In a stepped-up bid to attract migrant dollars, the Mexican government announced late last week that it will financially back a planned investment pool of more than $40 million. The Calderon administration’s objective, said Economy Minister Bruno Ferrari, is to realize “the potential of production capacities and take advantage of our compatriots’ skills through business formation.”
Ferrari made the announcement together with other senior Mexican officials who also took the opportunity to promote a business gathering slated for Los Angeles this month and that is intended to increase migrant investments back home.
Miguel Maron, the Economy Ministry’s deputy minister for small and medium business, said migrant remittances are currently under-utilized for productive purposes. Only three percent of migrant dollars go toward economic development, with the vast bulk of the money spent on routine expenses, according to numerous reports.
In the first six months of 2011, migrant remittances fetched just over $11 billion for Mexico, slightly outpacing the comparable period for 2010 but still lagging behind the dollar flow prior to the 2008 world economic melt-down. Remittances account for an estimated two percent equivalent of Mexico’s Gross Domestic Product.
In the hierarchy of foreign exchange sources, remittances have overtaken direct foreign investment since the world economic crisis began. Last year, Mexico counted about $21.3 billion in remittances (down from $26.5 billion in 2007) as new foreign investment totaled $17.7 billion, a sharp drop from the nearly $30 billion invested in 2007.
The Calderon administration’s new Migrant Fund, which will be set up to finance 300 projects, follows years of previous government-sponsored programs at both the federal and state levels that attempted to attract and match migrant dollars for public works and small business development.
Interviewed at last fall’s world migration forum in Puerto Vallarta, a former Inter-American Development Bank official in charge of remittances issues told Frontera NorteSur that a major change in official Mexican thinking about migrants and their dollars took hold in recent years.
Pedro de Vasconcelos, manager of the Rome-based International Fund for Agricultural Development’s remittances program, said the shift was evident about a decade ago when then-President Vicente Fox declared migrants were “heroes.”
De Vasconcelos said another example of the new attitude came when Mexico’s Secretariat for Social Development started allowing six months of remittances to be counted as income for determining housing eligibility .
According to de Vasconcelos, the broader potential of remittances is barely tapped. Citing a precedent, the international specialist pointed to Europe of the 1980s, when the mutual savings of Portuguese and Spanish migrant workers spurred growth in their countries’ financial sectors. He estimated that 52 percent of the modern Spanish banking sector traces its portfolio to migrant remittances.
“Let’s not tell people what to do with their money, it’s private,” de Vasconcelos said. “However, what people need are other options.”
Whether most Mexican migrants are currently in a position to significantly contribute to their home country’s economic development is an open question. A recent study prepared for Mexico’s Chamber of Deputies noted that a difficult US labor market, the rising value of the peso and inflation have all combined to eat away at the value of remittances.
The report by the Chamber’s Center for Public Finance Studies confirmed that remittances were up overall in the first months of 2011, but it also found that the increase did not benefit the country across-the-board and that migrant-sent money flows had actually dropped in the states of Baja California Sur, Chiapas, Mexico, Campeche, Tabasco, and Colima.
Of the states experiencing decreases in remittances, both Chiapas and Mexico have been the home base of significant numbers of new migrants in recent years.
Mexican Economy Minister Ferrari was questioned about the timing of the Migrant Fund, which was unveiled almost five years after the Calderon administration came to power and less than one year before the upcoming elections that will choose a new president and Congress. Like 2006, migrants will be allowed to vote in the presidential election and could conceivably swing the outcome in the event of a close race, though voter turn-out would have to be much, much higher than during the last contest when migrant participation was disappointingly low.
Ferrari denied electoral motives were behind the creation of the Migrant Fund: “I think we should be above the elections…the truth is that the country can’t be stopped because of the elections and we shouldn’t allow party and political questions to be above the interests of Mexican families.”
Mexican immigrants in the US will have a chance to hear about the Migrant Fund and related issues at Expo Mexico Emprende scheduled for August 19-21 in the Los Angeles Convention Center.
Organized by Mexican government agencies and co-sponsored by private businesses like cell-phone biggie Movistar and pawn store chain Prenda Mex, the event will feature information and discussions on venture capital, exports, financing, business innovation and more.
Mexican filmmaker Alfonso Arau and Silicon Valley business consultant and strategist Jorge Zavala are among the scheduled presenters. A representative of the Houston Chamber of Commerce is scheduled to give a talk titled “Houston: The Gateway to the World.”
Additional sources: La Jornada, June 9 and August 6, 2011. Articles by Notimex and Susana Gonzalez G. Proceso/Apro, April 1, 2011; May 4, 2011; June 3, 2011.
Frontera NorteSur: on-line, U.S.-Mexico border news
Center for Latin American and Border Studies
New Mexico State University
Las Cruces, New Mexico