The overall effect of remittance monies to the DR from family members abroad

Larry

Gold
Mar 22, 2002
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There is an article in todays New York Times titled, "With fewer dollars going around, more are going around the world". I had trouble posting the link but it is available through their website in the "New York Region" section.The article explains how despite the geo-economic downturn we have experienced in recent years, more and more money is being remitted from the USA to family members in other countries (the dominican republic was mentioned). Seems only logical that with the weakening of the peso, families that are recieving dollars periodically from abroad should be able to significantly increase their standard of living. With so many Dominicans in New York and elsewhere sending money, I wonder what true and lasting effects this has on the overall economy in the DR. Your thoughts?

Larry
 
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Apr 26, 2002
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Larry,

I have some first hand experience here. Yes, those with dollar remittances are fairing well right now - not just because it's more stable but also because they automatically adjust to the devaluation and the dollar really does buy more now in relative terms than before. However, this is tempered by the fact that the US economy is not doing so great right now either.

As for true and lasting effect, the only one I can think of is that now is a golden opportunity for those with access to dollar to exercise economic muscle against those whose only have pesos. In other words, families of Dominican Yorks now have an opportunity to increase their real net worths in the DR.
 

Jersey Devil

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Jul 5, 2002
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Larry

Another good question.

As one who is sending dollars back to the DR, I truly
think it depends upon who is receiving the funds. In
the case of nieces and nephews it will help them continue
their education, and the net effect will be positive. In
the case of some others, it may actually harm them
because if they don't know how to spend what
they have giving them more will make it worse in the long
run. Allowing them to live a slightly better lifestyle but
possibly helping them to continue bad habits.

Al final it will continue to be positive overall for the DR
to have more dollars floating around to move the
economy.

JD
 
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XanaduRanch

*** Sin Bin ***
Sep 15, 2002
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Or, How I Learned to Relax and Love the Bomb.

I think that's the longest title I've ever seen in here Larry! ;)

(1) My opinion would be that just like the dollars I spend here the dollars coming in from abroad help all Dominicans and the local economy. (2) By virtue of the devaluation of the peso this is a defacto increase in the amount of income to the island's economy by virtue of the fact that inflation is still lagging well behind devaluation. (3) If the article means that even more dollars are being sent than that increase in income caused by the inflation/devaluation spiral is even greater. (4) When inflation finally catches up with devaluation in a few months or a year perhaps the increases in dollar inflow will still remain and as a result a permanently higher level of off-island income remains.

Look, isn't this just the same, but better, than getting a loan from the IMF? I mean the relatives, or ex-pats, or tourists, aren't asking anyone to pay it back like the IMF. I'll bet half or more of the IMF money winds up in some politicos pocket and immediately off-shore in an account in the U.S. But, those dollars coming here buy local goods and will circulate in the local economy dozens of times before fleeing.

IMHO it's all good.
 

GringoCArlos

Retired Ussername
Jan 9, 2002
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Larry- the near-term effect is that now Papa can have 3 Grandes instead of 2, as soon as Mama gets back from Vimenca, and Mama can get some extra things from the colmado.

Jersey Devil- I haven't met many dominicano/a's who doesn't know how to IMMEDIATELY spend whatever they have at the moment, and it's even easier right after they just got a fat wad of pesos. For dominicanas, the first thought is usually some new SHOES. For dominicanos, it is a Grande to enjoy while they figure out what to do with the rest of the wad, IF they can get it or keep it away from Mama.
 

Hillbilly

Moderator
Jan 1, 2002
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Remittances

The remittances constitute a huge proportion of the dollars that enter the Dominican economy. In towns like Tenares there are 40+ exchange houses. Same in Baitoa and Sabana Iglesias.

As to their effect on the economy, they sustain it at the local level, in many places; the colmados, and yes, the bars, the colegios and most stores in the towns and cities get a lot of their business from money from the States.

Long term, this is having a negative effect on the population, since many are becoming "check cashers" rather than "check earners" . Like Welfare in the states...It might be taking some of the incentive to get ahead by means of education. why work if I get a check every week or two?

For years to come, this will be analysed over and over, not only here but in Mexico and all of Central America and Jamaica, mon....

HB
 

mkohn

Bronze
Jan 1, 2002
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Looks like if it weren't for the casas de cambio it would be an even better form of foreign aid. The kind that goes directly to the recipient. Forty percent! There's gotta be a better way!
mk