The Economics of Transnational Living (1)
by
Luis Eduardo Guarnizo
University of California, Davis
Forthcoming in International Migration Review, vol 37(3) Fall 2003
The Economics of Transnational Living
Since the turn of the last century, migrants' long-distance economic relations with their homelands have been the subject of an extensive, albeit fragmented multidisciplinary inquiry on the relationship between migration and development. (2) Yet, most existing studies have been either primarily or exclusively concerned with the north-south flow of resources that migrants provide to family and friends left behind. In particular, remittances, the moneys that migrants send to their homelands, have constituted the prime topic of research in this field. Remittances have become the most visible evidence and measuring stick for the ties connecting migrants with their societies of origin. While this approach is highly effective in revealing migrants' commitment and support to their homelands, I argue here that it is nonetheless too limited. By focusing on north-south resource flows, many scholars fail to heed the multiple macroeconomic effects of global import generated by migrants' transnational economic and non-economic connections and, thus, underestimate migrants' agency and their influence on their localities of origin and beyond.
Using a transnational perspective informed by economic sociology tenets, I seek to analyze the theoretical and practical implications of the multiple economic effects generated by migrants' relations with their homeland, which have been neglected in most previous studies. To do so, I look at migration through the prism provided by the concept transnational living, which refers to a condition that encompasses a wide panoply of social, cultural, political, and economic cross-border relations that migrants maintain across borders. The concept of transnational living allows us to detect myriad economic multiplier effects spawning from migrants' transnational engagement, whose compounding effects cut across multiple geographical scales: from translocal to transnational to global. To be transnationally engaged, migrants necessitate a multitude of goods and services supplied by conational and non-conational providers, small producers, as well as large, transnational corporations. As I will demonstrate later, the goods and services demanded by migrants' transnational engagement flow not just north-south, but also south-north and north-north and south-south.
An analytical framework focusing on migrants' transnational living can produce new vistas that challenge received scholarly understandings and representations of the relationship between migration and development and, more generally, between labor mobility and capital mobility. The goal here is to illuminate a new landscape of global processes driven by migrants' agency, and to interrogate accepted tropes that construct socioeconomic globalization as the sole domain of corporate capitalism and that construct labor migration as a mere result of global capital's patterns of investment and disinvestment.
Before delving into the core of my analysis, I will first introduce my theoretical framework, followed by a succinct review of the literature on the three main themes that have guided the field, namely remittances, business investments, and collective support to local development. (3) In the second part of the paper, I will discuss some of the "missing" macroeconomic processes briefly outlined above. At the end, after drawing some general conclusions, I will point out some elements for future research.
A TRANSNATIONAL PERSPECTIVE
First conceived around a decade ago, the field of transnational studies is rapidly gaining recognition as a cogent theoretical perspective solidly based on sound empirical evidence. Precursor studies of transnational action by migration scholars (Glick Schiller et al. 1992, 1995; Basch et al. 1994; Rouse 1991) captured the imagination of many investigators and generated a flurry of academic fora and works whose titles prominently displayed the word "transnational" as a marker of sophistication. Many scholars were quick to show their profound skepticism, pointing out not only the historical precedents of transnational action, but also the substantive methodological limitations and analytical ambiguities common in these first studies (Foner 1997; Waldinger 1998; Massey 2001).
More recently, a second wave of transnational studies has addressed some of these initial critiques and helped establish the field on a more firm theoretical footing (among others see, Glick Schiller 1999; Portes et al. 1999; Vertovec 1999; Kyle 2000; Mahler and Pessar 2001; Portes et al. 2002; Guarnizo et all. 2003). Focusing on a specific kind of action (i.e., political participation) or a single activity (i.e., participating in transnational civic organizations such as hometown associations) has become the accepted way to investigate and analyze transnational migration. Adopting a single action or activity as the sampling unit of inquiry has been a fruitful strategy, which has allowed a finer analysis of the scope, scale, and determinants of migrants' transnational engagement (see for example, Mahler 1999; Portes et al. 2002; Smith 2002; Guarnizo et all. 2003). This more tightly focused analysis has helped address some of the early critiques, and has also helped temper often exaggerated conclusions from earlier studies that portrayed virtually every contemporary migrant as transnationally engaged, and that characterized this engagement as inherently subversive and progressive.
However valid and useful for these particular purposes, this analytical framework can limit our ability to detect interrelations and unintended consequences of transnational action across domains, including, for example, the economic effects and changes spawned - usually inadvertently - by political and sociocultural activities. The embeddedness of social action in multiple complex and heterogeneous social, cultural, economic, and political structures (Grannovetter 1985) implies not only that the determinants, but also the effects of any action cut across diverse social fields. Everyday transnational practices are not neatly compartmentalized, and nor are their consequences. Therefore, in order to examine the economic effects of transnational migration one should not limit the inquiry solely to activities a priori tagged "economic." In this sense, the mode of inquiry lately used in transnational studies is not flexible enough to address fully questions related to the economics of transnational migration. I argue here that it is thus imperative to approach these questions from a more holistic perspective that also captures the economic implications, intended and otherwise, generated by migrants' multifaceted transnational engagement, phenomena which can be described by the concept of transnational living.
Transnational living
Building on Smith's concept of "transnational life," (4) and Olwig's and Sørensen's concept of "transnational livelihood," (5) I use migrants' transnational living as my central analytical focus, a condition that implies a set of cross-border processes initiated and sustained by migrants. This concept avoids the limitations associated with narrowly focusing on one or few specific activities, or on a specific form of social organization. It represents complex processes that encompass a wider set of activities: from remittances, to cultural reproduction and social intercourse, to political participation. While transnational living foregrounds migrants' agency, their cross-border engagement is seen as shaped by the historically determined social, economic, political, and cultural micro and macro structures of the societies in which their lives are embedded. Transnational living signifies an active, dynamic field of social intercourse that involves and simultaneously affects actors (individuals, groups, institutions) located in different countries. In this sense, transnational living is not a state or a condition that reaches a stage of consolidation and equilibrium before disappearing, as suggested by the term "transnational life" (Ostergren 1988; Smith 2001). Rather, transnational living is an evolving condition contingent on the relationship between migrants' resources and sociocultural positioning and the historical contexts in the specific localities where they live. The contextual conditions in these localities variously facilitate or impede, foster or discourage, demand or preclude some or all of the cross-border activities that form migrants' transnational living. On the other hand, as a condition of migration, transnational living is not as instrumental or strategic, or a reaction to globalization as Olwig and Sørensen's "transnational livelihood" concept implies. Unlike the latter, transnational living is concerned with the structural embeddedness of transnational engagement and with the intended and, perhaps more importantly, the multifarious unintended economic consequences of transnational action.
The historical-locational embeddedness of transnational living explains, for example, how under certain conditions transnational living can eventually become more or less widespread (more or less "popularized") among the first or subsequent generations of migrants (i.e., among some contemporary first generation migrants in the United States and Europe; or among second and third generation Irish Americans and Polish Americans in the US), while under other circumstances it ceases to exist or is reduced to a field of action dominated by an exclusive, small group of cosmopolitans.
A CONVENTIONAL TYPOLOGY OF TRANSNATIONAL ECONOMIC TIES
It is important to acknowledge the impressive and dynamic scholarship on the economic effects of migration, as well as some of the theoretical advances made by different scholars in this field. In what follows, I briefly review some of the central themes and debates that characterize recent scholarship on migrants' remittances, transnational entrepreneurship, and community development support.
Remittances
Remittances represent the social ties of solidarity, reciprocity, and obligation that bind migrants to their kin and friends across state-controlled national borders. This long-distance, intimate "bounded solidarity" (Portes 1995, 1997), which initially has a very narrow scope of action, as individual migrants' intent is mainly to benefit kin and friends, has become a macroeconomic factor that spawns vast effects in the countries of origin and beyond.
More importantly, perhaps, the volume and stability of migrant remittances worldwide have transformed this intimate transaction into one of the most important private transactions in the global economy. As a result, many economic transactions undertaken by global financial actors now take into account workers' remittances - either as a source of profits, or as a security instrument to upgrade the credit-worthiness of impoverished countries to secure large scale international loans. This novel use of migrant remittances as a financial instrument transacted by powerful global capitalist actors, however important, has so far eluded the attention of migration scholars and will be discussed later.
While migrant remittances can be either monetary or nonmonetary (i.e., transferring durable and consumer goods, services, and ideas), the former have monopolized the interest of both social scientists and policy makers. Official estimates of the annual global volume of monetary remittances (as recorded by the IMF's Balance of Payments Statistical Yearbook) point to their rapid growth, and indicate that remittances surpassed $100 billion in 1999, from $70 billion in 1995, and $43.3 billion in 1980 (Puri and Ritzema 1999; Gammeltoft 2002). Annual remittances to developing countries more than doubled during the 1990s, and have been approximately 20% higher than official development assistance to these countries (Gammeltoft 2002). Although the official data on monetary remittances are deficient and tend to underestimate the total amount of money that migrants transfer to their homelands (in part by excluding moneys transferred through informal channels, as well as in-kind remittances), they suggest that the amount remitted is highly significant for many national economies. (6)
The recently increased volume and macroeconomic significance of monetary remittances and the interest that they have engendered among scholars and policymakers have important historical precedents. At the turn of the twentieth century, European migration to the United States provided considerable revenues for regions of emigration and created large overseas markets for European products such as textiles, clothing, and other consumer goods (Caroli 1973; James 1999). Likewise, the century-old US-bound mass Mexican migration constitutes another important example of the historical significance of remittances for countries of origin. The fluctuating official and scholarly interest in remittances closely parallels ebbs and flows in the volume of these monetary transfers, which in turn reflect the changing conditions in the US context of reception as well as the socioeconomic situation in Mexico (Gamio 1930; Durand 1988; Lozano 1993, 1999; Massey and Parrado 1993; Durand, Parrado, and Massey 1996). Because it stems from a developmental concern, most research on remittances has centered on determining their volume, assessing their contribution to local development (with a special interest in their use in productive activities), identifying the channels employed to transfer them, and defining the determinants of remitting.
A flourishing academic controversy has ensued regarding the developmental significance of remittances. It is often stated that given the more or less stable flow of high volumes of money sent by migrants, remittances represent an obvious positive contribution to development (Rivera-Batiz 1986; Stark, Taylor, and Yitzhaki 1986; Stark 1991). Others dismiss arguments about positive effects, denying that any contribution to development comes out of these financial flows. Countering this view, Douglas S. Massey and associates have argued that studies that question the productive value of remittances "have ignored the indirect effects that consumer spending has on economic production and income in Mexico" (Durand, Parrado, Massey 1996:425; see also Massey and Parrado 1993). Accordingly, they support the findings presented by Adelman and Taylor (1992) who concluded that each "migradollar" entering Mexico produced a $2.90 increase in the country's GDP and raised exports by a total of $3.20. All these authors coincide in pointing out the positive multiplier effects of remittances both directly as productive investments (i.e., creating new businesses) and indirectly in expanding consumption, even in the case of wasteful spending on carousing and celebrations (Durand, Parrado, and Massey 1996).
Still, even if the remittances are used productively by the migrants and their families and do have multiplier effects, the question remains as to whether the community and country of origin as a whole benefit from remittances. Numerous studies have shown that given the oligopolistic economic structure of many developing countries, the most common use of migrant remittances for immediate consumption often results in price inflation, rather than supply expansion, and increases the demand for imported, rather than nationally produced goods. Other studies have shown that remittance dependency negatively affects agricultural production as land use changes from agricultural production to cattle ranching, reducing not only the production of food staples, but the demand for labor in rural areas of emigration. It also has been argued that in areas of high emigration, young people's willingness to work for low wages has diminished, creating serious distortions in the local labor market, as observed in the Dominican Republic (Grasmuck and Pessar 1991) and more recently in El Salvador (Lungo and Kandel 1999; Zilberg and Lungo 1999).
This use of remittances (labeled as irrational or wasteful by some analysts and policymakers) and the perceived negative consequences that ensue have led some scholars and policy makers to propose initiatives to grant the state control over migrant remittances in order to channel them toward more "rational" uses in order to foment development, such as the promotion of small business investment and other similar initiatives in order to increase local production and combat unemployment (Cornelius 1990; Diaz-Briquets and Weintraub 1990; Martin 1990). Among the latest versions of these efforts are state-migrant partnerships recently introduced by local state governments in Mexico, as well as exploratory debates and multilateral meetings sponsored by multilateral agencies such as the Inter-American Development Bank and the European Commission seeking to maximize and "channel" migrants' economic potential to support local development (see Smith 2002; Centre for Development Research 2002; IDB 2002).
Other analysts, however, have argued that migrants and their families make a highly rational use of remittances given their personal and familial circumstances, cultural conditions, as well as structural economic, social, and political contexts in which these decisions are made. Evidently, local contextual limitations and opportunities affect the way in which migrants use their resources. On the other hand, studies suggest that families spend remittances in the same ways as other income (ECLAC 1991). Therefore, it is not clear why in some cases sending communities have developed economically because of remittances while others have not. In other words, it is not clear when one should expect a "productive" kind of rationality when money comes from working abroad. Existing evidence shows, however, that migrants adapt the use of their resources when local structural conditions change and provide more opportunities to make productive investments (Massey and Basem 1992; Russell 1992; M.P. Smith 2002). (7) Ultimately, then, debates about whether or not family remittances have a positive effect on the communities and countries of origin's development still remain "unsettled" (Papademetriou and Martin 1991).
Migrant Entrepreneurship
A second theme that has concerned migration scholars interested in migrants' monetary transfers has been migrants' transnational entrepreneurship. As stated above, scholars have widely substantiated that the vast bulk of migrant remittances are spent on consumption (basic family subsistence, housing, and the purchase of durable and non-durable goods for household use), while a small proportion is actually devoted to productive investment. Recent research, however, has documented the existence of a vast array of transnational entrepreneurial activities undertaken by migrants. The bulk of this research, with some notable exceptions, has relied on ethnographic material drawn from immigrant communities and their respective sending countries. This emergent transnational entrepreneurship appears to be a distinct mode of transnational economic action, clearly distinguishable from the more common and well-studied immigrant entrepreneurship path (i.e., ethnic entrepreneurship) undertaken by migrants in the country of reception. Some examples will illustrate this type of transnational economic activity.
In Mexico, Durand, Parrado, and Massey (1996) found several examples of the productive use of migrant remittances, or "migradollars." In a village in Guanajuato, for example, migrants invest in workshops that produce tennis shoes and footwear. In Michoacán, remittances are channeled into farming, cattle raising, and handicraft production, some of which is exported to the United States. Migrant remittances also provide resources to sustain and improve the economic conditions of local small-scale enterprises strapped by structural financial obstacles such as the lack of working capital and access to credit (Taylor and Wyatt 1996). Migrants' investment in productive activities in their place of origin, this time in partnership with the regional state government, has also been analyzed by Smith (2002) in Guanajuato.
A recent study of the transnational activities undertaken by the large Salvadoran immigrant populations of Los Angeles and Washington DC, discovered a "vibrant entrepreneurial community embedded in a web of social relations" (Landolt et al. 1999:296). In their detailed ethnographic study, the authors identified a wide array of transnational enterprises connecting Salvadoran and Los Angeles economies. These firms ranged from those involved in the transfer of goods and remittances across countries and range from large formal shipping firms to informal international couriers, known as viajeros, as well as thousands of microenterprises established by returnees to El Salvador that rely on their contacts in the United States.
A similar pattern was detected by Itzigsohn and his associates (1999) in their study of the Dominican immigrant communities in the Washington Heights area of New York City and in Providence, Rhode Island. These researchers also uncovered a number of informal transnational couriers operating between the U.S. and Dominican Republic; the proliferation of stores selling imported Dominican foodstuffs, music, and newsprint in New York and Providence; and the rapid growth of remittance agencies. In an earlier study, Portes and Guarnizo (1990) found strong connections between Dominican small business owners and Dominicans in New York City. Many of the former are returned or transnational migrants who acquired skills abroad, have clients in New York, and have used remittances to start or maintain their businesses. These additional funds made it possible for migrant-linked firms to possess higher levels of average working capital than similar firms not linked to migration.
Existing research has shown that business formation and is part of migrants' transnational living practices. Business investment decisions are embedded in a web of social expectations and obligations tied to their place of origin. Migrants who invest in a business in their homeland often do so either in order to return and have a steady, non-wage income, or to provide a steady income for their dependents in lieu of remittances.
A recent quantitative analysis of the transnational practices of Colombian, Salvadoran, and Dominican migrants residing in five US metropolitan areas demonstrates that transnational entrepreneurship is a distinct path of immigrant economic adaptation (Portes at al. 2002). This study shows that transnational entrepreneurship involves a diverse web of cross-country ties and, while not the modal path among the three immigrant groups studied, it has been adopted by a substantial number of immigrants. While this analysis does not delve into the causes of transnational entrepreneurship, it does identify the empirical distinctiveness of this mode of transborder economic action, which presents significant variations across nationalities. Because of the contextual embeddedness of transnational entrepreneurship, it is not always the more educated and occupationally experienced migrants who pursue this path. In the absence of a socially supportive context, skilled migrants may opt to pursue upward mobility through conventional labor market means in the country of residence, rather than seek advantage in cross-border ventures that require sustained contact with their country of origin.
Support to Local Community Development
The economic activities connecting migrants and their societies of origin are more than just monetary transfers to support family and acquaintances and to seek profitable investment opportunities. A third kind of economic transaction, with a broader initial social scope, includes the collective transfer of resources to support local community development projects, philanthropic endeavors, and post-disaster relief efforts in the society of origin. This collective effort undertaken by groups of migrants, usually coming from the same place of origin and organized in civic associations (i.e., hometown associations) is motivated not by personal familial obligations, but rather by a combination of sociocultural and political factors, including migrants' identity and sense of solidarity with their place of origin (local nationalism, or regionalism), reciprocity with the homeland, and often an eagerness to gain status and recognition in the place of origin (Goldring 1998, 2002; R.C. Smith 1998). In some cases, for example in Mexico, both national and regional governments promote and have even entered in partnership with migrant organizations to promote local development initiatives (see Smith 2002).
These activities have significant symbolic, as well as practical effects. The act of contributing to the construction and beautification of public spaces such as town plazas and churches, and to employment-generating activities (such as maquila plants in some localities in Mexico, see Smith 2002) is loaded with tremendous cultural meaning that is conveyed not only to the migrants' paisanos (townsfolk), but also to neighboring towns and villages as part of inter-village competition. Besides their symbolic value, community projects supported by migrants represent important contributions to local economic and social development. The construction of roads, water supply systems, classrooms, hospitals, as well as non-material projects such as scholarships and educational campaigns, all improve local well-being and economic potential. These projects help bestow the locality of origin with an improved social and material infrastructure that can eventually facilitate and attract investment and trade.
Examples of this kind of collective transnational engagement abound in the literature. Two examples can illustrate the point. A recent study concluded that: "Life conditions in [Salvadoran] municipalities that receive grassroots transnational aid confirm the relevance of this collective remittance strategy. Towns with a hometown association have paved roads, electricity, and freshly painted public buildings; the quality of life in transnational towns is simply better" (Portes and Landolt 2000:543). Los Angeles houses hundreds of hometown associations, many of them organized under umbrella organizations, that are actively engaged in promoting and/or supporting developmental initiatives in the hometowns of thousands of Mexican and Central American migrants in the city (see Goldring 1998; R.C. Smith 1998; Landolt et al. 1999, 2000; Guarnizo 2001). This level of organization and activism, however unique, has many parallel examples in other US metropolitan areas with a high presence of migrants, such as Chicago, Miami, New York, Boston, and Houston.
In addition to their economic multiplier effects, community development efforts also generate significant political effects. They influence home local and regional governments by determining which public projects receive migrants' financial support and which do not. By so doing, migrants compel authorities to take their wishes and priorities into account. As Levitt (1997) and Landolt (2000) have noted, helping finance local development projects or contributing to philanthropic works are effective mechanisms for creating or upholding political influence in the localities of origin. Similarly, in his study of the transnational relations developed by migrants from a small town in Puebla, Mexico, R.C. Smith (1998:227-28) found that migrant transnational organizations actively engaged in their town's development "are forcing the state to engage them in new ways," and in effect, have generated "parallel power structures" with the old, traditional regime.
In brief, existing accounts of family remittances, transnational entrepreneurship, and support for community projects reveal economic relationships that have several features in common. First, all of them are unidirectional relations initiated by migrants living abroad; second, they seem to involve people (i.e., senders and receivers) located in similar social positions; third, they are perceived as taking place primarily at the local level and secondarily at the national level, to the exclusion of any global dimension; and, fourth, they seem to take place, for the most part, outside, or even against the purview of both the state and corporate capital. Some analysts have even characterized some of these relations as representing reactive actions by workers from peripheral economies to resist the impetuous power of global neoliberal capitalism and state control.
However, a I argue, this migrant-initiated flow of resources is just part of the story. For the most part, the relationship between long-distance microsocial transactions undertaken by ordinary people, and the mobility and transnational expansion of corporate capital has not caught the eye of most migration scholars (but see Mitchell 1997). For example, migrants' demand and consumption of things "national" to reproduce their cultural identity and original social milieu abroad, have tremendous transnational economic effects that have been neglected, for the most part, in the existing literature. This oversight has prevented most analysts of transnational migration from making an empirical connection between labor mobility and global capital. (8)
While the debate about the volume of money remitted and the ways it is transferred have dominated the field, very little has been done to elucidate the recent involvement and competition of large financial corporations in the control of the transfer of remittances worldwide. Much less has been written about the recent incorporation by international financial institutions of the future flow of remittances as collateral securing foreign finance for countries of emigration (Ketkar and Ratha 2001). By limiting their focus to migrants' transnational economic relations to remittances, investments, and community support, scholars miss crucial economic relations generated by migrants' transnational living. There are significant unexamined relations between migrants' transnational living and corporate capital that provide an empirical opportunity to close the analytical gap between the study of transnational labor migration and global capital expansion. Whereas the spatial mobility of labor in many instances is a consequence of the capricious mobility of capital, in many cases the cause of mobility runs in the opposite direction. Thus, corporate capital moves in order to capture forward and backward economic linkages created by labor mobility and migrants' transnational relations.
MISSING MACROECONOMIC LINKS
The conventionally exclusive concern with remittances, transnational entrepreneurship, and support to community development also neglects other significant, and perhaps more important economic ties and processes generated by migrants' transnational living. In fact, the economic effects of migration are much more complex and multi-directional than unidirectional economic actions (i.e., north-south transfers). Migrants' transnational living generates demands for goods and services that in turn generate a complex array of backward and forward economic linkages that are captured by non-migrant actors including the state, corporate capital, as well as small-scale business enterprises in the countries involved. As a result, migrants' resources flow not only north-south, but also south-north, as well as north-north. Figure 1 provides a heuristic typology that illustrates the complexity of these linkages. (9)
Figure 1 about here
Maintaining transnational living
Transnational living, that is, leading a life that straddles across national borders, engenders two main sets of processes. First are the processes associated with migrants' desire to reproduce their cultural practices and customs to maintain their local, regional, and national identities and social milieu abroad. Migrants' desire to continue living, let us say, as Arianos/as, Michoacanos/as, and Mexicanos/as (from Ario de Rayón in the state of Michoacán, Mexico) while in the United States, generates a sizable demand for goods and services from their locality and country of origin. Eating and drinking national foods and beverages, or listening and dancing to "authentic" national music becomes "the thing to do" among many immigrant populations, especially among those living in segregated residential, ethnic enclaves. This demand is seized upon by both larger businesses and smaller ventures "back home," for whom the overseas migrant population becomes an extension of their national market - and a conveniently oligopolistic environment for big businesses, creating a captive market of conationals with a higher purchasing power than that of their compatriots back home. This demand for things national unintendedly provides a bridge to national producers (both corporate and otherwise) to transnationalize their operations, a possibility unthinkable for most of these firms without migrants' presence overseas.
The second set of processes generated by transnational living has to do with maintaining more or less stable social, economic, and political relations and engagement with the society of origin. The maintenance of these relations and engagement generates a sizable demand for communication and transportation services, often controlled by large US corporations. In fact, many analysts have given credit to technological innovations in communication and transportation for the tremendous increase in transnational activities "from below" observed in the last third of the last century. Yet very few have ever mentioned the costs and aggregate value that migrants pay for using these technologies, however cheap they may be. This seems baffling given the economic and marketing trends that point out that some of the fastest segments of the telephone, air transportation, and financial industries are international long-distance calling, ethnic tourism, and the private remittance of money undertaken by migrants (Halter 2000; Beachy 1998; Yankee Group 1998; Coopers & Lybrand 1997). The following examples will illustrate the backward and forward linkages generated by these two processes - i.e, cultural reproduction and transnational engagement. These two processes are illustrated in the following examples.
Migrants' demand for goods and services to reproduce their culture abroad has allowed many producers in the country of origin to expand their clientele beyond their national boundaries. A prime example is Mexican beers' penetration of the US market, considered one of the most impressive marketing successes in the industry. Corona, a beer considered by Mexicans as a "humble, even low-rent beer," became some three years ago the number one foreign beer in the United States. While much of Corona's success is owed to clever marketing strategies, the key that opened the US market to it lies elsewhere. Grupo Modelo, the producer of Corona, first appealed "to a core group of Mexicans living in the United States" before promoting it among college students as a beer with a special cachet (Wills 1999:C1). Appeals to migrants' nostalgic memories of home and their desires to reconstruct their culture abroad have repeatedly been used by corporations and small producers alike as a means to promote their products. This is also found among Dominicans in New York, who prefer Presidente to any other beer, or Salvadorans' knack for beers bottled by La Constancia (which recently started bottling its beer in Los Angeles), or Colombians' preference for Aguila and Bavaria, and the reddish soft drink Colombiana (now bottled in Brooklyn) over US drinks.
Another example is provided by Latin American migrants' demand for traditional wedding accoutrements and other ritual handicrafts, such as rosarios and aritificial floral arrangements. Such a demand has expanded exponentially, spurred by the rapid growth of the Latin American population and, in turn, has triggered the expansion of supply which has provoked dramatic changes in the production system of theses items in rural Mexico. As Mummert (2001) has shown, a complex, extensive, and decentralized system of production has emerged in regions such as rural Michoacan, where peasant women, often the wives and sisters of migrants living in the north, are the sole producers of these goods to be distributed and sold among Mexican and other Latin immigrants in the United States (Mummert 2001).
Migrants' demand allows not only the export of specific national goods, but also the transnationalization of some services, which without the migrant demand would have never been able to expand into and successfully compete in the US market. An example of this is the expansion of a Salvadoran supermarket chain to Los Angeles. By US standards, La Tapachulteca is a small supermarket chain that caters to middle-class and upper-middle class customers in El Salvador. The likelihood of this company expanding its operations to the highly competitive and monopolist US market was nil, until recently. The high concentration of Salvadorans in Los Angeles, estimated at over one-quarter of a million by the 1990 US Census, offered a unique opportunity for this supermarket to compete with giant supermarket chains such as Safeway and Vons. Once La Tapachulteca acquired a foothold in the Los Angeles market, its operation expanded rapidly. Its clientele includes not only Salvadoran, but also Mexican and other Central American immigrants. The supermarket not only sells Salvadoran processed foodstuff hard to find elsewhere, but does so in an "Salvadoran" environment, where subtle regional differences in taste are appreciated and catered to. This cultural insightfulness gives this chain an advantage hard to overcome by any other American competitor.
Migrants have also become an important market for other sectors of their country's
economy, such as the construction and housing industries, tourist industry, music and
entertainment, as well as mass media. By the mid-1980s, Dominicans living abroad already
accounted for 60% of the total amount of the country's yearly formal housing sales (Cámara
Dominicana de la Construcción 1986). Similar trends have also been documented in other
countries of emigration, including Mexico, Colombia, Ecuador, and El Salvador (see Landolt et
al. 1999; Guarnizo et al. 1999; Durand, Parrado, and Massey 1996; Kyle 2000; Levitt 2001).
Although quantitative analyses of migrants' contribution to this key sector do not exist to my
knowledge, there are countless ethnographic reports of it for many countries. A common story
has local developers and mortgage banks actively promoting the sale of residences, plots, and
other real estate property among migrant populations abroad. In some cases, like that of El
Salvador, new financial structures have been created by the government to allow the granting of
mortgage loans by private banks to nationals whose main income is derived from their
employment or business endeavors abroad. In other cases, the government has adopted a more
active role in the promotion of home ownership among migrants residing abroad by providing
subsidies, building official housing complexes for migrants, and allowing international financial
arrangements, as the government has done in the Dominican Republic (Levitt 2001:143). In
many countries, savings and banking accounts in dollars, import tax exemptions, and other
similar financial and fiscal provisions have been introduced to facilitate migrants' business
transactions and transnational living arrangements. (10)
In order to keep their transnational connections alive, migrants also demand other kinds
of services. Keeping in touch with family and friends, overseeing business interests, engaging in
political action, taking vacations, and so forth, are transnational activities that generate a
significant demand for communication and transportation services, a demand which has large
corporations vying for its control. In fact, major advertising campaigns for big corporations that
provide these kinds of services, such as AT&T, MCI, American Airlines, and United Airlines
have been designed to appeal to ethnic diversity and the interest in ancestral ties. For instance,
AT&T committed a sizable portion of its marketing budget to hire a communications firm to
focus solely on consumers who call relatives and friends outside the United States. "The highly
successful national campaign created print, broadcast, direct mail, and community-event-based
advertising in nearly twenty languages" (Halter 2000:28). According to marketing studies, by
1998, Latin Americans in the United States were making $2 billion (or 5% of the US residential
long-distance market) worth of international phone calls a year to friends and family in their
countries of origin (Beachy 1998). Recent statistics indicate that Mexico dwarfed other countries
as the favored place of destination for calls, netting 970 million minutes per year (Yankee Group
1998). Corporate competition for the control of the rapidly expanding international long-distance
calling business is fierce. For example, when the Federal Communications Commission
approved a long-distance service in the United States for a joint venture between Teléfonos de
México (Telmex) and Sprint, the mega-carriers AT&T and MCI opposed and appealed this
decision. MCI even asked the federal government to carry its complaints against Telmex before
the World Trade Organization. The fact that Telmex is recognized by virtually everyone from
Mexico, despite the fact that it is now controlled by an American corporation, was one of the
main reasons why competition with Telmex was seen as a threat (Beachy 1998). Similar competition and corporate take-overs have ensued over the control of air traffic to
countries with large migrant populations in the United States. For example, arguing a violation
of federal antitrust laws, American Airlines sued the Colombian airline Avianca over the control
of the New York-Colombia direct-flight market. In the end, the law suit did not succeed, in part
to the mediation of the Clinton administration on behalf of the beleaguered Colombian
government, a crucial US partner in the controversial war on drugs. In a different development,
American Airlines recently took over TACA, the regional Central American airline, as a way to
gain the control over the increasing demand by Central American migrants to visit their
homeland. Meanwhile in Mexico, in response to an increasing demand from migrants, new
airlines and flights that connect US destinations and large and small cities of western Mexico
have sprung up. The new flight between Chicago and Zacatecas, for example, "is used primarily
by migrants, not tourists or businessmen" (Durand, Parrado, and Massey 1996:431). At the same time, migrants' demand for traveling services has transformed local markets
in their places of residence. For instance, the first international flight to land in Sacramento's
International Airport was from Mexico. Nonstop international service has taken a long time to
come to California's capital. Sacramento County supervisors voted in 1995 to change the name
from Sacramento Metropolitan Airport, anticipating international flights would arrive soon. This
only happened on July 1st 2002, when Lt. Gov. Cruz Bustamante welcomed the first Mexicana de
Aviación flight from Guadalajara, the capital of the state of Jalisco. Underlying the intrinsic
economic dimension of Mexican transnational living in the area, Mr. Bustamante stated that the
flight "will mean hard dollars and a boost of the economy for Sacramento and California," and
"will also bring families together." Given migrants' transnational connections and the economic
characteristics of Jalisco, airline and airport officials expect strong business. California officials
estimate that as many as 500,000 people in the market served by Sacramento International have
family ties to Jalisco. In addition, Guadalajara, a traditional manufacturing center and Mexico's
Silicon Valley, is Mexico's second largest city, with 1.6 million residents in the immediate urban
area and an additional 2 million in the metropolitan area (Lindelof and Martinez 2002:B3). Transnational migration and global neoliberal restructuring Global economic crises affecting most developing countries have brought migrant remittances to
the forefront of global financial transactions. First, the increasing worldwide volume of money
that migrants send to family and friends in their countries of origin has reached such levels that it
has caught the attention of large financial corporate interest. The transfer of monetary aid to
families had usually been the business of small, shoestring operations owned by migrants
themselves, which operated on the basis of mutual trust and social understanding between
conationals. Lately, it has become a multibillion industry, the control of which has generated
high competition among corporate firms, such as Western Union and MoneyGram - which by
1996 already controlled 97 % of the remittance market and 81% of the estimated 43,000 outlets
nationwide (Cooper & Lybrand 1997:17). Many of these outlets are originally ethnic owned
operations, which due to stringent reporting regulations imposed by the Treasury Department as
part of its fight against money laundering, became franchises of these corporations. Second, the flow of migrant remittances to countries of emigration has proven so reliable
and stable that it has become a crucial part in the macrofinancial positioning of these countries
vis-à-vis global lending agencies. Since Mexico's sudden devaluation of the peso in 1994, and
the subsequent crisis in Asia, capital lending to developing countries has remained depressed and
borrowing costs high. Major international agencies have downgraded the credit-worthiness of
third world economies and the possibilities for accessing international finance by these countries
has dimmed. Under these conditions, developing countries and international financial agencies
have found creative solutions to secure international finance. One such solution is to back loans
with future hard-currency receivables, such as remittances, to allow lenders to "break through
sovereign credit ceilings and gain access to cheaper [long-term external debt] ... [and] also
prevent the large-scale panic that may result when a country's foreign reserves suddenly dry up"
(Ketkar and Ratha 200:1). In effect, migrants' solidarity and reciprocity with their loved ones
residing in their homeland have become a "hard-currency receivable" used as a "tradeable
security" to secure foreign loans for economies whose credit-worthiness have been downgraded
in the international market (Ketkar and Ratha 2001). In a typical "future flow transaction" of this kind, the borrowing country sells its future
product (receivable) to an offshore agency, which issues the debt instrument to be used as a
guarantee for the lenders. Until recently, however, this type of securitization of international
lending was done with commodities, such as oil, gas, and minerals, and manufactured products.
Services, remittances, and taxes are now included. International credit rating agencies (such as
Standard and Poor's Rating Services, Fitch IBCA, Duff & Phelps) ranked future flow receivable
transactions from most secure to least secure (see Table 1). As Table 1 indicates, while crude oil
tops the list as the most secure collateral, migrants' contribution to securing international
transactions (identified in bold face) is significant. According to aggregate data, remittances
alone contributed some 5% of the total amount securitized for the 1987-1999 period, and are
estimated to constitute around 10% of the total potential securitized borrowing for Latin America
(Ketkar and Ratha 2001:7). This system of finance is relatively new. The first important future flow securitized
transaction in a developing country occurred in 1987, when the Mexican telephone company,
Telmex, at the time state-owned, securitized telephone receivables. In August 1996, based on the
expected inflow from remittances alone, SBC Warburg, Inc. sold $100 million in securities to
Banco International in Mexico. The year before, J.P. Morgan Securities Inc. and Merril Lynch &
Company sold $206.5 million in bonds to Banco Nacional de México (Banamex) (Case 1996).
These transactions allowed these banks to issue securitized bonds based on the expected amount
of remittances that would enter the system through electronic transfers. Since the Mexican crisis,
Latin American borrowers dominate this market. Mexico alone accounts for over one half of
these transactions in dollar terms (Ketkar and Ratha 2001:6). Table 1 about here The new roles that remittances have in international finance and, more generally, the
significance of the economic multiplier effects of migrants' transnational living may very well
put an old economic axiom on its head: capital mobility follows labor mobility. This time
migrants are followed not as a source of cheap labor, but as a profitable market. On the other
hand, migrants are unintentionally providing, through their monetary transfers, badly needed hard
currency to complement and even subsidize some of the consequences of neoliberal reforms
imposed by international financial agencies on developing countries. Migrants' hard currency helps
reposition the country in the global financial world, subsidizes the import of goods and services
to modernize national industries, and maintains the consumption of foreign goods. Meanwhile,
migrants' demand from abroad helps expand a contracted national market for goods and services.
Most of this complex array of effects has been missed in most analyses of the economic effects
of migration. Some analysts have mentioned them, but mostly as a way to emphasize the
significance of migration in general, rather than to delve into their specific empirical dimensions
or theoretical implications. CONCLUSION Existing research has produced a wealth of knowledge on the size and effects of transnational
migration on the development of sending communities. However, the research agenda has been
half full. Significant dimensions have been neglected, some because of their newness, others
because of the dominant analytical focus on one-way effects - that is, the north-south flow of
migrant monetary resources "benefitting" the localities and countries of origin. As this paper has
shown, the economic effects of migrants' transnational living are much more varied,
multidirectional, and consequential than thus far acknowledged. This does not mean, of course, that the old research agenda should be dropped altogether.
Further investigation is required, although with new or at least added emphases. Specifically, the
relationship between corporate capital, migrants' transnational living, and state-sponsored
neoliberal policies should be investigated in light of the processes outlined above. An abundant
literature already exists on the role of the state of origin, especially regarding the granting of
special rights to migrants to promote their integration into the national project and to ensure the
steady transfer, control, and use of their remittances (see R.C. Smith.1998; Guarnizo 1997;
Landolt et al. 1999). Much less is known about the way in which official neoliberal reforms and
economic restructuring in sending countries make use of and are articulated with (and even
subsidized by) the increasing amount of migrants' moneys and resources. Similarly, we know
very little about how corporate capital vies for the control and exchange of the resources that
migrants transfer to their homelands, and for migrants' demand for goods and services to sustain
their transnational living. Analytically, what is novel and deserves more attention, is the fact that
a microsocial relation undertaken by people located physically and politically outside the centers
of national power and control has become critical for the present and future of countries of
origin's macroeconomic stability and positioning in the global political economy. The study of the articulation between migrants' transnational living and capital mobility
offers exciting analytical new vistas on the economics of transnational migration, particularly
regarding the relationship between migration and development. The silent, albeit crucial salience
of migrants' steady long-distance loyalty to family, friends, and community for global neoliberal
restructuring is evident. The commodification of the future of remittances as a security to
upgrade the credit-worthiness of highly indebted countries is not only an indication of the
economic global import of labor mobility, but also a clear expression of the creative malleability
of capitalism to accommodate to new circumstances to reproduce itself. While, for the most part,
migrants are still unaware of their tremendous economic power (or at least unable to make use of
it), what seems clear from these processes is that characterizing the mobility of labor as a mere
reaction to capital mobility (to be pushed and pulled around) seems to be inadequate under the
new conditions created by capitalist globalization and global migration. If we are to understand
and critique the economic aspects of transmigration, then we have to take into account the
dynamic role of capital in "following" the lead of labor (rather than the other way around). Despite the complex and unforeseen macroeconomic effects of transnational living, it
would be unwarranted to confer it a subversive and independent character vis-à-vis the state and
corporate capital. As the evidence presented reminds us, we continue to live in a capitalist world
organized around a global system of nation-states. Despite hopeful prescriptive writings about
the alleged autonomous and statelessness character of transnational practices, there is no
evidence that migrants are escaping either a capitalist or a nation-state-centered logic.
Transnational relations are neither free, nor are they necessarily liberatory. Indeed, we should
guard against unrestrained optimism about the possibilities of transnational living. Despite its
apparent fluidity and ability to create new social spaces, one should bear in mind that like any
other type of social action, transnational practices and relationships are embedded in and
simultaneously affect historically and geographically specific sociopolitical and spatial
hierarchies and contexts. These local contexts affect (i.e., may limit, encourage, empower,
disable) transnational actions, making them, for the most part, trans-local (i.e., local to local)
relations. Migrants' search for profits across borders is bounded by sociocultural relations,
discourses, and practices, as well as by desires and claims for social recognition and status in
migrants' places of origin and destination. In this sense, such practices are not impervious to
social and economic inequalities inherent in the system. Paradoxically, instead of escaping the
control of the state and corporate capital, migrants' cross-border engagement provides
opportunities for further capitalist expansion and the reproduction of old inequalities. Some
migrants, especially the better-off, often succeed in taking advantage of interstitial spaces to
empower themselves. The majority, however, have been unable to overcome power
asymmetries. Class, gender, and regional asymmetries outlive transnational practices from below.
Perhaps more importantly, these asymmetries themselves are being changed, not eradicated, by
transnational living. To put it more boldly, transnational relations from below are altering the
face of capitalism. They are not eliminating traditional inequalities, and not merely reinscribing
them, but changing them, making them more supple and subtle in some cases, and more brutal
and constricting in others. Sociologists should thus use their empirical findings to consider the
effects of transnational practice on capitalism in the longue durée. Evidently, all depends on whether transnational actions become the most common
practice among migrants and are sustained over time. However, even if transnational living and
its concomitants were to die with the first generation, as long as south-north migration continues
and globalization persists, there is no reason to expect that transnational living will disappear.
These issues should compel further sociological interest in the character and evolution of
migrants' transnational engagement in light of the persistent and powerful role of the state and
corporate capital in shaping the landscape of global possibilities. The co-optation of migrants'
enormous contributions by the state and corporate actors points to the formation of novel forms
of social control and profit extraction in the global economy. The question is not whether
transnational migrant relations are good or bad, but rather who benefits from them, and how they
affect the rules of the game. For instance, while transnational entrepreneurship indeed represents
a new type of entrepreneur, the question is what structures of power these new entrepreneurs
affect and create, and what kind of constraints and potentials this kind of economic endeavor
entails. Although first-generation males appear to be the dominant actors in this field, it is not
clear whether such domination is structurally determined, or merely a historical juncture in
transnational entrepreneurship development. Whether or not transnational entrepreneurship will
endure beyond the first generation and expand to include more female migrants is an open
question. There is a need for both comparative and longitudinal quantitative and qualitative data
to establish more firmly the structures, determinants, contextual effects, and long-term effects of
transnational enterprise. Similarly, knowing how much money migrants remit and how that
money is sent and used is important. However, in order to determine the economic dynamics of
transnational migration, it is imperative to learn more systematically about the geography of
remittances (i.e., variation across places of origin and destination) and the sociology of
remittances (i.e., sociodemographics and power relations along class, gender, and generational
lines of senders and receivers across different contexts). In the U.S., a good deal of migration research has been devoted to the so-called historic
region of emigration in Mexico (i.e., the Western Central states, especially Guanajuato,
Michoacán, Jalisco, and Zacatecas). Many generalizations have been made from case studies and
local studies about both the Mexican case and migration more generally. More attention should
be devoted to regional comparisons within countries of emigration and to cross-national
comparisons, including important countries of emigration such as El Salvador, Guatemala,
Colombia, Ecuador, Peru, the Dominican Republic, Jamaica and Haiti in the Western
Hemisphere, as well as mainland China, South Korea, Vietnam, India, and the Philippines in
Asia. More comparative and longitudinal research is also needed across subnational regions,
countries, and genders. These should compare the experiences of contemporary migrants from
the same sending regions and countries moving to different countries and regions in the
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Duff & Phelps. 1. I gratefully acknowledge the helpful comments, critiques, and ideas provided by Hans
van Amersfoort, Fred Block, Louis DeSipio, Krystyna von Henneberg, Frank Hirtz, Peggy Levitt,
Douglas Massey, Seán Ó Riain, Michael Peter Smith, David Wilson, and many others when
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June 30, 2001.
2. The study of transnational economic relations linked to migration is a multidisciplinary
endeavor which is dispersed in a voluminous set of publications by anthropologists, economists,
demographers, sociologists, historians, political economists, political scientists, and geographers.
3. A fourth type of relationship connecting migrants and their homelands, which has been
studied to a lesser degree, is the transfer of knowledge that migrants have gained abroad into the
local economy. A more developed area of research has focused on the economic consequences
for local economies of the emigration of highly skilled migrants ("brain drain"). This field seems
to be experiencing a comeback, this time with an alternative transnational perspective that sees
the emigration of highly trained personnel not as a drain, but as a potential gain for the society of
origin (see Chaponnière 1991; Charum and Meyer 1999; van der Veer 2000).
4. Smith (2001:38-39) 5. They propose to move the analysis "away from a narrow focus on international
population movements ... and the concomitant ... networks of relations," and call for "a broader
investigation of mobile livelihoods and the fluid fields ... that these livelihoods imply."
Following Norman Long (2000), they see "transnational livelihood" as one among many
livelihood strategies that people can adopt to cope with local and global change. According to
Olwig and Sørensen, these strategies imply "value choice, status issues, identification with or
distantiation from other modes of living and types of social persons."
6. In Asia, for example, a growing number of economies are growing more dependent on
the monetary transfers sent by their migrant populations working overseas. By 1990, officially
registered remittances represented about 13% of the total exports of India, 47% of those of
Bangladesh's, 40% of Pakistan's, 20% of Sri Lanka's, and 18% of the Philippines' (Puri and
Ritzema 1999, Table 2). A similar situation has been observed in Latin America and the
Caribbean. Remittances to El Salvador have exceeded the total amount brought in by exports,
whereas they are over half the value of the exports from the Dominican Republic and Nicaragua
(Meyers 1998). In Mexico, the largest source of migrants to the United States, migrant
remittances have been estimated to equal the revenues brought in by agricultural exports. They
represent around 80% of foreign direct investment, 60% of tourist revenues, and 60% of maquila
production (Massey and Parrado 1994; La Jornada 2000). By 1995, the value of remittances
represented 4.6% of the total exports of the country (Lozano 1999). The Mexican central bank
estimated that in 2000 alone, migrants sent $6.5 billion, an amount that helped reduced the
deficit of the national balance of payments by 27% (García Zamora 2002). Meanwhile, the
macroeconomic weight of migrant remittances has also been crucial for Middle Eastern and
North African economies. According to the World Bank (2001:28), the "stronger flows of
workers remittances" were one of the key factors that "provided a boost for this group of
countries" in 1999.
7. It is important to notice, however, that the great majority of studies are based on the
effects of migration on rural areas. However, there is growing evidence that migrants' direct
business investment is significant and apparently expanding in urban areas.
8. Many analysts, however, mention the capital-labor relationship in analytical, or most
often in rhetorical and anecdotal terms. However, little attention has been given to the actual
practical interconnections that labor mobility (i.e., migration) has with capital mobility (i.e.,
patters of investment and disinvestment of global capital).
9. While not the focus of my discussion here, it is important to acknowledge some of the
most significant effects of transnational living characterized here, may indeed result in south-south flows of resources and change. For instance, migrants' supply of resources, as well as their
demand for goods and services from abroad, often provoke the transformation of old, or
introduction of new systems of production and distribution - and concomitant social changes
such transformation in the local labor markets, gender relations, and business opportunities.
10. Novel business strategies has also been adopted by many corporations. For example, a
new business niche has been created whereby migrants pay transnational firms cash for durable
goods such as appliances and business equipment to be directly delivered to their kin and
partners in countries of origin such as Mexico, El Salvador, and the Dominican Republic.
Arguably, this arrangement assures migrants that their money is used as intended and not
squandered by needy relatives. In Mexico, Elektra, an electronics, home appliance, and furniture
chain that represents Western Union, encourages consumption by providing a discount on goods
bought with remitted money. It also delivers appliances and furniture bought directly by
migrants in the United States for relatives in Mexico. Transfers done through Elektra has grown
at an astonishingly fast pace: from $100 million in 1994, they increased to $400 million in 1995,
and $700 million in 1997 (Meyers 1998).
Table 1. Ranking of future flow-backed transactions, from most secure to least secure