Tuesday, October 19

Family remittances: what are they, how do they work and what is their importance in the economy


The country that sent the most remittances in Latin America in 2020 was Mexico, with $ 42.9 billion.

Foto:
MARVIN RECINOS / Getty Images

Remittances are remittances of money from migrants from a foreign country to their country of origin. They are a very important support for the economy of various nations, especially those that are developing.

The United Nations General Assembly proclaimed the celebration of the International Day of Family Remittances every June 16 around the world.

Today commemorates the contribution of the more than 200 million fellow workers who send money to their more than 800 million family members in their countries of origin.

The great resilience of these migrant workers in the face of economic insecurities, natural and climatic disasters and the global pandemic, such as the one recently experienced with Covid-19, is also remembered.

Remittances are an essential lifeline for the developing world. Individual contributions are relatively low but, as a whole, These flows are three times the amount spent on official development assistance worldwide.

The United Nations notes that these economic contributions have transformative effects on households and local communities, and help many families achieve their own Sustainable Development Goals (SDGs).

These flows have increased fivefold over the last two decades and have served to counteract economic recessions in recipient countries due to their countercyclical nature.

The World Bank published in May 2021 just a decrease in remittances of only 1.6%, going from the $ 548 billion in 2019 to $ 540 billion in 2020, despite all the inconveniences that arose in the middle of the pandemic.

Although these flows amount to billions, the most important figure corresponds to monthly remittances with a average between $ 200 and $ 300.

The United Nations continually urges governments, the private sector, development organizations and civil society to promote digital and financial solutions so that remittances flow more directly to recipient families.

Online and mobile digitization boosted the flow of remittances very significantly in the difficult period of the pandemic. Only remittances sent with mobile technology increased 65% during 2020, reaching $ 12.7 billion, according to GSMA data.

Among the many benefits that remittances bring are:

Remittances represent 60% of the total income of many households, allowing them to better cope with uncertainty and accumulate assets.

– They reduce poverty, a 10% increase in remittances per capita leads to a 3.5% reduction in poverty.

– It allows those who receive them to have better medical care (access to health care, preventive medicine and health insurance).

– Children from host families have a higher birth weight and the mortality rate during the first year of life is lower.

School enrollment rate doubled, remittance recipient households have access to better education and they invest about a tenth of their income in it.

– Remittances have a positive effect on the quality of life and assets of the recipient families because they invest these resources in improving their homes.

– In rural communities, half of remittances are used in agriculture.

– Additional income increases household demand for food, which in turn increases local food production and improves nutrition, especially of children and the elderly.

– The value of migrants is enormous: knowledge, skills and contacts.

– The savings of families receiving remittances in the countries of origin and of migrants in the host countries increase the financial resources available for the global economy.

The Latin American countries that received the most remittances in 2020 were:

(with data from the World Bank and KNOMAD):

Mexico, $ 42.9 billion dollars

Guatemala, $ 11.4 billion

Dominican Republic, $ 8.3 billion

Colombia, $ 6.9 billion

El Salvador, $ 5.9 billion

Honduras, $ 5.6 billion

Brazil, $ 3.6 billion

Ecuador, $ 3.3 billion

Haiti, $ 3.1 billion

Jamaica, $ 3 billion

Globally, the 5 countries that received the most remittances in 2020 were:

India, $ 83.1 billion

China, $ 59.5 billion

Mexico, $ 42.9 billion

Philippines, $ 34.9 billion

Egypt, $ 29.6 billion

You may also be interested in:

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Among 52 OECD nations, Mexico is where the most amount of beer is drunk


eldiariony.com

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