Remittances in Central America: Whose Money is it Anyway?

Abstract

In opposition to optimistic visions that present remittances as an opportunity for developing countries, this paper shows they are part and parcel of a process of economic imperialism, whereby their use and final destinations are strictly conditioned. In order to go beyond a conception of remittances as epiphenomenon, and in order to trace the role they play, this paper focuses on the transnational strategies of capital. It finds that remittances enable an increase in foreign investment and import production by facilitating the rise of a new class of consumers in Central America. Remittances create and feed a purchasing power that would not exist in their absence. Factories, fast food restaurants, communications companies, banks, travel agencies, and supermarkets are opening new branches throughout Central America in order to benefit from transnational savings that would otherwise be used differently. In this way, remittances are conditioned and co-opted by transnational capital’s strategies to sustain an ever growing market, with Central America more generally – and once again – potentially at risk of becoming characterized by enclave economies and chronic commercial deficits. The remittance-based economic model furthermore cannot be sustainable in the long run unless Central American countries keep exporting workers ad infinitum, something that is obviously not possible.