Tag Archives: Remittances and immigration

Chart of the Day: Remittances from the US to Mexico

From the International Money Transfer Conference, coming to Mexico shortly:


The Latin America “Middle Class” Cliche: Why It Doesn’t Work And How To Fix It

If we wanted to go totally meta with this, we could talk about how people’s shrinking attention spans preclude meaningful conversation and understanding about subjects too complex to be crunched into 140 characters or even 1,200 words.

Seriously, how many slice of life stories do we really need to read about Manuel the carpenter/mechanic/cab driver in Toluca/Cali/San Jose who just paid for a new dishwasher in monthly installments with remittances sent from his 1/3/7 relatives in the US ?

Enter, unexpectedly, the World Economic Forum on Latin America, which just wrapped in Peru the week before last. I never expected a WEF gathering to nail it, but nail it they did in a panel entitled, “Unleashing the Power of the Middle Class“, whose commentary I promise you is far more compelling than the session title.

I don’t blame anyone for not having an hour to sit through this (that’s what I’m here for), so what we have here instead are two of the smartest things I’ve heard anyone say about the so-called “middle class” of Latin America since I don’t know when:

At about 16:00, Marcelo Cortes Neri, Brazil’s Minister of Strategic Affairs:

Just one small point with respect to this in terms of definition. I think when we talk about middle class, we talk very much about US or European definitions, where you have two cars, two dogs, two kids and I don’t think this is a good definition in my opinion.

I think we are having two kids which is important, gives you sustainability, but I think if we look at the US and Europe, we will see ourselves as poor–they are the richest in the world–so I am very much in line with the Minister’s idea, we have to look within our communities and countries, and I think if we do that, the world here…because Latin America actually in terms of its income and its very high inequality, but this is a very good picture of the world, so I don’t think we should import definitions from developed countries, otherwise we are not going to see ourselves moving; we are going from someone whose income changed from $1,000 to $2,000, and you look up, you say well nothing changed in this guy’s life, but there’s a revolution going on.

One last point: I think it would be very tough to respond to the aspirations of the Latin American middle class because we have very high aspirations. Latin Americans are very positive toward their future, it’s more…if you are controlling for income, nobody is more optimistic to the future than Latin Americans. So this is tough.

I’ve been saying this in some way or another for years now, but Minister Neri actually put it in far more eloquent language.

The second comment, which comes at 30:00, is Augusto de la Torre (no relation to yours truly) Chief Economist, Latin America and the Caribbean, World Bank. And disregarding the aforementioned inappropriateness of the phrase “middle class”, what he has to say could not be more true:

I’d like to add a dimension which we highlight in our report. We are excited about the growth of the middle class because people have a better life. But we are also excited because we believe deep down that the bigger middle class will make for better societies. So there is this correct perception that the middle class is associated with citizenry. That middle class people are more educated, they have better jobs, they have a better understanding of what the common good is, and they can push for better institutions, they can reduce the levels of corruption, monitor the government so they can produce better education, etc.

So we did some exercises on this and we found it is not so simple. When we look at the world as a whole and you do the statistics, you do find very good positive associations. Countries that have larger middle classes have lower corruption, better institutions, better government spending, quality, freer markets, better property rights. So these associations are what inspire us. But we have also found, and this is the troublesome part, that the Latin American middle class does not seem to be opting into a better social contract. In fact, what we found was evidence that the middle class in Latin America has a tendency to opt out of the social contract.

Let me give you a couple examples to explain what I mean. The moment a Latin American household becomes a middle class household, the first thing they do is take their kids out of public schools and put them in private schools. They no longer are concerned about the quality of public education as a result. You go to the Dominican Republic, the moment you are a middle class family, you buy your own electricity generator, because you don’t want to trust public electricity services. So once you have your generator, you don’t care about the quality of the public good of energy.

Or when you become a middle class in many Latin American cities, you try to buy a house in gated communities, they have walls, they have private security, because you’d rather not rely on the public police. So you could end up in a bad equilibrium.

So rather than what you would expect, which is a middle class which contributes to better institutions, more public goods, more cohesive society, better citizens, you may end up with a middle class that opts out and finds private ways of solving their own problems. And their interests may diverge from the public good.

Now let’s close this by going back  to the meta. It seems to me that so many people are so desperate for certainty that they resort to the flimsiest of evidence and the sloppiest of explanations to lean on for decision making. In short, sounding like you know what you’re talking about has in some ways become more significant than actually knowing what you’re talking about. And the pithier you sound, the more you’ll be quoted,  and the more you’ll be recognized, which just goes around and around until you wind up with some signalling phrase like “Latin America’s growing middle class” which really, when you get right down to it,  has absolutely zero meaning.

Chart of the Day: Drug-Related Killings in Mexico

Taken from an unusually blunt look at Mexico by the Council on Foreign Relations:

2013.02.18.Chart of the Day Mexico Drug deaths

Source video:

I would hasten to add a couple points not explicitly made in the video:

1. By any reasonable assessment, these statistics are low estimates.

2. Even if the coming six years reveal some decrease in drug-related murders, this does not necessarily mean that a) actual murders have indeed decreased, b) the Peña Nieto Administration’s approach toward the drug war is any more or less “effective” than the previous administration’s or c) drug problems are mitigating.

I realize I’ve set this up to be a no-win situation for Peña Nieto but the bottom line is that I really really really really really really really really really really do not trust this man or any of the people supporting him.

Global Remittances Zig, Mexico Zags

First came a report from BBVA that remittances to Mexico have decreased for five consecutive months, with the $1.695 billion recorded in November apparently 5.1% lower than in November 2011. Furthermore:

“Among the factors explaining the fall in remittances to Mexico over recent months are: the weak employment situation of Mexican migrants in the U.S., associated with the uncertainty regarding the future of the US economy, with alternatives being sought to adjust the major fiscal deficit. There is also a comparison effect with November 2011, when annual growth in remittances was 9.4%.”

But let’s let the pictures to the talking:

2013.01.10.Mexico remittances

Then comes this article from This Day in Nigeria:

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Migrant Remittances Update

I’m doing some catching up today after being on holiday for most of the past week and wanted to make sure this World Bank brief on global remittances didn’t go unnoticed.

At this point, remittances have drawn enough attention that there are all kinds of ways to crunch the data, so I’m going to assume everyone reading this has the basics down on the who-what-where. With that said, a few of the charts from the report are worth comment.

Not one of the top 10 economies most dependent on remittances as a proportion of GDP is investable on a retail level and all of them pose serious difficulties for investment even at the institutional level. I would simply point out right now that eight of these countries have had armed conflict of some sort in recent memory, which for the sake of this discussion I’m going to define as beginning from the end of the Cold War. The other two (Lesotho and Samoa), for what it’s worth, happen to be islands, one literal, one figurative. Read into that whatever metaphorical meaning you wish:


Outward migrant remittances from Russia to the CIS countries appear to be correlated with the price of oil. The next logical question to ask is what outward remittances look like for GCC states, which the report briefly confirms have a similar correlation though there is no accompanying chart, perhaps because the Russia-CIS chart is visually striking enough:

There is also some loose attempt to correlate or at least compare remittance flows with FX rates:

I appreciate the curiosity here, but I personally think this is stretching it a bit. Each of these countries has different market-specific things happening that influence local currency rates and to suggest that remittances might have some relationship here might need a bit more proof.

Finally, the steadiness of remittances in relation to other types of capital flows I find pretty striking:

Get the report here.

Related reading: “Harnessing Remittances and Diaspora Knowledge to Build Productive Capacities” from UNCTAD here.

Update to the African Mobile Revolution

I don’t know how this has escaped me for so long, but apparently in June this year, Gallup and the Gates Foundation published a survey of 11 African nations that attempted to compare payment behavior across Sub-Saharan Africa.

There’s a lot of interesting data in here for those who want it. Here’s a sample:


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Migrant remittances, same as it ever was

Here’s a challenge to all newspaper reporters charged with writing a story about migrant remittances: see if you can open without resorting to the same opening far too many of your predecessors have used for this topic. The New York Times has once again proven itself not up to this task:

From her job at a packaging factory in Chicago, Patricia Gonzalez cobbles together $70 a month to send to her mother in Guadalajara, Mexico, leaving her less money for groceries. In Boardman, Ore., Raul Esparza, a migrant farmworker, works as many hours as he can to send $50 a week to his children in Mexico City. Continue reading

Vietnam real estate coming back

There’s clearly a lot more to say about this sector, but for the moment I’m just putting up some quick numbers to have it on file here. From Vietnam News:

The State-owned Bank for Investment and Development of Viet Nam has already earmarked loans worth VND4 trillion (US$192.13 million) at 16 per cent per year interest to individuals and households buying housing in projects it funds. Continue reading

A current look at migrant remittances

The Economist has taken a recent look at global migrant remittances and with it has produced some handy visualizations of this flow of capital:

Having spent most of my graduate degree studying exactly this topic (indeed it’s what brought me to Mexico to begin with), there are a couple of things that strike me after having been unplugged from this for the past couple years:

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