The overlooked impact of remittances

The movement of people across national borders is a worldwide phenomenon. Mex CA MapAccording to UN data, there are 232 million international migrants in the world, a little over 3% of the world’s population. A sizeable number of Americans reside or work outside of the United States. An estimated 6.2 million Americans (excluding military) live abroad. Over 1.5 million reside in Europe, another 2.5 million live in Western Hemisphere countries other than the United States.

Due to the flow of undocumented migrants coming across the border with Mexico, immigration policy has become a hotly disputed political issue in the United States. Other than agreeing that undocumented migrants should not be shot, American politicians can’t agree on immigration policy priorities or how to deal with the estimated 11.7 million undocumented people residing in the country. In an attempt to resolve the matter, the U.S. Senate passed a massive immigration bill that greatly enhanced border security, changed visa requirements and regularized the status of many migrants.

Unfortunately, the bill has long moldered in the U.S. House of Representatives because its headstrong conservative members refuse to bring it up for a vote. Tired of the unyielding impasse in Congress, President Obama has launched initiatives that will regularize the presence of approximately five million undocumented people, including a large number brought to the U.S. as young children. As a result of the executive branch policy shifts, the selected groups will be able to function as temporary residents safe from the threat of deportation.

As expected, the White House move has provoked an explosion of complaint, much of it from Congress, from the same people who failed to act on the Senate bill. Despite the assertions that the Obama administration is soft on illegal immigration, the U.S. government is deporting over 350,000 people per year, a large increase over earlier times.

Never mentioned in the fear-tinged immigration harangues is the fact that the Remit 1remittances workers send home are important because they have become the major source of developmental assistance. The amount of remittances flowing to developing nations is larger than the amount of development assistance provided by donors.

With Mexico part of the North American land mass, it should not be surprising that the largest group of undocumented people residing in the U.S. are Mexican nationals. Mexico is a country with a population of 118 million, nearly 50% of the population lives below the poverty line.

In 2013, approximately $22 billion in remittances flowed back to Mexico. Remittances are the country’s second- largest source of foreign exchange. TheyRemit 2 cover the living expenses of millions of people and are helping to develop the economy. The U.S. also hosts a sizable contingent of migrants from Mexico’s southern neighbors, Honduras, El Salvador and Guatemala. With the poverty rate in these countries ranging from 36% to 60%, remittances provide a sizable portion of national income. They account for 10% to 20% of GDP.

The combination of a falling birth rate in Mexico, an expanding Mexican economy and tighter border security has reduced the number of illegal border Remit 3crossers. Border Patrol apprehensions are running at approximately 415,000 per year, down from the high of 1.6 million in fiscal year 2000. In the countries south of the border, the pressure to migrate is not going to completely recede until the local economies develop to a point where workers aren’t forced to leave to find a job. Given the lack of interest in expanding developmental aid, remittances are going to continue to play a big part in economic development.

Depending on the circumstances, the human traffickers charge between $3,000 and $10,000 to move a person across the border. With border security BP Tucsoncontinually tightening, the U.S. government should be able to control the flow of migrants. The administration should think about charging resident and future migrant workers an amount similar to the smuggling rate for a temporary work visa. It would legalize the border crossers while helping to continue the flow of vital remittances to home countries.

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