Close to Home The Development Impact of Remittances in Latin America

The report analyzes the characteristics of households that are remittance recipients and how these characteristics affect the poverty-reducing impact of observed remittances flows. It also devotes significant attention to the macroeconomic impact of these flows, and explores policies and interventions aimed at enhancing the development impact of remittances in the region. On the whole, the main messages that emerge from close to home are quite positive. Even though the estimated impact is moderate in most cases and country heterogeneity is very significant, higher remittances inflows tend to be associated with lower poverty levels and with improvements in human capital indicators (education and health) of the recipient countries. Remittances also seem to contribute to higher growth and investment rates and lower output volatility. Against this background, remittances are to be welcomed and actions that lower the cost of remitting and therefore attract additional flows should be encouraged. The development impact of remittances in Latin America to be a valuable contribution to the regional debate on how to enhance the positive effects of remittance flows. The World Bank is committed to enriching and learning from this debate and to supporting the efforts of countries in Latin America and the Caribbean to improve the living standards of the poor.