[EQ] Close to Home: The Development Impact of Remittances in Latin America

Close to Home: The Development Impact of Remittances in Latin America

Pablo Fajnzylber and J. Humberto López

The International Bank for Reconstruction and Development / The World Bank,
October 2006

Available online as PDF file [89p.] at:
http://siteresources.worldbank.org/INTLACOFFICEOFCE/Resources/ClosetoHome.pd
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“……The report analyzes the characteristics of households that are remittance
recipients and how these characteristics affect the poverty-reducing impact
of observed remittances flows. It also devotes significant attention to the
macroeconomic impact of these flows, and explores policies and interventions
aimed at enhancing the development impact of remittances in the region. On
the whole, the main messages that emerge from Close to Home are quite
positive. Even though the estimated impact is moderate in most cases and
country heterogeneity is very significant, higher remittances inflows tend
to be associated with lower poverty levels and with improvements in human
capital indicators (education and health) of the recipient countries.

Remittances also seem to contribute to higher growth and investment rates
and lower output volatility. Against this background, remittances are to be
welcomed and actions that lower the cost of remitting and therefore attract
additional flows should be encouraged. These results, however, come with a
number of important qualifiers that deserve the attention of the region’s
policy makers. For one, the migration of workers that precedes remittances
flows is not without costs. Besides the social disruptions that take place
when a parent migrates and leaves his or her children behind, there are
potential losses of income associated with migrants’ absence from their
families and communities. Moreover, as a result of migration patterns, some
countries have lost significant portions of their college-educated
populations. ….”. Guillermo Perry Chief Economist for Latin America and the
Caribbean Region The World Bank

Content:

Foreword Executive Summary

I. INTRODUCTION

II. HOW RELEVANT ARE REMITTANCES IN LATIN AMERICA AND THE CARIBBEAN?

III. PROFILE OF REMITTANCES RECIPIENTS

IV. WHAT DO WE KNOW ABOUT THE MIGRATION PATTERNS OF LATIN AMERICANS?

V. DO REMITTANCES REDUCE INEQUALITY AND POVERTY?

VI. REMITTANCES, GROWTH, AND INVESTMENT

VII. REMITTANCES AND OUTPUT VOLATILITY

VIII. REMITTANCES AND HOUSEHOLD SAVINGS

IX. REMITTANCES AND HOUSEHOLD EXPENDITURES

X. REMITTANCES AND HUMAN CAPITAL

XI. REMITTANCES, LABOR SUPPLY, AND ENTREPRENEURSHIP

XII. REMITTANCES AND FINANCIAL SECTOR DEVELOPMENT

XIII. REMITTANCES AND THE REAL EXCHANGE RATE: ARE THERE DUTCH DISEASE
EFFECTS?

XIV. CAN FISCAL POLICY HELP TO MITIGATE SOME OF THE POTENTIAL NEGATIVE
IMPACTS OF REMITTANCES?

XV. PRIVATE AND PUBLIC TRANSFERS: IS THERE CROWDING OUT?

XVI. POLICY COMPLEMENTARITIES: WHAT CAN POLICY MAKERS DO TO ENHANCE THE
DEVELOPMENT IMPACT OF REMITTANCES?.

XVII. THE REGULATORY FRAMEWORK: HOW TO FACILITATE REMITTANCES FLOWS

XVIII. CONCLUSION: THE DEVELOPMENT IMPACT OF REMITTANCES IN LATIN AMERICA
AND THE CARIBBEAN

References

URL:

http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/LACEXT/EXTLACOFFICEOFCE/0
,,contentMDK:21105202~pagePK:64168445~piPK:64168309~theSitePK:870893,00.html

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Received on Tue Oct 31 16:09:51 2006