The CGD Podcast Remittances for Development with Manuel Orozco
Jul 31, 2025
Manuel Orozco, Director at the Inter-American Dialogue and a remittances expert, shares insights on the crucial role remittances play in supporting families in low and middle-income countries. He highlights the implications of a new U.S. tax on these financial lifelines and discusses strategies to boost their impact on economic resilience. Orozco also explores how digital advancements are transforming remittance behaviors and emphasizes the need for innovative development policies that support human capital investment, particularly in fragile states.
AI Snips
Chapters
Transcript
Episode notes
Remittances Boost Economies and Reduce Migration
- Remittances increase disposable income and savings, significantly impacting households and local economies.
- They strengthen financial ecosystems and can reduce the propensity to migrate by fostering asset building.
Cash Remittances Hit Hardest by US Tax
- The US remittance tax affects mainly cash transactions, used more by migrants from Honduras, Nicaragua, and Haiti.
- A 1% tax may reduce remittance amounts and push users to unregulated channels, harming legitimacy and security.
Tax May Undermine Migration Goals
- The remittance tax was politically motivated to target vulnerable migrant communities, but might backfire by pushing unregulated transfers.
- The tax doesn’t address root causes of migration, linked to state fragility and political crises.