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This is an archived USAID document retained on this web site as a matter of public record.
Presentation by Donald Boyd
Senior Deputy Assistant Administrator
Latin American and Caribbean Bureau, USAID
Opening Remarks - Launch of "Mexican Hometown Associations
and Their Development Opportunities" by Manuel 0rozco
Washington, D.C.
September 15, 2003
For Adolfo A. Franco,
Assistant Administrator, Latin American and Caribbean Bureau
Good morning ladies and gentlemen. It is a pleasure for me to give the remarks of our Assistant Administrator, Adolfo Franco, this morning. Mr. Franco regrets that he is unable to join us due to a change in his travel schedule that means he is on his way to Lima, Peru today. It is nice to see so many of you here as USAID launches a new report on Mexican hometown associations based here in the U.S. and how they are leveraging local economic development in their hometowns back in Mexico.
As you know, hometown associations are small philanthropic groups that support a wide range of projects in the Mexican communities of their origin. Dr. Manuel Orozco, who conducted research on the experience of Mexican hometown associations, highlights the economic and social importance of these money transfers and suggests that there are innovative partnership opportunities to leverage even more impact.
As a frame of reference for the discussion today, I think of the Partnership for Prosperity that President Bush and Mexican President Vicente Fox launched September 2001. This initiative is reflective of the strong commitment of our government to stimulate job creation and economic development in Mexico as well as across Latin America and the Caribbean. The Partnership for Prosperity gives special attention to spreading opportunity in the less prosperous areas of Mexico that have greater rates of emigration to the United States. Within its action plan, the Partnership acknowledges the tremendous flow of private resources that remittances represent and calls on the public sector to engage in alliances to enable these resources to reach farther and have greater impact.
So far both within the US-Mexico partnership and more generally in the Latin American and Caribbean region, most projects and analysis on remittances have focused on improving financial services for remitters and their families back home -- lowering the cost of money transfers, banking the unbanked, promoting competition, and increasing financial literacy.
An emphasis on financial services is appropriate since the bulk of remittances are meant to help with family finance. On the other hand, the Partnership for Prosperity has also recognized the potential for linking remittances with economic development projects in Mexico, noting the need for solid research that will provide a better understanding of this potential. It made sense, then, for Manuel Orozco, a scholar known for his pioneering research about remittances, to take a systematic look at community remittances and the opportunities they might present to local economic development.
In my view, this research fit well with our Administrator's call for USAID to increasingly find opportunities to adopt the approach of our Global Development Alliance - the concept of mobilizing ideas, efforts, and resources from other prominent public and private sector actors to extend the reach and effectiveness of development assistance. The research that will be presented today can help us think innovatively about synergies with the efforts of migrants.
To give you a sense of the highlights of this new study, I am reminded of two quotations:
Rosario Marin, Treasurer of the United States, stated in a November 2002 report to Presidents Bush and Fox, Remittances are not important just because a lot of money is involved - $8.9 billion in 2001 by one estimate. Remittances are important because they are hard-earned wages sent directly to people who need the money to spend as they see fit.
In a very different context, the late Senator Everett Dirksen is reputed to have said: "A billion here, a billion there, pretty soon we're talking about real money."
Mirroring the sentiment of Rosario Marin, the report shows that alongside the hometown associations' charitable efforts, for example, to refurbish the local school, productive investments are among the ways they - the hometown associations -- see fit to spend. This gives me confidence that looking for ways to link community investment of remittances and development assistance is demand-driven rather than donor-driven.
Mirroring the words attributed to Former Senator Dirksen, the research finds that while community investments are usually pretty small amounts of money - on average $10,000 and are a minor percentage of all remittances, they are adding up to significant levels of money - an estimated $30 million or more in 2002 by Mexican hometown associations alone. Finally, hometown association projects have impact beyond their immediate intent. Small road improvements can connect town folks to new markets and educational options; and, hometown association partnerships with local governments are setting standards for transparency and accountability.
Back in 2001, when President Bush and President Fox first met as president's they explained that, 'Among our highest priorities is unfettering the economic potential of every citizen, so each may contribute fully to narrowing the economic gaps between and within our societies. ' Migrants individually and as hometown associations are clearly contributing. We recognize the importance of remittances on its own merit and the on-going sacrifice and initiative that emigrants are making to help their home communities. Yet, there might be ways that our assistance can be used to reinforce the ability of the hometown associations as agents of change.
First, while helping themselves, remitters are leveraging broader change. Development assistance can help deepen this impact, especially by working to improve financial services. Second, the kinds of projects that hometown associations are choosing to engage in are complementary to our own efforts. Most of the communities studied by Dr. Orozco are in rural and less advantaged areas in Mexico and the efforts of emigrants are helping in important ways to improve local government. USAID currently puts a priority on promoting rural prosperity and has long advocated decentralization and strong municipal governments. It seems, then, that there is potential to establish connections that enrich their efforts as well as our own.
In essence this new study suggests another interesting avenue to promote development effectiveness. Through partnerships such as Mexico's Iniciativa Ciudadana 3 x 1 program discussed in the study, we are starting to understand hometown associations as development players.
With the introduction of the Millennium Challenge Account, we have recognized that our assistance performs better when there is already a commitment to progress - a platform to build on - and we recognize the positive impact of local ownership of the development agenda.
As Adolfo Franco, our Assistant Administrator for Latin America and the Caribbean, observed in relation to today's event: Dr. Orozco's research shows that the hometown associations are committed, are helping set an agenda along with the local governments, and are co-investing so that their families back home can also have the freedom to dream of a better life -- home ownership, access to health, education, financial services and growing economic opportunity.
The report also highlights how Mexico's government, within the spirit of the Partnership for Prosperity, has become a partner in this new dynamic - welcoming and furthering the initiative of its emigrant population.
We believe that the efforts of the United States Government in the area of remittances - The Department of Treasury under the Partnership for Prosperity, the continuing work of the Inter-American Foundation, and the pilot efforts of USAID -- are also contributing in a meaningful way to leverage greater impact from the already significant flow of remittances to Latin America and the Caribbean.
USAID's Bureau for Latin America and the Caribbean seeks innovative ways to help the money which remitters send home, as well as our development assistance, to more effectively contribute to the dream of prosperity across the Americas. I hope you will have the time to read Dr. Orozco's full report and also learn about other pilot initiatives that USAID has supported over the past year. Finally, I want express my appreciation for Dr. Orozco's efforts to gain an understanding of remittances and to offer guidance to the donor community. I also want to ask if he can comment on how the results from the Mexico study we supported are or are not relevant beyond Mexico - in brief, are you learning different things or seeing a common pattern in the studies USAID supported in Nicaragua and Guyana or other studies you might know of?
Thank you. I invite Dr. Orozco now to present his new report, Manuel...
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