Five Contributions of Migrants to the Growth of Latin American Economies

The polarization of the debate surrounding migration has left little space for balanced, rigorous, and data-based research and analysis on migration's positive effects on our communities. Economically, for example, we often see in the media and social networks how migrants and refugees are described as an economic burden for host countries, overlooking the significant contributions reported in many studies and research.  

The following are five evidence-based facts on how migrants contribute to the growth of Latin American economies from different roles and functions:  

• Migrants contribute as workers: migrants are part of the labor market and also have effects on it; they also alter income distribution in the country and influence internal investment priorities. In Chile, for example, a study by the Economic Commission for Latin America and the Caribbean (ECLAC) revealed that between 2009 and 2017, the country's GDP increased by $63.3 billion, mainly sustained by the contribution made by the Chilean workforce and migrants recently arriving from Peru, Bolivia, Colombia, Venezuela, and Haiti.  

• Migrants contribute as entrepreneurs and investors: migrants create job opportunities and promote innovation and technological change. In the Dominican Republic, an IOM study highlights the importance of the ecosystem of Venezuelan investments in that country, which amounts to approximately $553.3 million. In addition to being very diverse - shopping centers and real estate, banking, tourism, logistics, and food sectors, among others - most of these businesses are formalized (76.80%). Venezuelan capital in the Dominican Republic is generating approximately 9,000 jobs, representing 0.2% of the employed economically active population of the country.  

• Migrants contribute as consumers: in Costa Rica, a ECLAC research found that in 2018, in some segments, the monthly consumption of migrant households was 10% higher than that of non-migrants.

• Migrants contribute as taxpayers: migrants contribute to the public budget and benefit from public services. In the Dominican Republic, for example, the IOM study established that in 2021 the Venezuelan population contributed 0.35% of the national fiscal revenue from current income, including revenue from direct taxes such as income tax or property taxes and Family Health Insurance (SFS), and indirect taxes such as the Tax on the Transfer of Industrialized Goods and Services (ITBIS) and the Selective Consumption Tax (ISC).  

• As savers: a very substantial and increasingly growing body of evidence demonstrates the central importance of migrant remittances for supporting families and local communities in countries of origin. The money that migrants send home is essential protection against unexpected expenses, supporting the financial stability and resilience of families. In countries like El Salvador and Honduras, some studies have concluded that remittances can represent more than 17% of national GDP, which positions them with a relevant weight in both the dynamics and composition of aggregate demand, as well as in the determination of household income and spending.  

Migrants are agents of sustainable development, contributing to countries' economic growth. Migration is also a tool for poverty reduction for migrants and their families, contributing to Sustainable Development Goal 1 (No Poverty).  

To take advantage of these positive effects, it is necessary to empower migrants and diasporas to catalyze their contributions to the development and leverage the benefits of migration as a source of sustainable development, as set out in Objective 19 of the Global Compact for Migration.  

But also, efforts should focus on promoting safe, orderly, and regular migration, where the integration of migrants is at the center of governments' public policies, by promoting the welfare and protection of the human rights of all migrants, as established in the 2030 Agenda.

The blog is written by Carlos Escobar.