Agricultural Policies

Paper

Remittances, the Rural Sector, and Policy Options,in Latin America

Paper prepared for the conference “Paving the Way Forward for Rural Finance”, June 2-4, Washington(2003)

This paper examines the linkage between migration and remittances on a global and regional scale, and looks at rural Latin America as it relates to poverty and inequality. This case study looks at remittances and associated policy opportunities in rural areas where migration has occurred. Policy opportunities are explored through examining the connection between remittances and the rural sector in the developing world, specifically in Mexico, El Salvador, and Nicaragua. The effect of the movement of people is steadily being thought of as a key factor in making economic growth possible; labor and migration are seen as indicators of economic development. The share of local labor working in the global economy of nontraditional exports and other agricultural and industrial exports and the sharing of technology are significant in a country’s economic growth. The paper identifies several policy options, including reducing costs of remittances, promoting financial democracy, linking remittances with micro lending, developing hometown associations, and enabling regulatory environments. Policy intervention will help maximize the positive effects that remittances can have on rural recipient communities

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