Remittance Man

In the 19th century, the English usage of the word usually referred to money sent from England – the opposite direction to today’s usual usage of the term. A remittance man was an exile living on money sent from home. Within Victorian British culture, this often meant the black sheep of an upper or middle class family who was sent away (from the UK to the Empire), and paid to stay away. These men were generally of dissolute or drunken character, and may have been sent overseas after one or more disgraces at home.

An example of this usage is in Robert Louis Stevenson’s book The Wrecker where the character Tommy Hadden is cast as the ‘remittance man’. In the book
“     Tom Hadden (known to the bulk of Sydney folk as Tommy) was heir to a considerable property, which a prophetic father had placed in the hands of rigorous trustees. The income supported Mr. Hadden in splendour for about three months out of twelve; the rest of the year he passed in retreat among the islands.     ”

Latin America and the Caribbean

In Latin America and the Caribbean, remittances play an important role in the economy of the region, totaling over 66.5 billion USD in 2007, with about 75% originating in the United States. This total represents more than the sum of Foreign direct investment and official development aid combined. In seven Latin American and Caribbean countries, remittances even account for more than 10% of GDP and exceed the dollar flows of the largest export product in almost every country in the region. The Inter American Development Bank’s Multilateral Investment Fund (IDB-MIF) has been the leading agency on regional remittance research.

This research has often been carried out in collaboration with Manuel Orozco of the Inter-American Dialogue, his remittance research can be found at the Dialogue[7] and at the IDB. In this region, Mexico, one of the best documented examples of migration and remittances, received remittance inflows of almost 24 Billion US$ in 2007, 95% of which originated in the US.

A significant study conducted by the Inter-American Development Bank (IDB) in 2004 provides useful insight into remittance and related migration patterns between Latin America and the United States. The study reveals that over 60% of the 16.5 million Latin American-born adults who resided in the United States at the time of the survey regularly sent money home. The remittances sent by these 10 million immigrants were transmitted via more than 100 million individual transactions per year and amounted to an estimated $30 billion during 2004. Each transaction averaged about $150-$250, and, because these migrants tended to send smaller amounts more frequently than others, their remittances had a higher percentage of costs due to transfer fees.[8]

Migrants sent approximately 10% of their household incomes; these remittances made up a corresponding 50-80% of the household incomes for the recipients. Significant amounts of remittances were sent from 37 U.S. states, but six states were identified as the “traditional sending” states: New York (which led the group with 81% of its immigrants making regular remittances), California, Texas, Florida, Illinois, and New Jersey. The high growth rate of remittances to Mexico (not the total amount) is unlikely to continue. In fact, according the Mexican central bank, remittances grew just 0.6 during the first six months of 2007, as compared to 23% during the same period in 2006. Experts attribute the slowdown to a contraction in the U.S. construction industry, tighter border controls, and a crackdown in the U.S. on illegal immigration.