In line with the existing evidence figure 1 suggests

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Unformatted text preview: ‐transfer income simply reflect the fact that transfers (including remittances) are an important driver of income growth among the households fortunate enough to have access to these transfers.155 In other words, if remittances were to exogenously disappear, or substantially decrease as a result of exogenous shocks, the incomes of the poorest in LAC would have a negative impact. The distribution of remittances across pre‐remittance income groups also shows significant variation among the 11 countries in LAC for which this data is available.156 Roughly speaking, three groups can be distinguished: • In Mexico, 61 percent of the households receiving remittances fall in the bottom 20 percent of non‐ remittances income, whereas only 4 percent of them are in the top 20 percent. Similarly, in Paraguay 42 percent of recipients are in the bottom 20 percent of the distribution, and only 8 *LCR Crisis Briefs Series. 154 For a complete analysis of the pros and cons of the subject see “Remittances and Development: Lessons from Latin America,” P. Fajnzylber and J.H. López, editors. World Bank, 2008. 155 See P. Fajnzylber and J.H. López, op.cit., chapter 2, and “Mexico: Income Generation and Social Protection for the Poor,” World Bank 2005. 156 Data in this paragraph is taken from Fajnzylber and López, 2008, p.33. 123 percent are in the top 20 percent. Other countries where at least 30 percent of the recipients of remittances are in the lowest 20 percent are Ecuador, El Salvador, and Guatemala. In contrast, in Peru and Nicaragua the distribution of remittances across households is completely different. For example, in Peru fewer than 6 percent of the households that receive remittances belong to the bottom 20 percent, while 40 percent belong to the top 20 percent. In the case of Nicaragua, only 12 percent of the recipients are in the bottom 20 percent, while 33 percent belong to the top 20 percent. In between these extremes, there are four countries—Bolivia, Honduras, the Dominican Republic and Haiti—where remittances recipients are found at similar rates among households in the bottom and top quintiles. • • Evolution of Remittances flows to LAC and Impact of the 2009 Crisis After strong growth in the 1990’s, since 2004, overall remittances to the LAC region have stagnated (see figures 1 and 2). Following this stagnation period, the overall flow of remittances started to decline since the onset of the global financial crisis. Monthly remittance data from central banks for individual countries for which recent monthly data is available157 show declines in remittances for most countries. Rates of growth in these countries started to become negative in the last quarter of 2008. The unweighted average change in remittances’ flows to these countries has declined by 7.3 percent in recent months from levels one year earlier. Taking into account the weights of different countries in the overall remittance stream, the total level of remittances...
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This document was uploaded on 11/14/2013.

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