NCPA - National Center for Policy Analysis


June 6, 2007

Income from immigrant remittances forms a growing part of Mexico's economy.  It helps Mexican consumers all right, but it also hurts job creation there, says Investor's Business Daily.


  • Currently, some 10 percent of all Mexican households get remittances from the United States.
  • Foreign workers now make up 16 percent of the Mexican work force.
  • If they stayed home and worked in Mexico they would be building Mexico's economy -- not the United States'.
  • Instead, they live in poverty, overwhelming U.S. social services agencies and making Mexico's economy much weaker than it should be.

Mexican businesses are also hurt by the peso's remittance-driven strength.  The strong peso has priced many Mexican goods out of the U.S. market:

  • Mexican businesses have to charge more for their goods because of the strong peso; and worse, because they're being deprived of profits from exports, they have less money for efficiency-enhancing investments or expansion.
  • The remittance cash that drives the strong peso, meanwhile, ends up in short-term bank accounts and is mostly used for buying consumer goods -- not investing.
  • In effect, the high peso means a Mexican television-set manufacturer must compete against China's behemoth TV makers and do so handicapped by Mexico's stronger currency.

When even a tiny currency shift can mean the difference between buying Mexican or buying Chinese, there's no question that illegal immigration and its effects are holding Mexico back from joining the ranks of fast-growing developing nations.  Mexico's economy will only be sound when its people can work at home -- and Mexico's businesses can use them and the profits they generate to expand and modernize the country on real terms.

Source: Editorial, "Immigration Costs Mexico Jobs, Too," Investor's Business Daily, June 6, 2007.


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