances (for whatever reason) which wouldcreate a negative outlook for poverty

Remittances could be an aspirin

Remittances as percentage of the trade balance (2004)

13%

1272%

247% 143%

0%200%400%600%800%

1000%1200%1400%

Brazil DominicanRepublic

Ecuador Mexico

positive trade balance negative trade balance

Source: The World Bank

Conclusiones

Remittances have a positive effect on the income of the families that receive them and contribute to improve their quality of life.

The global volumes of remittances received in many countries constitute important sources of foreign exchange

Conclusions

Remittances play a critical role as a source of foreign exchange, but its volume does not provide a solution to the challenges of development.

The structural problems of poverty and inequality go beyond controlling remittances. Moreover, its effect depends on the ability of the productive base of the local economy to absorb external savings.

Development depends directlyon a development policy.

It was agreed that remittances cannot resolve regional and national development problems which by definition demand broader state participation, as well as increasing private investment flows. In the same way, these economic transfers cannot replace Official Development Assistance funds.

• By the reduction of exports derived from an appreciation of the national currency.

• They can have inflationary effects• And generate dependency and social

inequality.

Migrant Transfers May Have Undesirable Effects

Conclusions

Within a context of globalization and profoundly asymmetric regional integration, the balance between the costs and benefits of international migration, in the medium and long term, in developing countries may be very different to that of developed countries.

In order to understand how migration may act in favor of development, it is not enough to classify countries as receivers or senders; the degree of development and the way they are inserting in the global economy must also be taken into account.

Source: Remesas, desigualdad y pobreza: evidencias en el México rural, Jorge Mora