How Remittances Shape The Economies of Central America

A $56 billion industry may spell trouble for the countries on the receiving end of US money sent home.

By Joy DiazMarch 2, 2016 12:47 pm| ,

People in the US sent $56 billion to their families back home. Yes, billion. Among the five countries that most benefit from these remittances is Mexico. But how does that work, with more Mexicans leaving the US than coming in?

Sandra Robledo came to the US 20 years ago. She lives in Houston. Ever since, she’s been sending money to her family back in Mexico.

“My mom is still there,” Robledo says in Spanish, “and I help support her.”

In the beginning, Robledo could only get random jobs in Texas. But, as time went by, she got certified in cosmetology, specializing in skin care, which is what she used to do back in Mexico.

Two years ago she and her husband bought the cosmetology school she attended in Houston and are now running a successful business there.

That’s one way the Mexicans in the US can afford to send more money home. The ones that remain here are more established now and have better jobs than when they first arrived. Robledo, for instance, is building the home where she plans to retire in Mexico – so she’s sending more than ever before.

Data from the US Census Bureau shows newly arrived immigrants from Mexico are better educated than ever before. Many speak English and that makes it easier to find better paying jobs, and better able to send money home.

But Mexico is not the only Latin American country experiencing remittance growth.

“The first one is Guatemala with 15 percent, followed by Colombia with 14 percent,” says Manuel Orozco.

Orozco leads the Migration Remittances and Development program for Washington-based think-tank, the Inter-American Dialogue. Orozco says Haiti, Honduras, Paraguay, the Dominican Republic, Nicaragua and even Cuba experienced some remittance growth last year.

He says the money is good news to the families that receive it. But it’s also worrisome.

“Most of the countries in that list – with exception of Paraguay and the Dominican Republic – are dealing with political or insecurity problems,” Orozco says, “some form of state fragility.”

Meaning that when remittances were down, the countries were not exporting as many immigrants and things were relatively good. As more and more people leave Central America and move to the US they don’t do it just to send money home, they do so to avert the danger they face at home.