Migrants’ money has positive effects on household finances and even the level of liquidity throughout the economy.
In 2021, migrants Latin Americans sent around $ 126,000 million to their countries of origin. Of that total, $ 4 billion reached Ecuador.
The most optimistic projections pointed to $ 3.6 billion for last year, but the injection of liquidity from the ecuadorians at Exterior It exceeded all expectations.
The manager of the Central Bank, Guillermo Avellan, acknowledged that those remittances constituted one of the three pillars of the economic growth in 2021, together with the improvement of adequate employment levels and the increase in credit through banks and cooperatives.
Yolanda Trujillo, saleswoman and head of household, explained that part of the remittances that came to her from her husband in the United States helped her complete the initial investment to set up a store over the past year.
“It was a great help because I still haven’t recovered the income that I had before the pandemic,” he said.
Ecuador is the eighth country to receive remittances
Again, both regionally and locally, money from migrants exceeded the amount of Foreign Direct Investment (FDI). And, in the Ecuadorian case, it partially covered the space left by the governments of the day and their scarce amount of resources available to implement massive programs of direct assistance to both citizens and companies.
In Latin America, Mexico is the country that received the most remittances in 2021, with a total amount of $ 52.7 billion; While Ecuador it ranked eighth, with an impact equivalent to 4% of the Gross Domestic Product (GDP).
According to the latest report from the Association of Private Banks (Asobanca), the level of deposits in the financial system grew by more than $ 4,100 million in the last year. One of the factors that drove this reality were precisely the remittances.
In addition, those higher deposits allowed banks to deliver 12% more loans.
To better understand the positive effects of remittancesThen myths around them are debunked:
Remittances do not reduce poverty
A common myth surrounding the money that comes from migrants is that it does not contribute to reducing poverty and inequality. However, this money has prevented further economic and social deterioration because it reaches middle-class families or those with lower living conditions.
According to a study by the World Bank (WB), the poverty it would have increased between 2% and 3% more without the money from Ecuadorians abroad. In other words, the current percentage of 32.2% poor could have escalated to more than 35%.
Likewise, remittances have been important in reducing the gap in access to basic services because, in a large proportion, they go to finance family expenses in health and education.
Remittances generate dependency on those who receive them
The myth states that remittances they generate dependency because families get used to receiving and do not want to continue working. However, studies by at least three multilateral organizations show that they not only expand the possibilities of children to go to school; but also the options of entrepreneurship of women who are heads of household.
In regional terms, migrants’ money drove a 30% growth in spending by beneficiary households for purposes such as education and new businesses.
Remittances are the only benefit of migration
There is a myth that the benefits of migration for the country of origin they are only accounted for in remittances. In reality, there are also other positive effects such as the transfer of knowledge and skills; the creation of markets for national products abroad; investment boost, among others.
In addition, although it is not ideal, it becomes an escape valve for economies such as Ecuador, which does not offer adequate job opportunities to the majority of its population.
Currently, a little more than 5.6 million Ecuadorians are between underemployment (plus other precarious jobs) and unemployment. Without these remittances, and their multiplier effect on household consumption, this level of informality and lack of work could have increased by 2%.
What is questionable about the migration phenomenon is that local and international mafias take advantage of the need to establish illegal trafficking networks. In 2021, around 71,000 Ecuadorian illegal immigrants were detained at the border with the United States. (JS)
Con respecto a 2020, el monto total de remesas creció en $700 millones.