Mexican immigrants living in the U.S. have been building homes in Mexico for years, but the likelihood of them returning to their dream houses is slim at best.
The Mexican economy is heavily reliant on remittances from migrants living in the U.S. It is reported that migrants sent $25 billion worth of remittances back home in 2015, according to Univision. The payments that were formally tracked account for 2 percent of Mexico’s GDP, according to the nonpartisan Migration Policy Institute.
To give context to the importance of remittances, Mexican state oil company PEMEX only contributed $23.4 billion to the Mexican economy. Remittances from Mexicans living in the U.S. in 2015 surpassed the GDP of Afghanistan in 2015, which stands at $19.2 billion.
One of the central problems with the dependence on remittances is that the money sent home goes towards the daily financial needs of families, Univison reports. There is not a great deal of investment in the infrastructure of the rural Mexican towns that migrants hail from, due to the quick personal spending by family members.
The research division of global banking giant BBVA calculates that most of the U.S. ranks number one as the top “remittance-sending country.” Mexico is the world’s fourth-largest recipient of remittances, with 22.4 percent of the world’s remittances coming from the U.S.
Mexico is also the largest remittance recipient in Latin America and the Caribbean, accounting for 37.6 percent of the region’s remittance money. BBVA reports that Guatemala is at a distant second place in the region, at 9.4 percent.
Mexican remittances and their importance to the country’s economy is a central issue for America’s 2016 presidential campaign. GOP presumptive nominee Donald Trump stated that he will get Mexico to pay for a border wall by targeting global money transfer firms such as Western Union and their services to foreigners.
Trump says he will force Western Union and others to ask for legal identification of all individuals using their services and deny services to illegal aliens. The tightened regulations on money transfer institutions could have devastating impacts on the Mexican market.
“The notion that we’re going to track every Western Union bit of money that’s being sent to Mexico, you know, good luck with that,” President Barack Obama commented in April on Trump’s plan.
Mexican officials have gone to great lengths to discourage Trump from sticking to his remittance penalization plan. The Mexican Deputy Secretary of Finance Fernando Aportela said during a discussion at the nonpartisan Wilson Center think tank in May that Mexican migrants would just find illegal ways to send money back home.
“We will end up getting less information,” if remittances go off the books, Aportela stated. “New challenges,” are expected by Mexico if there is a significant shift in U.S. policy towards remittance practices.
BBVA’s research in its 2016 Mexico Migration and Remittances Yearbook stated that the construction industry employs a plurality of working Mexican men in the U.S. at 25.7 percent. The leisure and hospitality industry employs 19.8 percent of working Mexican women in the U.S. While 93.2 percent of Mexican men working in the U.S. earn over $10,000 and the same is true for 82.5 percent of Mexican women making a living in the U.S., according to BBVA research.
Sending money home to Mexico has done little to change the standard of living for many people in Mexican ghost towns. Between the Mexican government not investing much in the needs of their poorest people, along with a broken immigration system, it seems that remittance-built towns will remain empty.
Source: BIZPAC Review