Remittances positively affect household consumption in Mexico

said Genoveva Roldan Davila, a specialist at the Institute for Economic Research (IIEc).

In the opinion of Professor at FES Aragon, Rubén Ramos Muñoz, they represented an important measure to counteract some of the inflationary effects, drawn from the global health emergency. According to data from the Inter-American Development Bank, more than 70 percent of the resources have a direct impact on empowering housewives and the women who remain in the country and who form the bedrock of millions of homes in the Territory. .

An expert on international economics and development from the Complutense University of Madrid, Roldan Davila, in an interview based on the report of the Bank of Mexico in 2021, highlighted the accumulated value of income from sending money to citizens living and working abroad 51 thousand and 594 million dollars, an increase of 27.1 in cent compared to 2020, and ranks second after manufacturing, reaching 436 thousand and 75.9 million dollars.

He explained that this does not mean that remittances are more important than foreign currencies generated by other economic sectors, because they are in no way equal to foreign direct investment or income from oil exports or tourism, because the shipments made by Mexicans in the United States. states, basically targeting five percent of Mexico’s 35 million households; That is 1.8 million families.

He noted that Mexicans abroad only send 10 percent of their income to relatives who use it to survive and solve some health, education and housing problems, for example, but that does not mean that they are productive investments.

We must not deny the importance of remittances. However, it has another function which shows its multiplier effect in household consumption, which, although it contributes to economic revitalization, does so in most large supermarket chains; A large amount goes to foreign economies, because many of the products purchased come from other countries.

Meanwhile, specialist Ramos Muñoz stressed that Mexico is the third country with the highest collection of remittances, after only India and China, and agreed with Genoveva Roldan in the sense that these funds are directed to meet basic needs: food, clothing, education and some medical services, and that in our country The main source of income from raising money from the sale of oil, tourism, manufactures and remittances.

In some cases, they venture into small and medium-sized businesses, as well as local businesses that allow them to foster greater family growth; He stressed that they are even destined to build, rebuild or buy a house.

In the current situation due to the pandemic, it is undoubtedly necessary to have these cash transfers, which increased in 2021 as a result of the health emergency. “This is important not only for Mexican families, but also for the movement of capital within the national territory,” Ramos Muñoz said.

watershed

Returning to the use of the word, Roldán Dávila mentioned that there are entities in which these resources are substantial, particularly for those who are traditionally expelled (despite the fact that the new states have been incorporated into immigration flows), such as Jalisco, Michoacan, Guanajuato, and the State of Mexico, and Mexico City, Zacatecas, Guerrero, and Oaxaca, as well as municipalities such as Tijuana (the largest recipient of remittances), Leon, Zapopan, Morelia, Culiacan, among others. He stressed that their access to a large part does not mean that they are the richest states in the country.

He pointed out that during the period from January to September 2021, foreign direct investment received 24 thousand and 831.7 million dollars, while oil exports amounted to 28 thousand and 925.6 million dollars, which means that the two items contribute 2 percent of the gross domestic product on average.

Later, it was considered that due to the epidemic, the decline in activity in the tourism sector is significant; However, according to the National Institute of Statistics and Geography, in 2021, the economic benefit for foreign tourists and excursions was 19 thousand 795 million dollars, which was 19 percent less than what was obtained in 2019.

He pointed out that in the case of oil exports, the income from this activity has an economic benefit in servicing hotels, construction of platforms, preventive maintenance, oil infrastructure, feasibility studies, in the construction and energy sectors, etc.

He explained that in Sunda de Campeche, Pemex’s investments have had a significant impact on projects in the energy sector; That is, “what we economists say about production chains, which go beyond saying that foreign exchange is entered or jobs are generated, those dollars that come into the country for oil investments have multiplier expressions in a very wide range of the economy.” Something immigrant coins don’t have.

Likewise, the element to be compared with is those generated by foreign direct investment, whose role in the national economy is dubious, “to generate low-wage jobs, to the poor entry of new technologies and their limitations in terms of the formation of new “human capital”; even with all these criticisms, This sector contributes to creating job opportunities.

In this regard, Roldán Davila stressed that the money they send does not create jobs, although they contribute four percent of GDP – which is a large percentage – but given the size of the Mexican economy, it is not enough, and therefore the financial sector do that. It does not depend on remittances, it is the core income of 1.8 million families in the country, but the national economy is not subject to it.

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