NY Times article regarding Mexican economics of Mexican migrant labor force in US

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August 29, 2003

Money Sent Home by Mexican Migrants Tops Foreign Investment and TourismBy THE ASSOCIATED PRESS

EXICO CITY -- Mexican migrant workers sent more money to their home country than either foreign investors or tourists this year, according to central bank figures released this week, but some here aren't sure whether the increasingly migrant-dominated economy is a good thing.

Since the central Bank of Mexico's current recording format began in 1980, remittances have never before exceeded both tourism and foreign investment over a six-month period.

Remittances began to gradually outstrip tourism starting in 1998, although some recorded "tourism" is actually Mexicans bringing rather than sending money to family members.

This year, recorded remittances jumped an astonishing 29 percent in the first half of 2003 to $6.3 billion, outstripping the $5.2 billion sent in direct foreign investment.

That's second only to income from oil exports, at more than $8 billion, and well ahead of tourism at $4.9 billion.

Although part of the surge was attributed to higher migration rates, better monitoring and a campaign to make money transfers cheaper and safer also resulted in more money being tracked as it crossed the border. The use of money orders increased by 104 percent in the first half of 2003 over the same period of 2002, while hard-to-count cash transfers dropped by 28.6 percent.

o Madrazo, leader of the former ruling Institutional Revolutionary Party, or PRI, criticized the government for migration, depicting it as a forced and painful diaspora caused by a lack of job creation at home.

"This is a clear indication that we are on the threshold of a social crisis," he said.

Even the administration of President Vicente Fox hasn't been satisfied with what migrants and their families do with the money -- although Fox himself has hailed migrants as heroes.

"The great majority of (remittance) money is spent on satisfying basic needs, the purchase of durable consumer goods or home improvement," the Mexican government's National Population Council noted in a report. "Just a small percentage is dedicated to savings or so-called productive investment."

Migrants and their families often spend remittances on improving or building homes -- which they sometimes never return to -- rather than creating jobs that would prevent other Mexicans from having to leave.

Fox has launched a program -- with slim results -- to get migrants to pump their savings into businesses in Mexico.

The debate surrounding migration is nothing new. Migrants are lionized in official discourse, but sometimes robbed of their savings by police on returning home. Even when they strike it rich, migrants -- often from poor, rural regions -- are often looked down upon by Mexico's educated urban elite.

Federico Estevez, a political science professor at Mexico's Autonomous Technological Institute, rejected criticism of the remittance economy, saying, "Any money from abroad is a good thing."

"You can't call that unproductive. Every time you build a cinderblock house or put a better roof on, you decrease your family's death rate," Estevez said. "It frees up money from government anti-poverty programs, or allows those programs to reach their goals faster. It plays a role in decreasing extreme poverty."

Financial analysts also saw the increase in recorded remittances as a good thing.

"Mexicans are outpacing foreigners as a source of financing for Mexico's foreign financing needs," Stone & McCarthy research said in a report this week, noting that the development sets Mexico apart from other developing countries.

The "Chinese count on foreigners investing heavily in their country in order to fund their financing needs; Brazilians for many years relied on appetite by foreign companies for their state-owned enterprises. Mexicans have Mexicans to count on when it comes to financing their needs."

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