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Migrants' Dollars Cross Border, Brick by Brick

June 01, 2003|Richard Boudreaux | Times Staff Writer

PACHUCA, Mexico — Jose Antonio and Olga Lidia Mendoza have never set foot on the arid hillside lot they own here along Ejido Street near the corner of Agrarian Reform. They have never taken in the spectacular view of Pachuca's old mining center in the valley below.

The Mexican couple live in Los Angeles County and have not been home in years.

Having managed a risky border crossing with two young children and no documents, they prefer to stay put for now, clinging to his $225-a-week job as a chef at a Japanese restaurant in Diamond Bar.

What they do know precisely, though, is the computerized blueprint of their future home, which is rising from the tiny lot here by an innovative form of remote control: With help from an engineer at no extra cost, Mexicans and Mexican Americans in California can design homes or businesses for construction in Mexico and order the building materials for next-day delivery to relatives who oversee the projects.

"The advantage is that I control the spending from here," Olga Lidia, 34, said in a telephone interview from her rented apartment in Rowland Heights.

"Otherwise, I wire money home and, while mama is building the house, she can grab some of the cash for herself."

The cross-border service, offered by the Mexican cement giant Cemex, is part of a scramble by financial and retail companies for a cut of the more than $10 billion that Mexicans abroad are expected to send home this year. The competition is driving down the once-excessive fees charged for moving these migradolares, or migrants' dollars, and allowing even bigger sums to flow into Mexico, one of the world's largest recipients of migrant remittances.

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A Lot, a Little at a Time

Rather than a flood, the money comes in millions of trickles -- from what little is left after struggling migrants like the Mendozas pay for food and rent in the United States -- and goes largely to sustain poor kin back home. The recipients typically collect cash at wire transfer counters and spend more than 90% of it on consumer goods.

Mexican multinationals have begun targeting the 23 million Mexicans and Mexican Americans who live in the U.S., offering ways they can order and pay for furniture, home appliances and even groceries for delivery in Mexico instead of sending home cash.

But the cement company's initiative has won high-profile endorsement from U.S. and Mexican officials, who are seeking to channel the remittance boom -- Mexico's fastest-growing source of income -- into savings, home-building, small business ventures and other job-creating investment.

"That $10 billion could become a detonator of economic growth in the regions abandoned by our migrants, our most backward regions," said Javier Gavito, general director of Mexico's state-owned National Savings and Financial Services Bank.

The bank, which serves 3.8 million small-scale savers in Mexico, joined 16 other banks and credit unions on both sides of the border in January to create the People's Network, an Internet-based system that allows money transfers from the U.S. directly to savings accounts at 750 Mexican bank branches.

Mexican and U.S. officials have lobbied other American banks to make it easier to open accounts and cheaper to send money home.

With scores of American banks and wire transfer agencies vying for migradolares, fees have tumbled from an average 15% of the amount remitted five years ago to about 5% today. In April, Citibank and its Mexican partner Banamex offered the lowest fee of any major bank -- $5 plus a 2% commission on the transfer of any sum up to $3,500 between accounts in their branches.

President Vicente Fox, meanwhile, has expanded government programs that match part of the estimated $60 million that U.S.-based migrant associations send each year for public works projects in their home communities in Mexico.

On June 9 in San Francisco, U.S. and Mexican officials will meet to review such initiatives, which are part of their 2-year-old Partnership for Prosperity program, and to try to attract more American corporate investment to Mexico's poorer regions.

"We are looking for new ways to close the income gap between the two nations," said Eduardo Sojo, Fox's economic advisor.

While one aim of these efforts is to discourage illegal migration, the result is a paradox. As tougher U.S. border patrols raise the risks for undocumented Mexicans and as the Bush administration resists Fox's calls for a more open frontier, the income of those who slip through is increasingly welcomed by American banks and freer to move around.

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Flat-Fee Transfer

The day after the Mendozas placed an order and paid $315 at a Cemex branch office in Los Angeles last month, Gabriela Castillo walked into a Pachuca hardware store that is one of 5,000 Cemex sales outlets across Mexico and identified the order by code number. She hauled away 20 sacks of cement and 400 concrete blocks to start her daughter and son-in-law's two-story house.

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