Sending Home a House

Even as the flow of cash across the border grows at a double-digit annual rate, Mexicans working in Los Angeles and elsewhere in the United States increasingly want to control how their hard-earned dollars get spent back home. Many businesses are catering to this desire, from electronics retailers to home builders. You buy here, your family (or friends) consumes there.

Three blocks away from this newspaper’s home office, Construmex offers on-site architects to advise clients on what the home of their dreams should look like -- back in Mexico. Clients choose from a series of models, then buy the construction materials that will be delivered in Mexico, often on credit. Materials for a handsome two-story, three-bedroom house are only $16,000, though someone in Mexico actually has to put it together.

These are private transactions with significant public policy implications. If it becomes easier to build a stake in Mexico while working in the United States, more migrant workers may want to return home eventually. As it is, one of the more perplexing questions surrounding immigration is whether the flow of labor is becoming more or less circular. Are more workers crossing the border illegally into the U.S. for short stints, only to return home? Or is the trend in the other direction, with the northern trek more often being a one-way trip?

That is a question we will continue to grapple with as we continue “thinking out loud” about immigration, and it’s an issue for policymakers in Washington as they consider an overhaul of our nation’s immigration laws. What kind of incentives should the U.S. offer if it decides it needs an expanded flow of legal temporary workers but doesn’t want to encourage them to stay?

Often, immigrants from a particular town contribute to a common fund that invests in their old community, paying for such things as street paving or lighting. This is a means for these remittances to fund development more directly and add to migrant workers’ continued sense of belonging to their town in Mexico.

Starting in the 1980s, immigrants from the Mexican state of Zacatecas agreed to plow some remittances into productive enterprises that would create jobs there. In a partnership linking immigrants with local, state and federal Mexican agencies, funds sent back that are earmarked for public projects receive a 3-to-1 match. Today, there are 1,500 investment projects in 26 different Mexican states being financed this way.

In Mazamitla, in the heights of the state of Jalisco, immigrants from California have invested half a million dollars in a tourist development that employs 60 people. In Juchipila, the remittances helped pay for a $1.5-million dam, creating 200 jobs and making it possible to irrigate formerly arid lands and create more jobs in agriculture. In Jalpa, the money from the U.S. built candy and tortilla factories run and operated by women.

Nancy Barry, president of the New York-based Women’s World Banking microfinance group, points out that 15% of remittance flows already are saved or invested. The challenge ahead, she says, is “to find ways to channel more of this money into productive assets for the poor.”