Remittances and Development in Latin America : A Relationship in Search of a Theory

Several governments and International organizations have lately paid attention to remittances as a tool that could contribute to the reduction of poverty and the development of the countries of origin of International migration. In this article, from a critical point of view, we submit some concepts and facts that allow a better understanding of the real role of remittances in promoting such a development process. First of all, from a macroeconomic analysis, we elaborate a model of the relationship between remittances and development that allows to understand and to evaluate the impacts of household remittances depending on their character and modality, as also their significance and specific behaviour as an economic category. The base of this analytical model is quite simple: the impact of remittances directly depends of the way they are incorporated to the economic structure of each society. Secondly, starting from an econometric model, we identify the determinants of the macroeconomic behaviour of remittances. The results of this model show that the dynamics of remittances are not related to an investment or saving fund, but to a wage fund, that in this case adopts the form of an external household transference, and that contributes to solve the negative effects over household of the re- iterative crisis and recessions of the Mexican economy