How important are remittances to Mexico’s economy?

There are millions of Mexican workers in the USA who send a sizable portion of their wages back to their families in Mexico. On a per person basis, Mexico receives more worker remittances than any other major country in the world.

An estimated 20% of Mexican residents regularly receive some financial support from workers abroad. Such remittances are the mainstay of the economies of many Mexican communities, such as many rural areas in Durango, Zacatecas, Guanajuato, Jalisco and Michoacán. Studies suggest that the funds sent as remittances are mostly spent on housing, food, clothing and durable consumer goods. A growing portion is being invested in education and small businesses. The corollary is that only a small percentage goes towards savings.

In 2008, remittances flowing back to Mexico exceeded $25 billion.The value of remittances fell slightly in 2009, according to World Bank figures, but are forecast to increase again this year. Only India and China, both with far higher populations than Mexico, have larger sums of remittances entering their economies.

According to figures published in The Economist (13-19 November 2010), remittances in Mexico are equivalent to 2.5% of the nation’s GDP. Mexico’s degree of reliance on remittances is greatly exceeded by the comparable figures of 22.4% of GDP for Lebanon, 11.8% for Bangladesh, 11.7% in the Philippines, 7.0% in Vietnam, 6.0% in Pakistan and 3.9% for India. (In China, remittances account for only 1.0% of GDP).

Related posts on this bog:

• The 10 states in Mexico receiving the highest remittances per person
• The 10 states in Mexico receiving the most remittances in total
• The 10 states in Mexico with the highest percentage of homes receiving remittances
• The US Bracero guest worker program
• Migration channels between Mexico and the USA, or how distant towns are linked through migration
• The connection between Napizaro (Michoacan) and North Hollywood (California)
• Over half a million natives of the state of Puebla live in New York City

Migration between Mexico and the USA is the focus of chapter 25 of Geo-Mexico: the geography and dynamics of modern Mexico. Ask your library to buy a copy of this handy reference guide to all aspects of Mexico’s geography today! Better yet, order your own copy…