Reading about Trump’s decision to end ‘Temporary Protection Status’ for 200,000 Salvadoran immigrants in the US – paving the way for them to be deported – I was struck by a statistic: 17.1% of El Salvador’s GDP comes from remittances, with about 90% of them coming from Salvadorans living in the US. Its neighbour Honduras, also relies on money sent back home from those who have emigrated for about 17% of GDP, more than any other single industry in the country. This seemed like a crazy economic structure, and a pretty risky situation, too – the anti-Latin Americans sentiment in the White House. I wanted to find out more about remittances and where the money sent from the US goes.
What is a remittance?
A remittances is money that an immigrant sends home to his or her country of origin, via wire, mail or online transfer (think Western Union). They’re peer-to-peer transfers, often between friends and family, rather than money sent abroad by businesses.
Why are remittances important?
As the world has become more globalised and workers have migrated more and more to other countries, remittances have become increasingly important. They now make up an important proportion of some small and developing countries’ GDPs. For example, in 2014 25% of Nepal’s GDP was made up of remittances. In the late 1990’s the amount of money sent in this way began to exceed the amount given in development aid from rich countries to poor countries. In 2016, according to The World Bank, US$573 billion moved around the world as remittances.
Hey big sender
Unsurprisingly, the world’s largest economy is also the biggest sender of remittances. These are the top 20 receivers of remittances from the US, according to the World Bank. Unsurprisingly, Mexico takes the top spot. Other Latin American countries and developing Asian countries are also prominent.
But those raw numbers don’t take into account the numbers of each nationality that have immigrated to the US, and therefore how many people are sending those massive sums. So in the below chart the remittance data has been divided by the numbers of each nationality resident in the US (again according to the World Bank)
Obviously it’s a very imperfect average as there’s no telling the actual number of individuals who send something and how many send absolutely nothing. But we can imagine the ‘average immigrant’ this chart shows as a representation of the monetary ties between different nationalities and their home countries.
Since recent immigrants are more likely to send money home, it probably makes more sense to look at those who have arrived in the last 30 years, as below.