Tuesday, July 24, 2012

Growth of Mexico Middle Class Fueled by Money Transfers

The Washington Post reports on the transformation of Mexico’s middle class, as more migrants return to Mexico and start up their own businesses in their home country. Even as much of Mexico’s economy remains dependent on remittances sent by those living abroad, the Post reports that these remittances have also helped fuel the expansion of the “anxious, tenacious, growing” middle class.

Part of this economic growth is fueled by the number of migrants returning to the US, the Post reports. As a recent report by the Pew Hispanic Center found, the number of migrants who are voluntarily or forcibly returning to Mexico has risen sharply, even as the number of those migrating to the US has dropped. The economic recession in the US may have also contributed to this migration pattern.  This means that for the first time in decades, migration flows between Mexico and the US have come to a standstill and may even have reversed, the Pew Center argued.

But evidence shows that the more time a migrant spends in the US, the remittances sent back to Mexico become larger, the Post says. It also becomes more likely that remittances will be invested in activities other than the family’s basic survival, such as business start-ups, the purchase of a new home, cars, vacations, or school tuition.

Researchers have found that after about seven years spent living in the US, it is more likely that remittances sent home to families will be saved and invested, rather than spent on a family’s immediate economic needs. These findings seem to suggest that the Mexican migrant population in the US has played a key role in helping to boost the Mexican economy -- but Mexico will more strongly feel the economic benefits the more time that migrants are able to spend working in the US.

According to the article's accompanying graphic, half of Mexico’s population of 112 million have a relative living in the US. The amount of remittances in 2011 was almost $23 billion. According to the Post, this was “greater than the direct foreign investment made by all multinational corporations. Remittances are now equal to the foreign currency exchange generated by Mexico’s tourism industry or its oil sector.” And the largest amount of remittances goes not to the very poorest, but to the lower middle class, according to research.

While remittances seem to have strengthened the middle class in Mexico, the Post adds that it is not a substitute for a strong economy that generates jobs inside the country. While there are some predictions that remittances will again begin to rise once the US economy improves, the Post notes that if Mexico remains dependent on these cash transfers to fuel economic growth, this is ultimately a sign of weakness, not strength.

The article is accompanied by a slideshow which includes scenes of daily life and businesses in Guanajuato, one of the several towns across Mexico transformed by the expansion of the middle class.

News Briefs
  • Nearing his one-year anniversary in office, President Ollanta Humala oversaw the second major shake-up in his 19-member cabinet, replacing his controversial prime minister, ex-army officer Oscar Valdes, with the justice minister and human rights lawyer Juan Jimenez, reports Reuters. Last December, Humala replaced 10 ministers in a Cabinet shake-up that was interpreted as a move to the right, largely because of his appointment of Valdes. The exit of Humala’s progressive drugs czar, Ricardo Soberon, in January was also interpreted to be a result of Valdes’ influence. Humala’s selection of Jimenez, who played a key role in Peru’s transition to democracy in 2000, appears intended to ease criticism that his government moved too far to the right with Valdes as prime minister. It is also likely that Humala was pressured to oversee another major reshuffling of his Cabinet due to his handling of the violent anti-mining protests seen in the past year, the AP reports. Bloggings by Boz notes that both now and in December, Humala made changes to his Cabinet in response to these anti-mining protests, and that he is spending much of his political capital on this fight, rather than focusing on other issues related to economic development. “It’s a political trap he needs to escape,” Boz concludes. 
  • A judge in Peru ruled that an army death squad active during former president Alberto Fujimori’s term was guilty of human rights violations, but not crimes against humanity, reports Reuters. This resulted in reduced prison sentences for many ex-members of the death squad, including one of Fujimori’s most prominent allies, former intelligence chief Vladimiro Montesinos, who saw his prison sentence reduced from 25 years to 20. Human rights group leader Gloria Cano of Aprodeh told Reuters that she worried the ruling could open the way for Fujimori’s early release from prison: "This is so they can have arguments to go to the Constitutional Tribunal and say there were no crimes against humanity -- so that Fujimori can be released from jail.”
  • Mexico’s Institutional Revolutionary Party (PRI) has requested the Federal Electoral Institute to formally investigate leftist candidate Andres Manuel Lopez Obrador for receiving illicit funds for his campaign, reports El Universal. These allegations follow charges by Obrador that the PRI used laundered funds to finance that campaign of president elect Enrique Peña Nieto.
  • The AP on the rising number of unidentified dead in Mexico’s morgues, as many state investigators lack the training or resources to properly identify the bodies found in mass graves. Andrew Selee of the Mexico Institute: “The fact that so many bodies remain unidentified tells you about the enormous scale of the violence in some parts of the country where the cartels have fought each other and also ravaged the civilian population in the process.”
  • A truck carrying 14 undocumented immigrants from Mexico and Central America crashed in South Texas, killing everybody on board, including the driver, reports the New York Times. The accident calls attention to the number of immigrants who travel northwards through the US packed into vehicle compartments. For another report on safety along the southwest border, Salon with a piece on abuses committed by the US Border agents against immigrants, which includes destroying the water supplies that volunteers leave in the desert.
  • The AP on the mausoleum being constructed in Caracas, intended to house the remains of Independence hero Simon Bolivar and serve as a monument to Bolivar’s legacy. The AP notes that it is unclear who actually designed the building, which was supposed to have been completed last December but has suffered various delays. According to analysis by Elias Pino, described as a “historian and leading expert on Bolivar,” the mausoleum’s implicit intent is to reinforce the connection between President Hugo Chavez and Bolivar. Pino: "This monument will tie together both figures,and will not just be the mausoleum of Bolivar but also the entrance of President Chavez into the pantheon of patriots.”
  • The Council on Hemispheric Affairs examines the controversial Belo Monte dam project in Brazil, which has prompted serious backlash from indigenous and environmental activists. 
  • The Guardian's Poverty Matters blog with a critique of the latest Human Rights Watch (HRW) report on Venezuela, arguing that while many of the report’s criticisms are valid, it should not obscure Venezuela’s overall progress in improving the lives of the poor and including much of its citizenry in the political process. Another piece from the newspaper’s Comment is Free section criticizes human rights defenders for failing to support WikiLeaks founder Julian Assange’s bid for political asylum in Ecuador, instead choosing to criticize Ecuador’s lack of press freedoms, which, author Mark Weisbrot argues, is a misrepresentation of Ecuador’s media battles. 
  • The Miami Herald on US efforts to waive visa requirements for Brazilians, one of the primary outcomes of the meeting between President Dilma Rousseff and President Barack Obama in April, when the leaders discussed ways to increase integration between the two countries.