Will Calderon Also Be Obsessed With Mexican Emigration?

Allan Wall, Mexidata, Nov. 13, 2006

Will Felipe Calderon, scheduled to become Mexico’s president on December 1st, be as obsessed with emigration as President Vicente Fox has been for six years?

Fox was obsessed with the emigration question and allowed it to gobble up valuable time and political capital, which would have been better spent to improve Mexico’s economy rather than figuring out how to get more Mexicans out of Mexico.

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The recent U.S. congressional elections open the possibility that President George W. Bush and a Democratic Congress will be able to give amnesty to illegal aliens and increase legal immigration. Yet the 2006 congressional election was not really a referendum on immigration, but a rejection of Republican incompetence.

It’s significant that no winning congressional candidate campaigned on a pro-amnesty platform. The 2008 primary season is less than two years away, and things could change once again.

By investing so much capital on the immigration question, a Mexican president is staking his future on a question that can be reversed by the U.S. electorate.

However from the Mexican perspective a more basic question remains. Regardless of what U.S. politicians might do about immigration policy, is the continuance of mass emigration in the long-term economic and social interests of Mexico?

Certainly emigration generates a lot of money for Mexico in remittances. In fact, remittance money may soon surpass oil revenue as Mexico’s largest legal source of income.

Emigration also provides Mexico’s leaders with a safety valve. As long as Mexican governments (of whatever party) can keep Mexicans crossing the border it will relieve pressure on the Mexican government.

And that, alas, is part of the problem. What incentives do Mexico’s leaders have to reform the Mexican economy as long as the emigration safety valve looms so large?

What about those remittances? Mexico is now the world’s biggest source of emigration (the largest exporter of human beings), and the 3rd largest recipient (after China and India) of remittance money.

Remittances do provide a social safety net. But as motors of economic development, remittances are not too effective say several experts.

For example, Alfonso Sandoval, spokesman for the United Nations Population Fund (UNFPA), says that remittances are not incentives for productive development in the Mexican regions that receive them. And none other than Mexican central bank chief Guillermo Ortiz said something quite similar, that remittances provide a social safety net but are not a key lubricant of the Mexican economy (Mexican Central Banker Ortiz Speaks His Mind, by Allan Wall, October 2. 2006).

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Rather than solving Mexico’s problems, remittances just perpetuate the viciousness of underdevelopment and encourage more Mexicans to emigrate. If Calderon wants real economic development he needs to move Mexico away from its heroin-like addiction to remittances.

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As a former energy secretary Calderon knows what a mess PEMEX (Mexico’s oil monopoly) is in. Politically, any sort of privatization or even semi-privatization would unleash a firestorm of protest, but something has to be done.

Mexico’s enormous informal economy is in reality an economic resource, and ways should be found to legalize it and bring it into the formal economy.

Taxation must be made more efficient, as estimates put Mexican tax evasion at 40 percent.

Calderon could work to achieve a real federalism, in which Mexican states have more leeway in managing their own revenues, rather than a one-size-fits-all approach to the economy.

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