typical problems you see… is often just a low capacity to
identify business opportunities and develop bankable projects,” Ruddy said. “The businesses are sort of limited to very
ad-hoc things by family and friends. They really don’t have
the capacity to formalize things, which is what you need to
do if you want to start institutionalizing things in a more
significant way into productive investment. That stands as
a big challenge.”
Consumerism and Survival
Analysts also cite a “culture of consumerism” that has taken hold in areas affected by migration to the United States,
even remote rural settings (see Table 4 above). If the local
economy does not offer productive channels for investment,
then remittances will be spent in other ways. Remittance
usage can lead to conflicts between the migrants who send
money and their families at home that spend it. “There’s
an awful lot of frustration that it’s really difficult to work
with those communities that for 20 years now have been receiving remittances and [engaging in] a lot of conspicuous
consumption,” said CRS’ Erica Dahl-Bredine. “[Some remittance recipients have] really nice houses, some of which
don’t even have latrines or running water.”
Observers state that low levels of formal education and
the ubiquity of consumer advertising also reduce the potential for productive investment. “Part of the problem is selfesteem,” said Guatemalan remittances analyst Sonia Maria Pellecer. “People don’t have the ideas. The population
doesn’t have a lot of education.” For a variety of reasons,
the notion of investing isn’t even “on the radar” of many
remittance recipients—while the incentive to spend on consumer goods is ubiquitous. “They don’t use remittances for
anything that’s going to help them in the long term, only for
their immediate needs,” said Linda Fortin of the Honduran Association of Banks, which works with immigrants and
their families on remittance investment.
Although there is evidence of remittances being used for
conspicous consumption, they are typically used for survival. Research indicates that a majority of remittance recipients use the money for necessities like food and clothes. In
El Salvador, one study found that 81 percent of remittances
were spent on food and utilities (see Table 4 above).38 “In a
country with so much poverty, the first thing people want to
do is buy things they never had,” said Lizette Montoya, who
works with the Irish Catholic aid agency Trocaire in Honduras. “There’s no consciousness…to say ‘OK, I’m going to
invest this in something productive.”
In 2010, Northern Triangle immigrants sent home average amounts that ranged from $225 to $363 per month (see
Table 4). With so many unmet basic needs and a limited
amount of remittance funding, there is not much money left
for long-term income generation projects. “They don’t spend
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it superfluously,” said Honduran immigrant organizer Malvia Rivas. “[They spend it] on children’s education, on health,
on housing, on things that their family needs, on medicine.”
Although it is difficult to measure which is the larger obstacle, both poverty and consumerism are clearly barriers to the
productive investment of remittances in the region.
“The question is: Is it allowing people to invest in activities
in things that will be sustainable?” CRS’ Erica Dahl-Bredine
said. “I think the evidence is pretty limited.” For its part,
MCC El Salvador is aware of the limitations on how much
remittance money can be channeled to income-generating
or job-generating activities. “It’s really tough when you don’t
have the conditions that are appropriate for investment,”
said Vincent Ruddy, MCC country representative for El Salvador. “Most people are just sending money back trying to
help their families survive.”
But if the Northern Triangle nations provided basic services to its citizens, remittances could be invested differently. “The books that the country ought to be providing for
your kids you’re able to provide because you’ve got someone
living abroad,” one analyst in Guatemala said. “The health
care that you are providing for your wife, and that the government is not providing, you are able to provide because of
remittances.” As the World Bank states, “It is best to think of
migration and remittance practices as the outcomes of the
failure of national economic policy to address public needs.”
The Policy of No Policy
Central American countries’ stance on migration and
development has been comparable to that of Mexico during the 1970s and 1980s—a posture that has been called “the
policy of no policy.” This stance allowed Mexico to “reap the
economic benefits