The Developmental Role of Remittances in U.S. Latino Communities and in Latin American Countries

The paper states that migrant remittances have, for several decades, been considered a family affair. However, as the migrant stream and the marketplace change, the institutional nature of remittances also changes. This paper primarily investigates and describes the new features of remitting:

• The transfer of remittances attracts new businesses. Competitive pricing, greater accessibility to financial institutions, and strategies to improve security eventually should channel more remittances;
• Innovations in capturing a share of remittances - from development bonds to matching-funds to HTA collective remittances - can pool monies into a critical mass for truly substantial accomplishments;
• What leads some immigrants to remit, and others to reduce their remittances? Among migrants living in the United States, the likelihood of remitting will decline steadily as they acculturate, although the amount those who remit send home will increase as employment earnings rise.

Migrant remittances offer powerful set of tools for economic and social development. The paper makes the following recommendations:

• Promote competition in the remittance market and encourage immigrants to use formal financial channels;
• Develop more structured approaches to leveraging remittances for development and investment;
• Foster hometown associations as agents for development;
• Explore further assistance and special programs for return migrants who would invest in their home communities;
• In order to understand current trends and craft appropriate policy responses, governments must improve their data collection on remittances, including flows that move outside of formal channels.

The author states that the new features hold significant promise. However, caution needs to be exercised in developing innovations in remitting and a definitive evaluation of the economic development that remittances generate should be explored.