Third Cumbre of the Great Plains
Understanding Immigration and the changing communities of
the Americas: Lessons from new destinations across the globe.
University of Nebraska at Omaha April 26-29, 2007
LIMITATIONS OF THE INTERNATIONAL
REMITTANCES AS A STRATEGY FOR LOCAL
DEVELOPMENT
Rafael G. Reyes Morales
Instituto Tecnológico de Oaxaca
Alicia Sylvia Gijon Cruz
Universidad Autónoma Benito Juárez de Oaxaca
Andrés C. Cruz Contreras
Instituto Tecnológico de la Cuenca del Papaloapam
Salvador López Platas
Centro de Estudios Tecnológicos y de servicios 124
Introduction

In this presentation Mexico-US migration is analyzed from
the perspective of its impact on the development of
communities of origin.

It is based on eight communities each of which has a high
proportion of Zapotec-indigenous people and is economically
diverse.

Seven of these communities are rural villages and one is a
market town which provides goods and services to rural
communities.

It is addressed the development conditions in rural areas in
Mexico and the constraints of remittances as a basis for
financing local development.
Frame of reference




Studies based on the new economics of labor migration
assert that the financial remittances sent from migrants in
the US to their households in Mexico have multiplier effects
on the communities of origin. (Taylor et al. 2003; YúnezNaude 2000; Taylor and Adelman 1996; Sadoulet and de
Janvry 1995).
Unfortunately, in the case of Mexico and other developing
countries there is little evidence to support these claims. In
the absence of banks in rural areas remittances do not meet
the needs of either producers or consumers.
At present, remittances arrive in rural communities and are
almost immediately spent in market towns where banks can
be found thus only benefiting the town economies.
Furthermore, families without remittances usually do not gain
access to bank credit.
Frame of reference




In the absence of effective redistributive public policies that might
correct the negative results of Mexico’s neoliberal development
model and the consequences of the North American Free Trade
Agreement, people in rural areas have had to create their own
strategies so as to secure survival and improve their family’s wellbeing.
The principal strategy is migration to the US which frequently
allows migrants to meet not only these goals but also provides
financial assistancet that can be used to maintain local cultural
traditions (Rivera-Sánchez 2006; Gijón-Cruz, et al. 2000).
Migration within Mexico can serve as a further survival strategy but
middle-sized cities and metropolises in Mexico are already
overpopulated with people from the countryside.
As a consequence, around half of the urban population is poor, lives
in squatter settlements, and is engaged in the informal sector of
the economy (Reyes-Morales 1999; Duhau and Schteingart 1997).
Market towns

Oaxaca has preserved the spatial organization of the colonial and
pre-Hispanic ages. It is based upon a network of market towns.

There are weekly circuits of itinerant markets known as tianguis. In
addition, there is a fixed market consisting of specialized stores and
services.

These market towns provide goods and services to rural
communities within their market area and these areas form
economically integrated microregions. This is the case of Tlacolula
de Matamoros whose market area includes the communities of the
Tlacolula valley in the Valles Centrales and many villages of the
Sierra Norte.
METHODS



A probabilistic survey was carried out to built the
social accounting matrix (SAM).
This presentation is based on the SAM results of
eight communities in the Central Valleys and Sierra
Norte regions, Oaxaca State, Mexico.
The majority of these SAMs were elaborate through
OAXACALIFORNIA project (Reyes Morales et al.
2001) and two SAMs come from graduate theses
(Arellano Amaya 2003; Cruz Contreras 2002).
Fig. 3 Ubicación de las seis localidades del Proyecto OAXACALIFORNIA
por Región, Distrito y Municipio en el Estado de Oaxaca.
Región Sierra Norte
Municipios del Distrito Ixtlán
Región Valles
Municipios
del Distrito Tlacolula
Centrales
Tlacolula de Matamoros
Santa Ana del Valle
San Sebastián Abasolo
San Juan Teitipac
Regiones de Oaxaca
01 Cañada
02 Costa
03 Istmo
04 Mixteca
05 Papaloapam
06 Sierra Norte
07 Sierra Sur
08 Valles Centrales
San Pablo Macuiltianguis
Muicipios del Distrito Villa Alta
San Mateo Cajonos
Characteristics of study communities, Oaxaca State, Mexico, 2000.
Community
Type of economy
Tlacolula de
Matamoros
Commerce and
services
San Juan Teitipac
Self-subsistence
agriculture and crafts.
Santa Ana del Valle
San Sebastián Abasolo
El Trapiche
San Pablo
Macuiltianguis
Capulálpam de
Mendez
San Mateo Cajonos
Small-scale
commercial
agriculture
Migratory
intensity
index
Deprivation
index
Total
population
Medium
Medium
11,087
High
Very high
2,817
Very high
High
2,140
Medium
Medium
1,688
Medium
High
850
Medium
High
443
High
Low
1,298
High
High
500
Forestry
Self-subsistence
agriculture and crafts
Fuente: CONAPO. 2002. Índice de intensidad migratoria México-Estados Unidos 2000, México, D.F.; INEGI.
2000. XII censo general de población y vivienda 2000, Aguascalientes, México; DIGEPO. 2002.
Marginación municipal, Oaxaca 2000, Oaxaca, Oaxaca, México.
RESULTS
Development and the impact of remittances





In the first instance, remittances meet the deficit facing rural economies of
the Sierra Norte region.
Rural economies of the Central Valleys have a greater capacity to produce
local production inputs because remittances are also used to finance
peasant agriculture, small-scale commercial agriculture, handicraft
production as well as housing construction.
Remittances have a further impact on a regional level. Housing construction
and agriculture generates a demand for local manpower in areas of high
migratory intensity. The increase in demand exerts upward pressure on
rural salaries.
Labor shortages are met by workers from the neighboring communities and
even from other regions of Oaxaca where migration levels are not yet so
high. Migration has created distinct regional labor markets offering higher
salaries to those paid in Oaxaca City, the state capital, for similar forms of
employment.
In this way, some of the benefits of remittances are redistributed among
rural communities.
Development and the impact of remittances

As a market town Tlacolula de Matamoros attracts the region’s
monetary surpluses and recycles them through banking credits for
investment in business and consumption.

However, it is clear that the flow of regional, national and
international remittances does not represent a source of effective
financing for the development of the communities of origin mainly
because the huge flow of remittances to market towns reduces the
funds available to other areas.
Structure of the gross production value. Two communities with timber economy,
Sierra Norte region, Oaxaca State.
Capulálpam de
Méndez
2002
San Pablo
Macuiltianguis
2000
Agriculture
4.6 %
11.4 %
Back-yard livestock
3.3 %
5.1 %
Commerce and services
70.0 %
83.5 %
Manufacture and crafts
5.5 %
0.0 %
Enterprises
16.6 %
0.0 %
100.0 %
100.00
Economic activity
Total
Fuente: Cruz Contreras, Andrés C. 2002. La construcción de la matriz de contabilidad social aplicada a
Capulálpam de Méndez, Oaxaca y su utilización en el diseño de política económica regional, tesis de
doctorado, UACH, p. 76;
Reyes Morales, Rafael G. et al. 2001. Impacto de las remesas internacionales en el desarrollo de las
localidades expulsoras de población en Oaxaca, México, ITO-CEE, COLMEX, Oaxaca, Oax., México,
p.51.
Structure of the gross village product. Two communities with timber economy,
Sierra Norte region, Oaxaca State.
Economic activity
Value added (gross domestic product)
Imported inputs
Local inputs
Government
Total
Capulálpam de Méndez
2002
San Pablo Macuiltianguis
2001
$ 5,241,174
$ 388,630
(40.7 %)
(28.0 %)
$ 6,673,232
$ 762,662
$ (51.7 %)
(55.0 %)
$ 736,269
$ 77,928
(5.7 %)
(5.6 %)
$ 244,248
$ 158,028
(1.9 %)
(11.4 %)
$ 12,894,923
$ 1,387,249
(100.0 %)
(100.0 %)
Fuente: Cruz Contreras, Andrés C. 2002. La construcción de la matriz de contabilidad social aplicada a
Capulálpam de Méndez, Oaxaca y su utilización en el diseño de política económica regional, tesis de doctorado,
UACH, p. 78; Reyes Morales, Rafael G. et al. 2001. Impacto de las remesas internacionales en el desarrollo de
las localidades expulsoras de población en Oaxaca, México, ITO- CEE, COLMEX, Oaxaca, Oax., México, p.51.
Households’ incomes at current prices. Two communities with timber economy,
Sierra Norte region, Oaxaca State.
Economic activity
Capulálpam de Méndez
2001
Total
Percentage
San Pablo Macuiltianguis
2000
Total
Percentage
Total income
$ 19,493,463
$ 2,181,490
Local income
$ 5,306,471
27.2 %
$ 388,630
17.8 %
External income
$ 14,186,992
72.8%
1,792,860
82.2%
Fuente: Cruz Contreras, Andrés C. 2002. La construcción de la matriz de contabilidad social aplicada a
Capulálpam de Méndez, Oaxaca y su utilización en el diseño de política económica regional, tesis de
doctorado, UACH, p. 80; Reyes Morales, Rafael G. et al. 2001. Impacto de las remesas internacionales
en el desarrollo de las localidades expulsoras de población en Oaxaca, México, ITO- CEE, COLMEX,
Oaxaca, Oax., México, pp.48-9.
Structure of the gross production value of three communities with peasant agriculture
and craft production, Central Valleys and Sierra Norte regions, Oaxaca State, 2000.
Santa Ana del
Valle
San Juan
Teitipac
San Mateo
Cajonos
Agriculture
8.2 %
14.6 %
3.7 %
Back-yard livestock
7.6 %
12.5 %
2.5 %
Commerce and services
25.6 %
52.3 %
52.0 %
Crafts
58.6 %
20.6 %
41.8 %
100.0 %
100.0 %
100.0 %
Economic activity
Total
Fuente: Reyes Morales, Rafael G. et al. 2001. Impacto de las remesas internacionales en el desarrollo de
las localidades expulsoras de población en Oaxaca, México, ITO-CEE, COLMEX, Oaxaca, Oax., México,
p.51.
Structure of the gross village product, three communities with peasant agriculture and
craft production, Central Valleys and Sierra Norte regions, Oaxaca State, 2000.
Economic activity
Value added (Gross
Domestic Product)
Imported inputs
Local inputs
Government
Total
Santa Ana del
Valle
San Juan
Teitipac
San Mateo
Cajonos
$ 4,862,708
$ 3,969,520
$ 1,815,329
(64.8 %)
(60.9 %)
(34.1 %)
$ 1,738,759
$ 1,189,330
$ 2,293,022
(23.1 %)
(18.2 %)
(43.1 %)
$ 631,166
(8.4 %)
$ 814,811
(12.5 %)
$ 849,546
(16.0 %)
$ 275,758
$ 545,246
$ 362,539
(3.7 %)
(8.4 %)
(6.8 %)
100.0 %
100.0 %
100.0%
Fuente: Reyes Morales, Rafael G. et al. 2001. Impacto de las remesas internacionales en el desarrollo
de las localidades expulsoras de población en Oaxaca, México, ITO-CEE, COLMEX, Oaxaca, Oax.,
México, p.51.
Households’ incomes at current prices in three communities with peasant agriculture
and craft production, Central Valleys and Sierra Norte regions, Oaxaca State, 2000.
Santa Ana del
Valle
San Juan Teitipac
San Mateo
Cajonos
Total income
$ 8,122,595
$ 8,402,470
$ 3,590,092
Local income
$ 4,862,708
(59.87%)
$ 3,969,521
(55.7 %)
$ 1,815,329
(40.9 %)
External income
$ 3,259,887
(18.3 %)
$ 4,432,949
(44.3 %)
$ 1,774,763
(59.1 %)
$ 275,783
(8.46%)
$ 545,246
(12.30%)
$ 362,539
(20.43%)
Economic activity
Government
Fuente: Reyes Morales, Rafael G. et al. 2001. Impacto de las remesas internacionales en el desarrollo de
las localidades expulsoras de población en Oaxaca, México, ITO-CEE, COLMEX, Oaxaca, Oax., México,
pp.48-9.
Structure of the gross production value of two communities with small-scale
commercial agriculture, Central Valleys and Sierra Norte regions, Oaxaca State.
San S. Abasolo
2000
Economic activity
El Trapiche
2001
Agriculture
8.4 %
Small-scale commercial agriculture
7.7%
Back-yard livestock
3.8 %
2.01%
Manufacture
0.0%
72.86%
80.1 %
23.06%
100.00
100.0%
Commerce and services
Total
2.07%
Fuente: Reyes Morales, Rafael G. et al. 2001. Impacto de las remesas internacionales en
el desarrollo de las localidades expulsoras de población en Oaxaca, México, ITO-CEE,
COLMEX, Oaxaca, Oax., México, pp.50-1.
Structure of the gross village product of two communities with small-scale
commercial agriculture, Central Valleys region, Oaxaca State.
Economic activity
San S. Abasolo
2000
Value added (Gross Domestic
Product)
46.0%
Imported inputs
26.5 %
73.5%
Local inputs
17.3 %
1.3%
Government
10.2 %
1.0%
100.0 %
100.0%
Total
El Trapiche
2001
24.2%
Fuente: Reyes Morales, Rafael G. et al. 2001. Impacto de las remesas internacionales en el desarrollo de
las localidades expulsoras de población en Oaxaca, México, ITO-CEE, COLMEX, Oaxaca, Oax., México,
pp.50-1.
Structure of the major economic indicators of Tlacolula de Matamoros, a market town,
Central Valleys region, Oaxaca State, 2000.
Economic activity
Gross production
value
Agriculture
0.3 %
Back-yard livestock
0.5 %
Manufacture
1.9 %
Commerce and services
93.3 %
TOTAL
Gross village
product
100 %
Value added (Gross Domestic
Product)
66.1 %
Imported inputs
11.4 %
Local inputs
15.7 %
Government
6.8 %
TOTAL
Households´
income
100.00 %
Local income
47.5%
External income
52.5%
TOTAL
100%
Fuente: Reyes Morales, Rafael G. et al. 2001. Impacto de las remesas internacionales en el desarrollo de las localidades
expulsoras de población en Oaxaca, México, ITO-CEE, COLMEX, Oaxaca, Oax., México, pp.48-9.
Conclusions
Constraints facing the local development.



The absence of micro-level financing institutions in
rural communities does not permit the recycling of
remittances before they reach market towns.
The economic dependency of the Sierra Norte
communities is partly due to the fact that these
remittances are not invested.
Nonetheless, communities of the Central Valleys
have reduced their deficits considerably within the
region and their labor force is seasonally engaged in
the regional labor market.
Conclusions



Regional deficits could be reduced if production surpluses were
increased and the sources of income were diversified.
In the Central Valleys, rural communities have diversified their
income sources through the following activities:
1)
cultural and alternative forms of tourism;
2)
investments in small business and handicraft production;
3)
housing construction; and
4)
exports of traditional products to the Latino market in the
United States.
In la Sierra Norte, communities have other economic initiatives:
1)
Sustainable timber production.
2)
Ecotourism and purified water production.
3)
Fruit and flower orchards, trout farming and small-scale bread
production.