FAMILY REMITTANCES to Latin America and the Caribbean surpassed US$65 billion in 2015, registering six per cent growth over the previous year.
Among those countries with the highest levels of year-to-year growth are Colombia, Guatemala and Haiti. Mexico grew 4.8 per cent, which also drives overall regional growth. Some other countries registered negative remittance growth, including Panama, Costa Rica, Uruguay and Guyana.
At first glance, increases are predominantly taking place in countries that display conflict, violence or poor governance, accompanied by slow economic growth in some cases.
In fact, the 2015 remittance growth rate correlates with state fragility. What comes across is that growing state fragility seems to be a factor driving migration and in turn increasing remittances. Remittances to Mexico and Central America have experienced important increases over the past ten years, and particularly during the 2008-2009 economic recession.
The factors affecting this growth are diverse, but generally relate to United States economic performance, increases in migration, and slow economic growth in the region.
These remittances to Mexico and Central America represent nearly two thirds of all flows to Latin America and the Caribbean.
In the Mexican case, growth has been related to increases in the frequency of sending, exchange rate fluctuations, and continued migration. Remittances to Mexico have continued to increase over the past three years.
In May 2015, Mexico registered the highest number of transactions recorded in its balance of payments. Moreover, March, April and July 2015 surpassed those of the past five years. Moreover, six of the ten highest transaction volumes ever were registered in 2015.
A look at remittances by Mexican state shows that the increase in transactions was correlated with security-related factors. Two indicators, the index of peace and homicides, were positively correlated with increases in the number of remittance transactions. As violence increases, so do remittances.
Central American countries are among those that have the highest continual remittance flows in Latin America and the Caribbean, and Guatemala was the country with the largest remittance growth from 2014 to 2015 at 15 per cent.
In fact, their share from the entire Latin American region increased from 17 per cent to 25 per cent in 15 years. Most growth is related to Central American flows, specifically Guatemala, El Salvador, Honduras and Nicaragua. These flows reflect sustained growth since the decade of the 2000s.
Aside from statistical improvements in measuring flows, these countries have experienced annual growth over seven per cent and only in one year (2009) they were negative. In total, these flows amount to nearly US$17 billion annually.
Guatemala showed the largest remittance growth of any Latin American or Caribbean country from 2014 to 2015, reaching US$6.2 billion. Remittances to Guatemala increased steadily since the early 2000s, and have continued to do so, with the exception of a dip during the 2009 economic recession.
This growth is at least partly due to the fact that the Guatemalan migrant population is still growing. According to US census data, the foreign-born Guatemalan population in the US increased ten per cent from 2010 to 2014.
While each country is slightly different, increases in remittances to Central America are generally related to migration from the region caused in large part by poor economic performance and violence. Violence is generally measured in terms of intentional homicides. However, our research shows that other forms of violence, including extortion, may be equally if not more important in terms of driving international migration.
Inter-America Dialogue is a Washington DC think tank that tracks immigration-related economic issues.
