Topic 9 – Remittances and Migrant Associations


A relatively understudied issue within the remittance literature is the role of migrant associations. One class of migrant associations that have received some attention is hometown associations (HTAs), which are formed by migrants from a specific region or town in the country of origin. Hometown associations (HTAs) can facilitate the flow of collective remittances, the transfers that migrants and migrant organizations send to the origin country to benefit a specific group or community. Unlike family transfers, collective remittances tend to be targeted towards infrastructural and community-development projects as well as social purposes in the community of origin. Although collective remittances often represent a smaller share of overall remittances, they may have a significant impact in resource-poor communities of origin, with potentially large multiplier effects on the local economy.

Recent studies of migrants’ associations including hometown associations (HTAs), professional associations, and cultural groups have been largely descriptive. Levitt and Jaworksy (2005) outline several methodological challenges associated with studying migrant associations and collective remittances. Orozco and Rouse (2007) report that the percentage of remittance-sending migrants who belong to HTAs varies by country of origin group. For example, on average, only about 9 percent of remittance senders in the United States of Latin American origin belong to an HTA. However, this fraction may be higher for other migrant groups and for sending areas. The extent of migrant participation in a HTA may depend on several factors including the dispersion of a sending area migrant’s within the destination community.

A new strand of literature traces the evolution of HTAs as development agents in origin communities (Goldring, 2002: Orozco, 2005). Origin country governments have increasingly shown interest in establishing partnerships with migrant associations. Beginning in the 1990s, the Mexican government developed outreach policies targeted at Mexican migrants to the US, providing support for the formation of hometown associations (HTAs), as well as promoting the flow of remittances to communities of origin (Orozco, 2005). Specifically, local and municipal governments in Mexico have developed matching fund programs to encourage the flow of collective remittances. In many cases, the government has combined collective remittances with government funds and expertise, and in some cases, they have used private-sector contributions to finance infrastructure projects. Mexican state governments have also experimented with involving HTAs in private-sector investment opportunities.

Can migrant associations promote economic development in sending communities? The evidence tends to be mixed (Alarcón, 2002). In addition, Paul and Gamage (2004) discuss some limitations of HTAs in sending collective remittances using descriptive evidence from the US and El-Salvador. The lessons from their case study suggest that policy interventions that aim to increase the flow of collective remittances and to promote migrant associations and their commitment to development objectives may need to overcome organization capacity and governance challenges in host and origin communities. However, an important question is how to promote the impacts of HTAs and which specific policies (for example, through consulates in sending regions) can lower the transaction costs and facilitate information flows toward HTA development.