Although migration has been a powerful factor in Central America’s economic growth for some time, public policies related to migration and development are relatively recent, limited, and diffuse.
Migration’s impact on development, and vice-versa, is significant. The more than 4 million Central American migrants working abroad have forged a network of economic relationships that directly influences growth and policy in their home countries. Family remittances—personal investments and private donations—are among the main transnational economic activities in which migrants and their families engage. These remittances amount to nearly 15 percent of many countries’ gross domestic product. Migration’s economic influence goes far beyond money transfers, however. A wide range of economic activities, including trade, transportation and telecommunications unfold at the intersection of migration and development.
Central American governments have designed policies related to migration and development, but in many cases they are limited in scope and depth. Most policies deal with preventing emigration or reaching out to migrants abroad, but neglect economic engagements such as remittances, knowledge sharing, and trade and investment promotion. The disconnect between the economic value of these activities, as detailed in the table above, and their relative absence in public policies represents an untapped opportunity.
A Lack of Proportionality
There is no proportionality when it comes to the magnitude of migration-related economic activities, policy implementation, or ideas surrounding migration and development. For example, although international migration from Central America is not new, few government institutions in the last 15 years have created mechanisms to address economic or development issues linked to migration.
As an example, Guatemala’s coffee exports, which amounted to US$770 million, received nearly 10 percent of all government subsidies within an agricultural budget of US$10 million. The government makes little to no investment in remittance transfers, though they amounted to over US$4 billion.
As this shows, there is an important disconnect between the economic value of these transnational activities and their relative absence in public policies. Central American governments can do more to channel, leverage, and support migrant economic activities in a way that promotes growth and development in the region.
This is part of a series of posts on Central America by the Migration, Remittances and Development Program at the Inter-American Dialogue. An upcoming book by Manuel Orozco and Julia Yansura, Centroamérica en la Mira: La migración en su relación con el desarrollo y oportunidades para el cambio (Editorial Teseo, 2015) offers more in-depth analysis of these issues.
 It is important to note that economic activities account for a portion of a wide spectrum of transnational activities through which migrants and their families shape development and social change.
 For a more in-depth discussion of these activities, see Orozco et al, “Transnational Engagement, Remittances, and their Relationship to Development in Latin America and the Caribbean.”