Editor's note: Elizabeth Havice, a summer 2004 Student Journal correspondent, is completing her third year of graduate studies in UC Berkeley's Department of Environmental Science, Policy and Management's division of Society and Environment.
This year, more than $17 billion will flow into Mexico in the form of remittances – money sent home by migrants working in the United States. This sum makes individual money transfers Mexico's largest source of foreign exchange, exceeding oil exports and tourism, and more than 10 times the total of all U.S. foreign aid to Mexico. The undeniable impact that remittances have on community and national economies alike has unwittingly hurled remittances, and by association, migrants, into the realm of international development. During the summer of 2004, I traveled to Mexico on grants sponsored by UC Berkeley's Human Rights Center and the National Science Foundation to investigate how migrants and the money that they send home have been formally inserted into Mexico's rural development plans.
Finding people with first-hand knowledge of this phenomenon was astonishingly easy. In taxis, on public buses, grabbing a bite to eat from street vendors – as soon as I mentioned I was from California, my companions became informants. I was inundated with accounts of deportation, dangerous border crossings, and most importantly, the motivations for journeying to the U.S. in the first place. Overwhelmingly, these migrants felt a responsibility to send money home to make life in Mexico more livable for their family members.
In an extended article published here, I assess three formal programs that tap into remittance dollars in order to achieve development goals. The first is a government-sponsored matching funds project known as Tres por Uno (Three for One) that subsidizes community infrastructure development. The second set of programs, financial services projects sponsored by private and commercial banks, extends banking and credit services to rural communities. A third program – productive projects sponsored by individual investment and international aid agencies – supports new business ventures in rural areas.
Based on data that I collected on these projects through my research as well as evidence from the literature on this topic, I learned that relying on remittances as an explicit development strategy intensifies rural Mexico's dependence on outward migration. It does so in several ways. First, it makes local communities reliant on money generated from abroad without adequately providing for an economically independent future. Second, since the successful implementation of remittance-supported projects depends on the use of market principles and market institutions, the projects end up expanding the reach of free trade policy and practices that have been shown to have negative impacts on rural economies. Polemically, remittances have become essential in maintaining and expanding the very institutions that have traditionally excluded rural communities from the benefits of free market economic growth. Finally, I saw a fundamental divide between development goals and the capital accumulation goals of the institutions using remittances to achieve development aims. These conflicting goals undermine rural development in favor of economic gains for the most powerful players in the trading system.
While remittances have been shown to have a marked impact on the development of rural communities and their vast scope continues to offer the opportunity to make real progress in rural areas, as currently formulated, remittance-based development projects are unsustainable, and only marginally reflect the needs of rural communities. Instead, they benefit the Mexican government and most influential players in the global economy. Utilizing remittances to equitably and sustainably enhance rural development requires a more comprehensive approach to rural development that considers the causes of migration and the most effective ways to curb them in the context of Mexico's political economy.
Read Elizabeth Havice's full report: Free trade of labor? The relationship between free trade, migration and development in rural Mexico