The Effects of Remittances on Latin America and the Carribean

In order to evaluate the effects of migrant labor to the United States and Canada and the remittances those laborers are sending home to Central America it is imperative to see what is causing these individuals to leave their homelands. For the past twenty years the phenomena of globalization has taken hold and the world has never been the same. This process has lead to sever inequality among the world’s nations and has lead to a steep influx of immigration to the countries that “have” from the countries that “have not”.

The world is growing increasingly interconnected through this process called globalization. Globalization in essence is a process of deterritorialization, where through the use of new and innovative technological advances, boundaries drawn by countries are now virtually invisible. (O’Brian & Williams, 138) These advances have made it possible and easier to travel long distances and a relatively short amount of time, or to communicate with someone on the other side of the world virtually instantly. Brian Atwood, former administrator of the US Agency for International Development (USAID) has this view about globalization: “…globalization has a great potential to create competitive economies and to facilitate access of information and technology. The problem of globalization is that it is now alienating the developing countries”. It is clear to see why Mr. Atwood has this view. The countries that are going through these vast technological advances are the rich countries and many parts of the world lack, in comparison, to these more wealthy “first world” countries. So while the rich are reaping the benefits, the “developing nations” lag behind. It is safe to assume that globalization is not occurring at the same rate and pace in all regions and countries of the world. (O’Brian & Williams, 138)

This uneven process of globalization is making the countries that lack struggle to keep up with those that are striving and, in all certainty, many of the people are at or below the poverty line and are struggling to survive. These countries have little opportunities for their inhabitants to strive so the people go abroad to make a living. This is especially common in Central America, especially Mexico. Since the bustling economies of the United States and Canada are in such close proximity, that is where they chose to go. The people who leave and go to work in the other countries are called migrant laborers. In many cases they stay in the migrated country illegally. The money they send back to their home countries is called remittances. Informally defined, remittances are typically transfers from a well-meaning indivdual or household that are targeted to meet the specific needs of the recipients, by doing so they tend to reduce poverty. (Ratha, 2005) It is hard to estimate the amount of money that is being sent to the native countries but in 2005, approximately $45 billion was sent from the United States to Latin American and Caribbean countries. That is twice the amount of what was sent 10 years prior, (Cevallos, 2005) but keep in mind, that is only a rough “officially tracked” amount. Many of the migrant laborers work jobs that are “off the books” and send or personally deliver cash. It is very hard to track those figures.

The rich countries have used technology and big business to facilitate their global ties and strive through globalization. The poor countries, on the