It might be a bit of a shock to some people, but Guatemalans living abroad not only influence their country’s economy through remittances, but they also partly shape the social life in their native country. These remittances can be channeled directly to both personal and national considerations.
In this post, we will look at the role and impact of these remittances on the economy of families and the entire country.
Pixabay/Public Domain
Understanding the Guatemalan Diaspora
Guatemalan diaspora is the population of Guatemala that has immigrated and established different communities throughout the world. From the available statistics, we can assume that the Guatemalan diaspora is living in a summarized way over the world and it is approximated that the number for that population is 1.4 million individuals. Being the largest North American country, the bulk of it is present in the United States, plus Mexico, and Canada.
Migration is caused by various factors such as:
– economic opportunities;
– employment opportunity;
– political instability;
– safety problems;
– the desire for a higher quality of life.
Hence, it is the combination of several people and communities in Guatemala’s economic sustenance that is being shown in many forms hence the culmination of them (both parties) is the success of their economy. Moreover, remittances from this diaspora help in farmers’ price chains indirectly, as it is highly recognized as a contribution to economic and social development.
The Economic Impact of Remittances
The Guatemalan diaspora’s remittances, which primarily finance local developments in the country, are of great economic importance in the functioning of the economy of Guatemala. These funds, representing a considerable Gross Domestic Product (GDP) share, can be the country’s support in overcoming the current economic situation.
So, by the statistics, thus, the 2019 remittances to Guatemala totaling $10.5 billion constituted 13.8% of the total country’s GDP. World Bank indicated that in 2021 remittances, which have been 17.7% of the GDP of Guatemala as of today, were provided.
Those who receive the money store it for use in different expenses such as daily. Not only are donations channeled towards education, health, and housing, but they also bring a for rehabilitation of recipients and improve their condition in life.
It is certainly true that the total of this remittance money has a positive impact on domestic poverty rates and enables an improvement of the living standards for several of the population.
Beyond Daily Needs: Investments and Real Estate
The economic development of the country due to the Guatemalan diaspora through remittances cannot be limited to just the everyday expenses; there are opportunities to contribute to the country’s long-term development through other avenues of life.
Foreign direct investment (FDI) appears to be an important factor in retaining inflows of capital, employment generation, and the stimulation of different sectors of the economy. Competitiveness, additional investment chances plus legislative reforms all enable the nation to a steady growth.
Regarding real estate, we can consider the following points:
– Increase in property value. One of the ways people make their wealth is by investing in properties located in the areas that are popular among the people.
– Job creation: Hiring construction workers, architects, property managers, and the like are the main contributors to the job market that real estate development projects generate.
– Infrastructure development. Real estate ventures frequently require the commencement and/or setting up of physical infrastructure such as housing complexes, business buildings, and transport systems.
– Rental income. Real estate investment lets landlords have an ongoing rental income, giving them a passively earned income.
The Role of Money Transfer Services
The need for money transfer services is mainly driven by the diaspora which consists of people who live abroad but at the same time want to send money back home. Such service providers play an instrumental role in the timely and secure payment of funds to family members and loved ones.
A money transfer service provides a platform to transfer money to Guatemala. These services especially appreciate those living in the countryside where they can rely on it to help them with their hectic lives.
Certainly, remittance services reinforce and facilitate the process of sending money overseas into the Guatemalan economy, and ultimately they stimulate household consumption at home, which of course, is a contribution towards the country’s economy, as highlighted above.
Banks are not the option for most Guatemalan remittance recipients since there are no banking services accessible to the poor. Money transfer services are designed for both convenience and cheapness and ensure that persons living in remote regions and hardly accessible areas of the globe get access to their funds.
Challenges and Opportunities
Indeed, despite remittances existing critical in Guatemala’s economy, the diaspora has faced not a few problems in sending money back home. This may be accompanied by excessive fees or limited availability, which block the transportation of money.
On the other hand, the rise of technology and fintech services is driving the development of a new channel for the implementation of cheaper and more convenient money transfers. The advanced technologies enable the off-shore community to contribute to their families and keep their homeland economy growing.
The Broader Impact on Guatemala’s Economy
The after-effects of diaspora remittances and investments not only take place at the household level but also transcend beyond. These financial findings have an effect on the macroeconomic framework of Guatemala. In addition, such flow of capital leads to employment generation, poverty alleviation, and overall economic growth. The disbursement of funding underpins the enterprises and the whole economy as a consequence.
Family remittances have a direct influence on poverty and development, therefore they should be under investigational priority. As an adage for Guatemalans, remittance is taken as part of their income and they spend it on the household or to the daily expenses.
Looking Ahead: The Future of Diaspora Contributions
In the near future, the impact of the Guatemalan emigrant on the country’s economy is believed to perpetuate. Among others, factors that may impact it, policy changes, new technology, and the global economy will define what moral contribution the future will make.
Moreover, it is time to decide on what Guatemala can do to use this grant on a bigger scale and achieve the goal of social and economic growth.
Conclusion
Guatemalans working abroad contribute immensely through remittances and investments that are vital for building the economy of their mother country. These monetary donations also have great repercussions, on both a personal and a nationwide scale. As showing the significance of the diaspora and the problems, Guatemala can use the contribution forces for sustainable economic growth and developm
