Mexican Immigrants Sending More Money Home

Mexican immigrants in the United States are sending greater sums than ever back home, evidence that family-based “foreign aid” for Latin America is on the rise.

But the rate at which the cash remittances are rising has sparked some debate here. Figures released by Mexico’s central bank show a 49% increase in cash received in the first six months of this year compared with the same period in 2000. That jump inspired new appreciation for immigrants’ generosity--but also doubts among skeptics about whether the Bank of Mexico is accurately measuring the funds.

Over the first half of the year, U.S. residents of Mexican descent sent $4.29 billion in remittances to their homeland, contrasted with the $2.87 billion sent in the first six months of 2000.

Until the Sept. 11 terrorist attacks in New York and at the Pentagon darkened U.S. economic prospects, Mexico was on track to receive upward of $9 billion in remittances this year, a figure now highly unlikely, although $8 billion is still possible, government officials said.

The impulse for the increase comes from immigrants such as Humberto Urena, owner of a Vernon garbage-truck-painting business, who are sharing their newfound affluence with family members back home.

Although Mexico is in the midst of a recession, there is no economic crisis that in the past has caused annual increases to rise above the 10% average annual growth rate, heightening skepticism among experts such as Fernando Lozano Ascencio, a sociologist who has published studies about the remittances.

“There is no instability in Mexico, no galloping inflation, no strong indicator to explain this kind of volume,” said Lozano, a professor at the Regional Center of Multidisciplinary Studies in Cuernavaca.

Some experts say the statistic simply reflects rising immigration and migrants’ prosperity, others that it must include business payments and maybe laundered drug profits to have risen so much. Top officials at money transfer agencies in Mexico say they have noticed no out-of-the-ordinary spike in the volume of cash they handle.

Although the Bank of Mexico has acknowledged that remittance measurement is as much an art as a science, it insists the inflow of family-directed dollars is rising. Money comes in at the rate of 1 million transactions a month, and the bank must use sampling techniques that are not always precise.

“It could be that we are measuring the remittances better than in the past,” said a government official who asked not to be named. “But what we are sure of is that the entry of money into Mexico is going up.”

The cash brings twin benefits to destination countries by reducing poverty and in balancing the national finances by providing foreign exchange, said German Zarate-Hoyos, an economist at the State University of New York College at Cortland. Only international oil sales, among its economic sectors, generate more foreign exchange for Mexico.

Mexico took in $6.28 billion last year, making it the second-largest recipient of remittances from citizens living abroad after India, which received more than $10 billion, according to a recent United Nations study.

“I was sending $200 or $300 a month a couple of years ago, but since I went out on my own with the paint shop, things are going really well, and so I give my mother in Guadalajara $500 a month now,” said Urena, who immigrated to California in 1972.

The long-term expectation is that remittances--which last year totaled about $12 billion throughout Latin America--will continue to rise. The steady increases over the last decade defy the expectations of some observers who predicted that the flow would tail off as immigrants are integrated in U.S. society and become more wrapped up in their own financial cares and needs.

Wayne Cornelius, director of the Center for Comparative Immigration Studies at UC San Diego, said a dramatic increase in 2001 remittances is possible despite the onset of economic deceleration because “migrants are more likely to be fully employed and earning more through overtime and second jobs than non-migrants.”

“So, it’s possible that the pool of funds to be remitted to Mexico was growing in real terms during this year,” Cornelius said. “Whether by 50% or not, I don’t know.”

The cash flowing into Latin America broadly represents an alternative form of foreign aid, said John Sanbrailo, executive director of the Pan American Development Foundation and formerly an official with the U.S. Agency for International Development, or USAID.

“The 35 million Hispanics in the United States are the major source of foreign aid to Latin America and the Caribbean,” Sanbrailo said.

The $12 billion that Latinos sent to Latin America and the Caribbean last year dwarfed the $772 million that USAID granted to the region. Also by comparison, the Inter-American Development Bank made about $7 billion in loans and the World Bank about $5 billion to Latin America and the Caribbean.

“The remittances are a good thing because they tend to go to homes that are on the bottom of the income scale,” said Zarate-Hoyos. “In rural homes, one out of 10 homes receives remittances.”

Governments, including that of Mexican President Vicente Fox, are trying to persuade immigrants to channel funds into social and commercial ventures to improve communities and create jobs back home.

Pablo Serrano, a Mexico City economist with the United Nations’ Economic Commission for Latin America and the Caribbean, said the downside to remittances is that they are a form of “dependence on foreign resources that in one way or another could change or disappear.” That’s a risk especially for a country like El Salvador, whose $1.7 billion in annual remittances represents 14% of the gross economic output.

“So it’s important that governments try to channel remittances to productive projects and not just family consumption, which is how 96% of them are used,” Serrano said.