Remittances and Sustainable Community Development in Latin America

By Aaron T. Bell and Eric Hershberg

Photo Credit: Futureatlas.com / Flickr / Creative Commons

Photo Credit: Futureatlas.com / Flickr / Creative Commons

Remittances to Latin America hit a record high in 2014 at $65.3 billion, according to the Multilateral Investment Fund of the Inter-American Development Bank, but their impact on development would be much greater with better coordination between sending  and recipient communities.  Mexico receives over one third of those funds, but remittances represent a significant component of GDP for many countries across the region.  The bulk comes from the United States, where 54 million Hispanics include 19 million first-generation immigrants, according to 2013 U.S. census figures.  In several Central American and Caribbean countries, funds sent home by migrants represent the largest single source of foreign exchange.

  • Remittances alleviate poverty by contributing to household income, helping to satisfy basic consumption needs, and sometimes enabling savings and investments in education.
  • Groups of migrants from particular communities sometimes pool resources through hometown associations to support shared objectives back home. A paved road or a new soccer field affects quality of life in tangible ways, and émigré financing of local political campaigns can determine the results of elections for mayors and other officials.
  • But remittances seldom promote local economic development initiatives that will generate sustainable incomes and opportunities for wide segments of the population – missing opportunities to address the causes of migration in the first place.

Some governments, development agencies, and philanthropies look to remittances as a potential mechanism for ensuring that Latin American citizens enjoy living conditions that afford them the “right not to migrate” from home communities.  Last month the Inter-American Foundation (IAF) and the Center for Latin American & Latino Studies (CLALS) convened a workshop to explore the challenges and opportunities for linking diaspora organizations in the United States, their communities of origin in Latin America and the Caribbean, and potential philanthropic partners to advance community development in the region through the effective deployment of remittancesParticipants identified several challenges.

  • Cooperation between immigrant-led diaspora organizations and their sending communities and governments is not a given.
  • Despite some research into hometown associations – created in the United States by migrants to connect with their communities of origin – we have relatively limited knowledge about how they function and the conditions that enable them to support community development.
  • Effective transnational cooperation requires broad multi-sectoral partnerships aligning immigrant-led groups, sending community organizations, and possibly governments and international funding institutions.

Despite information gaps and practical obstacles, there are successes to celebrate, such as the Salvadoran Fundación para la Educación Social, Económico y Cultural, with which the IAF has partnered.  Technical training on how to handle incoming funds and face-to-face meetings between participants and supporters in the United States and El Salvador have promoted transparency and trust.  Participants in the CLALS/IAF workshop offered several potential avenues for community organizations and philanthropic foundations to build enduring institutional connections.  It was agreed that further research should be conducted on hometown associations and other forms of diaspora organization to better understand how they function, how they relate to their affiliated sending communities, and how they can be catalysts to promote local development.  Policy-based research institutions in Latin America should be brought into the conversation, as should mainstream Latino organizations in the United States.  And immigrant associations and their counterparts in Latin America should not have to grapple with complex development challenges alone.  Indeed, U.S.-based community organizations and philanthropies could play a valuable role in catalyzing cooperation aimed at promoting development by making the case for public policies and transnational collaborative efforts that support “the right not to migrate.” Such development-supporting initiatives could, at least in theory, gain resonance across political groupings in the United States, appealing both to those interested in fostering global development and those concerned about immigration.

August 4, 2015

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