Economic Crisis and the Decline of Remittances to Mexico

In this era of globalization and strong migratory flows what happens in the United States and other core capitalist countries has repercussions on the developing world. Anthropologists working in both migrant-sending communities in Latin America and in migrant-receiving communities in the United States currently have the opportunity to map how economic downturn in the receiving country affects migrant families and communities in the sending country, thus showing how the local is affected by the global, an important theoretical (as well as humanitarian) concern in anthropology.¹ Applied anthropologists working in both the United States and abroad may be able to play a role in helping unemployed immigrants, whether staying in the United States or returning to their home communities, to generate or access alternative sources of income.

Recently much attention has been paid to the present and predicted decline of remittances in Latin America and the Caribbean. Slowdowns in remittances have been registered in Mexico, Brazil, El Salvador and Guatemala (Lazo, 2008: 1). The effects of these slowdowns in remittances will be widespread in the migrant-sending countries. It is estimated that "El Salvador receives about 18 percent of its gross domestic product from money abroad and Guatemala about 12 percent" according to the Inter American Development Bank (Lazo 2008: 1).² The World Bank also notes a slowdown in remittances since the third quarter of of 2008, a situation expected to "deepen" in 2009 due to what has now become a global financial crisis (Ratha, Mohapadra, and Xu 2008:1). The World Bank expects the flow of remittances worldwide to decline by between 0.9 and 6 percent in 2009. Regional differences exist, however. Remittances from the United States to Latin America and the Caribbean slowed most between 2007 and 2008, showing a zero percent increase; but remittances from all sources to the Middle-East and North Africa increased by 8 percent in the same time period (Ratha, Moapadra, and Xu 2008: Table 1, p.2).

Even in countries where absolute amounts of remittances remain stable, the value of dollar remittances has fallen. The Inter-American Development Bank reports that in 2008 remittances to Latin America will fall by a value equivalent to 150 billion dollars, or by 1.7 percent, the first fall since the Bank began keeping track in 2000. The Bank attributes this decline in remittances to four causes: 1) inflation in the immigrant receiving and sending countries; 2) recession in the United States and Spain which prevents access to better paying jobs; 3) the anti-immigrant climate in receiving countries; and 4) the fall in the value of the dollar compared to currencies in a number of Latin American countries, thus lessening its purchasing power (Cardoso 2008: 1). The Bank holds that the situation is particularly difficult in Mexico where 57 percent of remittances are used to cover basic needs like clothing, food, and housing. The other 43 percent is invested in savings, small businesses, property, and education (Cardoso 2008: 1).

While Mexican authorities predicted an 8 percent decline in remittances over the course of 2008, the World Bank predicted only a 4.4 percent decrease (Ratha, Mohapadra, and Xu 2008: 4). Even this decline will have a great impact on the Mexican economy, however, since after oil exports, remittances are the highest source of foreign exchange (Wilkinson 2008:1; González Amador 2008: 1). It was reported in September 2008 in La Jornada, a widely read Mexican newspaper, that the head of the national tax office (Secretaría de Hacienda y Crédito Público) estimated that due to the downturn in the U.S. economy there would be 2.5 billion dollars less in remittances in 2008 than there were in 2007. The head of the tax office sustained that approximately 10 million Mexicans are working in the United States and that their remittances, amounting to approximately $25 billion annually, help to reduce poverty and increase consumption in Mexico (González Amador 2008: 1). It is estimated that one in four Mexican families receive remittances from abroad (González Amador 2008: 1).

Migrant...