Posted on December 21, 2005

U.S. Money Helps, Hurts Mexicans

Hugh Dellios, Chicago Tribune, Dec. 20, 2005

CALERA, Mexico — The boys and girls of this central Mexico town will soon play in a $1.2 million sports center. Part of the money came from residents who emigrated to the United States and send some of their wages back home.

But not all that arrives with the money is so good. Because of all the cash that pours into Calera from U.S. cities, townsfolk struggle with inflated prices for houses and cars. Local officials worry that some residents are content to merely wait for a monthly check from relatives in the United States and aren’t investing enough of the cash in their future.

“We’re hoping to create new ways to spend the money, so people can make their own living,” said Edgardo Ramirez, Calera’s development director.

As President Vicente Fox visited this town in Zacatecas state earlier this month to give a holiday welcome home to immigrant workers he calls “heroes,” new questions have been raised about how wisely Mexico is utilizing the $16.6 billion those immigrants send to their families and villages from the United States each year.

The so-called remittances, or remesas, have become Mexico’s second-largest source of foreign income, behind only oil revenue after recently surpassing tourism receipts. Economists credit the monthly checks with helping to reduce poverty in many areas of the country.

But concerns are growing that Mexico is not taking full advantage of that income to reinforce its economy and create jobs for the long term. The vast majority is spent by families on daily needs, while the government has succeeded in redirecting only a small portion to development projects by offering matching funds.

At the same time, critics worry that Mexico has grown too dependent on the remittances to keep villages and families afloat. The country might regret that if population experts are correct and a lower birth rate means immigration flows to the United States will tail off in 20 years.

“The U.S. has become addicted to cheap Mexican labor and Mexico has become addicted to the remittance,” said Rodolfo Garcia Zamora, an immigration expert at the Autonomous University of Zacatecas. “It’s an error to see remesas as the national salvation.”

Garcia was speaking this month at a United Nations conference on immigration and development in Mexico City, where experts debated the pros and cons of the $220 billion worth of remittances traversing the globe each year and their impact on developing nations’ economies.

Many economists cheer the remittances as a positive effect of globalization, and say immigrants’ families often know better than governments how to use them. But U.N. officials and others have begun expressing concerns that Mexico isn’t using the money more productively.

One of the critics was U.S. Ambassador Tony Garza. “Let’s be honest with each other,” he told a group of Mexican business leaders in a speech in July. “Reliance on remittances from the U.S. and windfall revenues from high oil prices is simply not an economic policy.”


During his visit to Calera, Fox downplayed such concerns, comparing Mexican immigrants to Irish immigrants who helped their country by sending money home during that nation’s great migration to the United States.

“That is what the Mexicans in the U.S. are doing. They are building a great nation (in Mexico),” Fox said in an interview on his presidential jet. “It means they are preparing to return and that they have great confidence in their country.”

Fox said families use the money to build homes and open small stores, all good for the economy. Outside Calera, he spent an hour at a highway tollbooth, greeting immigrants as they drove home for Christmas and praising them as “great men and women” who also support the U.S. economy.

One immigrant, Agustin Angel Avalos, 30, said he was returning from Fresno, Calif., where he has picked grapes and peaches illegally for eight years. He said he sends money home every month to support his wife and three children, whom he hadn’t seen in a year and a half.

“It’s for our (daily) costs, and to save a little,” Avalos said. “Now we have a little house that we’ve started.”


As it is, less than 20 percent of the money sent home is used for projects. One big reason is fear of government corruption and a lack of trust, officials say.

“Some people think we are stealing the money,” said Ramirez, the Calera official, who hopes to encourage the opening of chili canning factories and other business ventures. “We try to get projects going but people don’t always want to collaborate.”