Giacomo Mattei & Luis Campos
Emigration as Economic Alleviation
Some countries actively encourage emigration as a strategy for development. Migrant laborers send back a portion of their earnings – remittances – which can have multiplier effects on the home economy.
For many countries, remittances make up a larger portion of gross domestic product (GDP) than foreign direct investment (FDI). The World Bank’s data shows that Nicaragua’s 2022 GDP was over 20% remittances and just over 8% FDI. In 2023, remittances to Nicaragua were nearly 50% higher than the year before, standing at $4.24 billion, an estimated 28% of GDP.
Venezuela, on the other hand, has consistently received fewer remittances and very little FDI between 2000-2022 (both remaining largely below 2% of GDP according to World Bank data), though the Inter-American Dialogue estimates that remittances reached 5% of GDP in 2023. Interesting hypotheses can be considered to explain this behavior, such as the migration of entire family households, and/or a lack of confidence in the country’s future as a destination for personal and family investment.
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