San Diego County Remittances Hit $1.1 Billion

San Diego County remittances to Mexico hit $1.1 billion

By James Giannini
October 19, 2007

WASHINGTON The amount of money that workers in San Diego County send to Mexico has ballooned reaching $1.1 billion last year from $800 million in 2004, according to a new estimate by the World Bank.

Elliott Giles wired money yesterday to Mexico from Murphy's Market in City Heights. Migrants sent $24.2 billion to Mexico last year.
In most cases, the money was sent to help relatives.

Experts expressed surprise at the magnitude of the money transfers, but they said the amount still represents a fraction of both economies. San Diego's economy is estimated at $120 billion and Mexico's at $840 billion.

The bulk of the $24.2 billion in remittances sent to Mexico last year came from the United States. Roughly $13 billion came from California.

Migrants worldwide sent more than $300 billion to their home countries last year, according to a study released this week by the International Fund for Agricultural Development and the Inter-American Development Bank. That sum surpassed foreign development aid and foreign direct investment and carries major development potential for poor nations if properly channeled.

India took in more remittance money last year than any other nation, $24.5 billion, with Mexico a close second.

In the estimate of formal and informal money transfers worldwide, researchers found that 150 million migrants dispatching a few hundred dollars each sustained millions of families in 162 developing nations. But little of the bounty has fueled economic growth in those nations, because most of it is used for small-scale consumer purchases, the study found.

Jaouad Khadim, manager of Murphy's Market in City Heights, helped Carmen Pavon send money yesterday to family in Veracruz state.
More money goes from San Diego to Baja California than to any other Mexican state. Because of the size and diversity of its economy, Baja California is less dependent on remittances than less-developed Mexican states, said Jeffrey Davidow, president of the Institute of the Americas in San Diego and former U.S. ambassador to Mexico.

They're much less important to the economy of Baja than they are to the economy in states like Michoacan or Zacatecas, said Davidow, referring to two states that long have sent large numbers of migrants to the United States. We know that about 50 percent of the population of Zacatecas is living in the U.S. and sending home hundreds of millions of dollars every year.

Davidow said thousands of Mexicans who have acquired U.S. citizenship, permanent resident status or local border-crossing cards choose to live south of the border and commute to work in the United States. He estimated that 40,000 Tijuana residents come to work every day in San Diego County.

Donald Terry, general manager of the Inter-American Development Bank's Multilateral Investment Fund, said the sum of global remittances grows about 10 percent each year.

People move north by the millions and money moves south by the billions, Terry said.

The growing phenomenon of remittances gets inevitably tangled with the emotional issue of immigration. The remittances to Mexico and other countries in Latin America reflect the dependence in the United States on foreign laborers.

Economists are divided about the impact of remittances on San Diego.

It has a negative effect for those people who live and work in San Diego, said Alan Gin, a University of San Diego professor and economist. The money is flowing out of the region when it could have been stimulating the economy.

But a report last year by the Inter-American Development Bank reached a different conclusion, saying that for every dollar leaving the local economy through remittances, $9 remains behind.

While almost 10 percent of these earnings are sent home to their families, more than 90 percent is spent in the states and towns where they live, directly contributing to the local economy, the bank said in an October 2006 remittances study.

Remittances are becoming big business. Financial institutions are trying to get foreign workers to use formal banking accounts to move their money.

Western Union, following successful efforts by other companies elsewhere in the world, next year plans to allow migrant workers in the United States to transfer money home using their cell phones.

Bank of America executive Diane Morais said feedback from customers led it to launch a program known as SafeSend, which seeks to make it less expensive and easier for millions of migrants to send money to Mexico.

Our Hispanic customers told us that they wanted lower transfer fees, money to be paid in cash over the counter in Mexico and a broader distribution network convenient to their family and friends, Morais said.

Some remittances are sent by clubs that Mexican natives of a particular area formed in the United States, said David Shirk, director of the Trans-Border Institute at the University of San Diego, which works on cross-border issues. The natives raise money for projects such as new sports facilities, additions to town plazas or improvements to churches. Some Mexican states have a policy of matching such contributions, Shirk said.

One key question is how sustainable the remittances are in the long term, he said. People who are currently sending money back to wives and children or mothers and fathers may not be inclined to do that in the future.

Mexico's minister of social development, Beatriz Zavala Peniche, who said remittances have been a contributing factor in Mexico's efforts to reduce poverty, lauded the clubs that send money back.

The number of Mexicans living in poverty has dropped from 52 million to 44 million since 2000, Zavala said.

But Zavala, who was in San Diego on Monday to speak at the Center for U.S.-Mexican Studies at the University of California San Diego, said the remittance money may not be helping the poorest of the poor, because they live in such isolated rural areas that they do not have the infrastructure to receive remittances. Unfortunately, she said, the remittances often do not reach such isolated communities.


The Washington Post and Copley News Service reporters Jerry Kammer and Finlay Lewis contributed to this report. Giannini is an intern from Point Loma Nazarene University.