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Immigrant Remittances Bring Much-Needed Cash to Latin American Countries - 2002-04-02

Economists estimate immigrants working in the United States are wiring $23 billion a year to their families in Latin America, most in increments of less than $200 a month. Mexico estimates such remittances are the nation's third largest source of income, after oil and tourism.

Trinity University Economics Professor Jorge Gonzalez says these immigrant remittances exceed the international development assistance available to Latin American countries.

And ironically, Mr. Gonzalez thinks, in some ways, this haphazard form of financial aid may be even more effective than government-to-government assistance.

"If you send development assistance to Guatemala, or to Nicaragua or to El Salvador, you are going to have a lot of people running these agencies, and every single one of them - the secretaries and everyone else - is going to be making money," he said. "So, the money that ends up getting into the hands of the poorest of the poor people, who need it the most, is going to be restricted."

Penn State anthropology professor Jeffrey Cohen, who works with several rural communities in Mexico, agrees the effects of the immigrant remittances are generally beneficial. However, in his opinion, they can change the nature of a local economy. In previously cashless communities, which had only traded goods, he says, the sudden arrival of dollars can disadvantage residents who do not have relatives working in the United States.

"One of the outcomes of migration is the increasing involvement of these communities in Western market systems, based around cash, based around wage labor," said Mr. Cohen. "And, if you don't have the cash, and you don't have the jobs, that can really change your position."

Fortunately, he adds, many Latin American immigrant workers in the United States are not only sending money to their families, but are also uniting to fund community-wide projects. "In countries like El Salvador and Guatemala and Mexico," said Mr. Cohen, "you have migrants that are from those communities organizing to do things, like expand electrical grids, build sewer systems, renovate schools."

In fact, for economist Jorge Gonzalez, immigrant remittances to Latin America are giving governments there a free welfare system. He explains: "If this money is satisfying the basic needs of these people, then the governments in Latin America don't have to satisfy those needs any more, and they can provide infrastructure that is needed, the education that is needed, the health care that is needed."

Their capability to do so should increase in the future, since, economists say, U.S. immigrant remittances to the region have been rising at the rate of 11 percent a year.