Why AMLO shouldn’t assume that sending funds is an accomplishment of their government

On the morning of this Wednesday, September 1, the president Andrés Manuel López Obrador (AMLO) asserted that in Mexico “a historic record” was reached in remittances, which he described as part of the work of his administration when presenting the government’s third report.

“Historical record for remittances, historical record for foreign investment, historical record for minimum wage increases, historical record for non-devaluation of the peso, historical record for no increase in debt, historical record for increase in the stock market index, historic record in the reserves of the Bank of Mexico. It’s like saying to the four winds, show off“, He expressed at the National Palace.

He also added that during the early hours of the day, the Bank of Mexico (Banxico) reported that for remittances, in July, have been achieved $ 4,540 million in the country.

However, such a statement has earned criticism and questions from the Mexican president, especially because he assured that an economy “is so bad” if it is based only on remittances. His opinion was posted on Twitter in 2016, under the administration of Enrique Peña Nieto.

“The economy is so bad that many parts of the country live only on the money migrants send to their families. Blessed discounts“He tweeted in March of that year.

According to Banxico, Remittances are the sending of money from those people who live in another country to their home country. In most cases, deposits are made in cash and sent to relatives for daily help.

And is it is a reality that there is a positive impact of remittances, since they are used to cover family expenses. They also contribute to generate income for the macro economy of the country, due to the fact that purchasing power is increased, the conditions of access to consumer goods, trade are improved and it intervenes in job creation.

However, not everything is so idyllic. Text-based Transfers and development. The two sides of the coin, by the academic Jorge Durand, this type of monetary exchange creates inequality, genres inflation in the local economy, forge a economic dependence and replicates the immigration system.

In other words, remittances are increasing because wages in Mexico are not enough to cover all needs economic, which is why people who migrate decide to support their relatives who remain in their country of origin.

“The problem lies in the valuation and the weight they give to this indisputable economic impact of remittances. […] The inflation which occurs in some cities of migrants affects some who can no longer buy houses or land, but it also affects new migrants who have to buy houses or land, ”said the researcher from the University of Guadalajara.

Despite the fact that Mexico currently maintains a 0% rate of nationals in the United States (that is, the same number of people going to the neighboring country as returning), the increase in the receipt of shipments of funds creates the impression that another place is better lived, which is why encourages migration and brain drain.

In conclusion, many economists consider remittances as a double-sided coinbecause they have both positive and negative impacts on the country’s economy.

However, they ask anticipate the effects of inflationAs a nation becomes dependent on remittances, this will in the long run generate a strong imbalance between production and demand, which will generate greater social inequality.

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