BEHAVIORAL ANALYSIS OF INTERNATIONAL MIGRATION AND REMITTANCE INFLOWS IN THE REPUBLIC OF ECUADOR

ABSTRACT

The present work carries out the analysis of the international migration of Ecuador, taking as a starting point different socioeconomic variables such as poverty and employment that are considered the causes for leaving the country. In the same way, it focuses on the study of remittances that enter Ecuadorian territory and its influence on the national macroeconomy, the volume of remittances sent by the receiving country of migrants and the main provinces that benefit from this economic item.

АННОТАЦИЯ

В настоящей работе проводится анализ международной миграции Эквадора, взяв за отправную точку различные социально-экономические переменные, такие как бедность и занятость, которые считаются причинами отъезда из страны. Таким же образом, он фокусируется на изучении денежных переводов, поступающих на территорию Эквадора, и их влиянии на национальную макроэкономику, объем денежных переводов, отправляемых принимающей страной мигрантов, и основные провинции, которые получают выгоду от этих денег.

Keywords: Ecuador Migration, Poverty, Employment, Remittances, Economy, Latin America.

Ключевые слова: Эквадорская Миграция, Бедность, Занятость, Денежные переводы, Экономика, Латинская Америка.

In Ecuadorian society, international migration is a phenomenon that has been occurring for several decades, however, the flow of people increased massively at the end of the twentieth century due to the economic crises and political instability in Ecuador. The massive departure of thousands of people is linked to the economic factor, i.e. they do it to get a job by exporting their labor and to be able to improve their own and their family's living conditions. The countries of destination in the 1990s are centered in Europe and America, with Spain being the preferred country of arrival at this time with 49.4% of the population, followed by the United States with 26.7% and Italy with 9.9% [13] and in smaller percentages to other countries.

1. Socioeconomic factors of migration

Ecuadorian migration is complex to understand; it begins with the loss of socioeconomic opportunities that are the reason for leaving the country. It can even be understood by those who emigrate as a practical solution to escape poverty and a response to a society and a national or sectoral government that fail to offer decent conditions or generate sources of employment [12].

Among the main socioeconomic causes in Ecuador is income poverty, i.e., economic capacity does not allow for satisfying aspects related to food, housing, education, health, and sanitation [1]. Income poverty in Ecuador is one of its main social problems, in the year 2021 a person living in income poverty is someone who receives a per capita family income of less than 84.71 US dollars (USD) per month, while in the case of extreme poverty if they receive less than USD 47.74 [8, p.5], to determine the severity of the indicators we will use as a reference the basic salary which was 400 dollars.

Another potential indicator for migration is Employment, The National Institute of Statistics and Census of Ecuador divides this variable into different categories a) Adequate/full employment: people who received a monthly income equal to or higher than the basic wage, the rate at the national level in 2019 was 38%, while for 2021 of 32.5% reflects a decrease of 5.5%; b) Underemployment: people with employment whose income is lower than the basic salary, or work less than the legally established working day, at the national level the rate increased from 18.2% in 2019 to 23.3% in 2021; c) Non-full employment: includes people with employment, who earn less than the basic salary or have a reduced working day and do not have the desire or availability of hours to work. This group proves to have a constant rate in 2019 (27.4%) and 2021 (27.2%) [9, 10].

The socioeconomic factors mentioned above directly influence the movement of people internationally, according to data provided by Migration - Ecuador, the migratory flow of Ecuadorians registered at seaports, airports and land control points at the borders, between 2019 to 2021, the total number of Departures abroad: 2,920,952 and Entries to the Country: 2,809,613, which means that in international movements there is a difference of minus 111,339 Ecuadorian inhabitants.

The figures officially presented by the Ecuadorian government are based on the migration of people who left the country legally; there are no records of the total number of people who left the country irregularly, which makes it impossible to establish the exact number of emigrants [15].  Within the analyzed period, the year with the highest migration was 2021, since 81,758 people did not return to the country [11], this phenomenon coincides with the post-pandemic period of COVID-19, which brought catastrophic repercussions in different spheres, hitting the economic, social, and even political sectors, the coronavirus situation caused the Ecuadorian economy to decrease 7.8% in 2020, compared to 2019 [2].

2.  Migrant remittances behavior

Remittances are considered flows of money sent by one migrant to another in his or her country of origin. The monetary flow at the national level represents current income in the Balance of Payments, contributing to the Gross Domestic Product, and the item is so important in the economy that it exceeds income derived from exports and imports of goods and services and foreign direct investment. The high volume of remittances makes them a possible source of local, regional and national development [7].

2.1. Macroeconomic focus

The foreign currency sent by Ecuadorian workers has had a positive effect on the national economy, according to figures from the Central Bank of Ecuador show that between the years 2016 - 2021 there has been a steady growth in remittances, however, for 2021 the flow of remittances entering the country was a figure higher by 30.71%, with a total increase of USD 1,025 million dollars, in relation to the income accounted for in 2020 (3, 337 million) [3]. The increase in remittances in 2021 corresponds to the emigration surge recorded in that year.

Graph 1. Evolution of remittances

Source: Central Bank of Ecuador. Own elaboration

Remittances help to maintain a balanced balance of payments in Ecuador; in the sum of the four consecutive quarters of 2021, the inflow of these currencies contributed 4.10% of the Gross Domestic Product (GDP) with USD 4,362 million. The contribution to the local economy is also outstanding, since it produces multiple effects by strengthening the final consumption of goods and services in Ecuadorian families, reaching an increase of 10.2% [4].

2.2. Remittances by country of origin

Migrant workers, among the decisions to be made, face the scenario of which country to travel to, for this they seek to go to a developed country or industrialized countries, for their high per capita growth rates and high rates of human development, as well as high standards of living, growth, educational, health and labor [6].

The expectations of the international migrant are considered by the author Solimano in different variables 1) Per capita differences, i.e. it is expected that the income dynamics will be higher in the receiving country compared to the country of origin; 2) Stage of the economic cycle, immigrants in the receiving country have a better chance of finding work when the country's economic growth is high and there is a deficit in labor, on the other hand if there is an economic recession and unemployment is high, the chances of finding work are minimal, 3) Support networks, a large number of migrants prior to their trip have contact with relatives, friends or compatriots living in the receiving country, and provide them with logistical support before, during and at the end of the trip, 4) Migration costs, it should be noted that they depend on several factors: first, if they travel with proper documentation (legal route), expenses may be lower; on the other hand, if they use risky routes not controlled by governments (illegal route), expenses tend to be higher as well as the time between the place of origin and destination; and 5) Geographic dimension, the closer the borders are between the country of origin and the receiving country, the higher the migratory flows will be [14]. 

In Ecuador, migrants have chosen to travel to the countries with the characteristics mentioned above, with the exception of Latin American countries that migrate due to their geographic proximity and because they have better economic indicators than Ecuador. Based on Graph 2, we can determine the 10 main destinations of migratory flows, 6 destinations are in the Americas, while the other 4 are in Europe. It should be noted that the 3 main migration routes, the United States, Spain and Italy, in the last two decades have been the main countries chosen by Ecuadorians to emigrate to.

Graph 2. Remittances by country of origin

Source: Central Bank of Ecuador. Own elaboration

Remittances sent have evolved in all major receiving countries of Ecuadorian migrants between 2020 and 2021, however, the growth rates of a country in relation to others vary, in the United States the growth is 36.5%, and the largest volume of remittances sent, reflected by the large number of migrants who hosted for 2021. In the case of Spain and Italy, their growth was not as intense, reaching rates of 18% and 16.3% respectively, Mexico recorded a considerable increase of 30%, but the most exceptional case in remittances sent is Chile with a growth rate of 69.8%.

Remittances entering the country are destined to the 24 beneficiary provinces, the information issued by the Central Bank of Ecuador shows that 22 provinces have had a steady growth with a variation in the volumes of remittances received, however, only the Provinces of Orellana and Galapagos, suffered a recession in their remittances in 2021, compared to those received in 2020.

Graph 3. Remittance received by Province

Source: Central Bank of Ecuador. Own elaboration

The first 4 provinces Guayas, Azuay, Pichincha and Cañar, contributed 75% of remittances in 2021, i.e. 3,271 million in relation to total remittances nationwide (4,362 million), on the contrary, the provinces of Bolivar, Napo, Orellana and Galapagos, together had a marginal contribution rate of 0.43%. Finally, it should be noted that the majority of remittances went to the urban area with 4.283 million and 79.602 million to the rural sector [5]. 

Conclusions

• International migration of Ecuadorians is subject to socioeconomic factors such as poverty and unemployment that deteriorate the quality of life of the individual and his or her family, so emigration is seen as a practical solution to escape poverty and achieve decent living standards which are not covered by the national government.
• In the year 2021, the post-pandemic period of COVID-19, it was recorded by Migration Ecuador that 111, 339 citizens did not return to the country, the figure published by the government does not coincide with reality, since thousands of Ecuadorians leave the country through illegal or unregulated routes.
• Remittances entering Ecuador have had a steady growth in 2021 with an increase of 30.71% compared to 2020, reaching a record 4,362 million US dollars and contributed 4.10% of the Gross Domestic Product.
• The main destinations for Ecuadorians to emigrate to are located in America and Europe, in the last two decades 3 countries have remained as preferred, the United States which had a remittance growth of 36.5% in 2021, Spain (18%) and Italy (16.3%), likewise migration is focused on Latin American countries such as Mexico, Chile, Peru and Colombia, which maintain higher economic indicators than those of Ecuador and also because they are geographically close countries.
• Of the 24 provinces in the Republic of Ecuador, only 4 of them, Guayas, Azuay, Pichincha and Cañar, contributed 75% of remittances in 2021, or US$3,271 million, making them the provinces that benefit most from remittances.

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