[PDF][PDF] Explaining the increase in remittances to Mexico

J Cañas, R Coronado, PM Orrenius - Chiapas, 2007 - core.ac.uk
J Cañas, R Coronado, PM Orrenius
Chiapas, 2007core.ac.uk
Mexicans living in the United States sent a record $23.1 billion back home in 2006, putting
remittances third after oil and maquiladora exports as a foreign-exchange generator for
Mexico (Chart 1). Over the last decade or so, inflation-adjusted remittances have grown at
an average annual rate of 15.6 percent. Since 2000, the rate has risen to 20.4 percent.
What's driving the rapid growth of remittances to Mexico? It'sa question that has puzzled
researchers for years because the most likely economic forces don't seem to be in play …
Mexicans living in the United States sent a record $23.1 billion back home in 2006, putting remittances third after oil and maquiladora exports as a foreign-exchange generator for Mexico (Chart 1). Over the last decade or so, inflation-adjusted remittances have grown at an average annual rate of 15.6 percent. Since 2000, the rate has risen to 20.4 percent. What’s driving the rapid growth of remittances to Mexico? It’sa question that has puzzled researchers for years because the most likely economic forces don’t seem to be in play. Fundamental factors, such as the size of the Mexican migrant population, their income and the strength of their bonds to Mexico, haven’t grown as fast as remittances. Other variables, such as the peso–dollar exchange rate and Mexican economic conditions, have been relatively stable since at least 1996. What have changed are money-transfer costs, which have plummeted since 2000, and Banco de México’s measurement techniques. Together, these factors likely account for the bulk of unexplained remittance growth in the last few years.
core.ac.uk