Economic Effects of Remittances

1
Economic Effects of Remittances

• Aly Miner
• Dawn Sepian
• Bryce Coryell

2
Source

• Chapter 6, Page 130
• Pew Hispanic Society
• FAIR
• BizJournals.com

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Remittance

• The service of making a payment at a distance
  i.e., sending money abroad.

4
Boom

• Remittances skyrocketed in the 1990s
• Total remittances are estimated at 20-30 billion
  
• Remittance average is only 200-300
• Cost of transfer is 10-15 of average total
• 20-30 of Mexican capital investments is from
  remittances

5
Methods

• Private Services
• Western Union, Moneygram
• Higher Fees
• Dont Always Need ID

• Bank / Credit Union
• Banco De Mexico, Wells Fargo
• Lower fees
• Usually need ID

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Economic Effects

• Remittances were the 3rd largest foreign exchange
  generator in Mexico in 2003 Only behind
  maquiladoras (border factories) and oil
• Great source of grass-roots investment in
  developing countries

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Economic Effects Contd

• Mitigating effect on hard times in South America
• Significantly effects balance of payments / puts
  downward pressure on value of Dollar
• Lowers US Reinvestment / Increase elsewhere

8
Remittance Issues

• Gouging of immigrants?
• Hidden fees
• Average immigrant paying higher fees than US
  citizen
• Lost investment to US?
• Perpetuating culture of dependency FAIR, 2004

9
Developments

• Matricula Consular
• IRnet
• ATM
• US Postal Service

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Developments

• Matricula Consular
• ID card issued by Mexican Consulate, allows
  holder to open bank account at some banks without
  a valid SS

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IRNet

• IRNet
• International Remittance Network
• Network of credit unions charging flat fees for
  remittance.

12
ATMs

• Allows people to pull American dollars out of ATM
  machines (Billions in motion) and they are only
  being charged the fee.
• There are no currency charges associated.

13
US Postal Service

• Dinero Seguro
• Promotional Program
• Competitive

14
Any Questions?
15
Questions

• Behind maquiladoras and oil, what was the 3rd
  largest generator of foreign exchange in Mexico
  in 2003?
• Drugs
• Border Factories
• Remittances
• None of the above