Causes and implications of the current mass emigration process in Latin America

Abstract

Since the mid-1970s, most Latin American countries have become net exporters of labour and this trend has accelerated over the past decade. Wide differences in income with industrialised countries, a low level of social investment and the existence of a large national community already established abroad are all factors that are conducive to the emigration of workers. Both geographic and linguistic proximity also play a significant role in this process. However, beyond the structural determinants, emigration also responds to short-term variations in economic activity, increasing when growth lags and unemployment rises, especially if economic conditions are strong in host countries. The linkage between migration flows and economic cycles is also reinforced by fixed exchange rates in the sending country, as labour mobility then acts as an adjustment mechanism. Although the emigration of a portion of the labour force helps the short-term adjustment of Latin American economies by reducing labour market tensions and improving the current account balance, the longterm implications give great cause for concern. In particular, the massive influx of capital through remittances sent by migrant workers to their families might generate a "Dutch disease" situation detrimental to the development of the export sector, while the brain drain might curtail human capital accumulation in Latin America, thereby reducing the region's potential growth. Consequently, Latin American governments must take action in order to try to control a process that could compromise the region's economic and social future.