Remittances and Sustainable Community Development in Latin America

By Aaron T. Bell and Eric Hershberg

Photo Credit: Futureatlas.com / Flickr / Creative Commons

Photo Credit: Futureatlas.com / Flickr / Creative Commons

Remittances to Latin America hit a record high in 2014 at $65.3 billion, according to the Multilateral Investment Fund of the Inter-American Development Bank, but their impact on development would be much greater with better coordination between sending  and recipient communities.  Mexico receives over one third of those funds, but remittances represent a significant component of GDP for many countries across the region.  The bulk comes from the United States, where 54 million Hispanics include 19 million first-generation immigrants, according to 2013 U.S. census figures.  In several Central American and Caribbean countries, funds sent home by migrants represent the largest single source of foreign exchange.

  • Remittances alleviate poverty by contributing to household income, helping to satisfy basic consumption needs, and sometimes enabling savings and investments in education.
  • Groups of migrants from particular communities sometimes pool resources through hometown associations to support shared objectives back home. A paved road or a new soccer field affects quality of life in tangible ways, and émigré financing of local political campaigns can determine the results of elections for mayors and other officials.
  • But remittances seldom promote local economic development initiatives that will generate sustainable incomes and opportunities for wide segments of the population – missing opportunities to address the causes of migration in the first place.

Some governments, development agencies, and philanthropies look to remittances as a potential mechanism for ensuring that Latin American citizens enjoy living conditions that afford them the “right not to migrate” from home communities.  Last month the Inter-American Foundation (IAF) and the Center for Latin American & Latino Studies (CLALS) convened a workshop to explore the challenges and opportunities for linking diaspora organizations in the United States, their communities of origin in Latin America and the Caribbean, and potential philanthropic partners to advance community development in the region through the effective deployment of remittancesParticipants identified several challenges.

  • Cooperation between immigrant-led diaspora organizations and their sending communities and governments is not a given.
  • Despite some research into hometown associations – created in the United States by migrants to connect with their communities of origin – we have relatively limited knowledge about how they function and the conditions that enable them to support community development.
  • Effective transnational cooperation requires broad multi-sectoral partnerships aligning immigrant-led groups, sending community organizations, and possibly governments and international funding institutions.

Despite information gaps and practical obstacles, there are successes to celebrate, such as the Salvadoran Fundación para la Educación Social, Económico y Cultural, with which the IAF has partnered.  Technical training on how to handle incoming funds and face-to-face meetings between participants and supporters in the United States and El Salvador have promoted transparency and trust.  Participants in the CLALS/IAF workshop offered several potential avenues for community organizations and philanthropic foundations to build enduring institutional connections.  It was agreed that further research should be conducted on hometown associations and other forms of diaspora organization to better understand how they function, how they relate to their affiliated sending communities, and how they can be catalysts to promote local development.  Policy-based research institutions in Latin America should be brought into the conversation, as should mainstream Latino organizations in the United States.  And immigrant associations and their counterparts in Latin America should not have to grapple with complex development challenges alone.  Indeed, U.S.-based community organizations and philanthropies could play a valuable role in catalyzing cooperation aimed at promoting development by making the case for public policies and transnational collaborative efforts that support “the right not to migrate.” Such development-supporting initiatives could, at least in theory, gain resonance across political groupings in the United States, appealing both to those interested in fostering global development and those concerned about immigration.

August 4, 2015

El Salvador: The Maras, Community Action, and Social Exclusion

By Mario Zetino Duarte, Larissa Brioso, and Margarita Montoya

Photo Courtesy of FLACSO-El Salvador

Photo Courtesy of FLACSO-El Salvador

Maras and gangs in El Salvador have become social actors with great power in communities suffering from a high level of social exclusion. They have been linked to violence and organized crime, and they have been blamed for the highest number of homicides, organized criminal actions, and the generalized insecurity in which the country lives. They have brought a sense of isolation to the communities in which they live, as well as a reputation that increases the communities’ exclusion. According to a study being conducted in crime-ridden communities of Santa Tecla (near San Salvador) and Sonsonate (64 km. west of the capital), the maras’ power derives from their ability to cause fear and terror among inhabitants as a result of their effective and organized criminal actions. Their influence has a strong psychological impact and broad influence over people’s lives. The criminal activities of the gangs in the community are generally rejected by inhabitants because they put families at risk, make neighborhoods the target of police operations, and taint both the community and its residents socially – making it hard for people to get or keep jobs.

Nonetheless, many citizens in these communities have a positive assessment of the maras when it comes to providing important neighborhood security, due to a lack of national or local authority. In Santa Tecla and Sonsonate, the Salvadoran government, the municipality, international organizations, and other institutions have invested heavily in programs to stem the tide of mara violence, with mixed results. These communities suffer from low levels of employment, education, and social security, particularly among women. Afraid of retribution, citizens in these communities do not turn to state institutions to report crimes or to request protection, and they instead approach the maras to take actions regarding conflicts with neighbors and situations related to domestic violence. The void in institutional services, which has been permanent in some communities, is being filled by the maras and their members, making them the primary support for the local Asociaciones de Desarrollo and implementers of development plans.

Changes in the community philosophy of the National Civilian Police (PNC) in one of the communities of the study offers a useful example of how new approaches can help improve citizens’ lives. The PNC’s new approach to the community and its underlying social and security problems has also led to the evolution of the maras’ role as community actors and their legitimacy in the people’s eyes, primarily based on the fear they instill. This has benefited some communities.  Likewise, international cooperation – which has played an essential role – and the recent implementation of community policing practices as a model within the national security strategy to reduce gang criminality have driven debate on how communities can confront violence and crime in a sustained manner. The problems are far from resolved, but the gangs, the police, and the state each appear to be redefining strategies and roles. It remains to be seen whether these actions are sustainable and applicable in other territories – and whether the maras’ involvement in development programs can help create conditions for citizens to cope with the violence and social exclusion that plague their communities.

* Mario Zetino Duarte, Larissa Brioso, and Margarita Montoya are researchers at FLACSO-El Salvador.  Their study is funded by the International Development Research Centre.

Resources and the New Developmentalism

By Paul A. Haslam*

María del Carmen Ortiz / Flickr / Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic (CC BY-NC-SA 2.0)

María del Carmen Ortiz / Flickr / Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic (CC BY-NC-SA 2.0)

Resource nationalism is driving the most significant shift in Latin American development policies of the past decade.  It is rarely talked about yet is constituting a new developmental model that is being adopted by governments of diverse ideological inclinations.  It has involved reforming taxation regimes dating from the 1990s to extract more “rent” from natural-resource intensive industries; strengthening and extending state capacity; using rents to support social spending by the state, including anti-poverty programs; and – most importantly – linking resource abundance with industrial policy.  It is the basic framework of the post-neoliberal development model, and examples are many.  The splashier headlines in the past decade focus on various instances of nationalization, including the expropriation of YPF in Argentina (2012); Venezuela’s erratic nationalization program; and Bolivia’s dramatic military occupation of foreign-owned gas facilities in 2006 – all intended to achieve these goals.  Early this month, the provincial government of San Luis, Argentina, presented a project-law to create a new provincially owned mining company, San Luis Minera (SAPEM) – joining many fellow provinces that have created or breathed new life into state-owned enterprises (SOEs), particularly in the mining sector.

By and large, these enterprises exist to associate with multinationals, following the trail blazed by Argentina’s YMAD (in Catamarca) and Fomicruz (in Santa Cruz) during the dawn of Argentina’s mining boom in the late 1990s.  The SOEs typically offer the rights to prime potential lands claimed by the state, handle the administrative and regulatory requirements of the province, and in some cases, negotiate the social licence with nearby communities.  In exchange, they get a small net profits interest (typically around 8-10 percent), which results in rent for the province.  The multinational does everything else: raises the money; plans, builds and operates the mine, and sells the mineral.

These are not the rent-seeking policies typical of low-capacity governments.  The enduring principles of the liberal regime (such as low royalty rates) have pushed revenue-hungry governments to explore creative options such as these to capture rent from their mining sectors.  The new SOEs are also an institutional innovation that aims at leveraging natural resource wealth for economic development, as governments also expand resource-funded social spending.  One of the objectives of Morales’s “nationalization” of Bolivia’s oil and gas resources, for example, was to “revitalize” the state-owned YPFB (Yacimientos Petrolíferos Fiscales Bolivianos) as an engine of development.  Nor is this “resource nationalism” exclusively a project of the left: Chile increased royalty rates in a “Special Tax” on the mining sector in 2005, and Colombia and Peru have hiked taxation on mining as well.  Brazil has continued to use of SOEs like PETROBRAS.  It’s still an open question, however, how successfully the rents generated by this new model can be combined with industrialization or development strategies that deliver enduring benefits. 

*Dr. Haslam teaches at the School of International Development and Global Studies, University of Ottawa, Canada.

Brazil: Sustained Attention to Sustainable Development?

By Evan Berry*

Photo Credit: Rodrigo Soldon / Flickr / Creative Commons Attribution 2.0 Generic (CC BY 2.0)

Photo Credit: Rodrigo Soldon / Flickr / Creative Commons Attribution 2.0 Generic (CC BY 2.0)

Media coverage of the approaching World Cup in Brazil has touched on the country’s contemporary ecological challenges, but they have glossed over their underlying causes.  Because of Brazil’s association with international sustainability accords, large international events – such as the “Rio+20” sustainable development conference two years ago and the 2016 Olympics – provide vehicles for global news media to focus on Brazil’s performance on environmental issues.  Among this flurry of journalistic coverage, two distinct narratives emerge.  In one, journalists look at sustainability with reference to economic modernization, suggesting that environmental problems are the outcomes of policy failures and ineffective governance.  Commentary in this vein calls for greater technocratic competency and a commitment to the development pathways of the global north.  In the other narrative, sustainability is set in the context of social justice and economic inequality.

These views lead to different responses.  The international bodies overseeing the upcoming sporting events – such as FIFA and the International Olympic Committee – demand that the Brazilian government do more to clean up beaches, improve transportation infrastructures, and purchase carbon offsets to compensate for the impact of new construction.  These prescriptions ignore, however, that environmentalism in the developed northern economies emerged from a distinctly middle- and upper-class preoccupation with aesthetically pleasing environments, such as wilderness, scenic landscapes, and exotic game.  Frustration with the pollution in southeastern Brazil’s Guanabara Bay, for instance, echoes the North American desire for well-managed spaces for outdoor recreation.  So too does the narrow focus on the plight of Brazilian armadillos, the vulnerable species chosen as the World Cup mascot.  This emphasis corresponds with a narrative that many Brazilian leaders would want to put forward – that the natural splendor of Rio de Janeiro in particular, and Brazil in general, can be secured by the kind of straightforward cleanup efforts that attended economic prosperity.  However, Brazil’s ecological woes cannot be solved by garbage scows, and endangered armadillos and the lack of clean recreational spaces are hardly Brazil’s most pressing obstacles to environmental sustainability.  Guanabara Bay is fetid because so many Cariocas, or Rio residents, lack access to basic sanitation.  Armadillos are threatened by deforestation that is as much a byproduct of global economic demand.

As elsewhere, environmental problems in Brazil are caused by myriad social, economic, and political factors.  Ameliorating the most visible impacts of these factors – protecting a charming creature or purifying noxious waters – addresses only symptoms.  International attention to sustainability issues in Brazil should be more mindful of social justice.  Brazil’s current political unrest centers on deeply shared public concerns about injustice, and addressing the problems giving rise to contemporary social movements will offer an important corrective to mainstream public discourse about sustainability.  International attention to the negative environmental impact of international sporting events, and accompanying investments in infrastructure, risks overlooking the unjust structural processes that complicate solutions to environmental problems.  Rather, the global popularity of sport provides an opportunity to deepen and expand international discourse about the human dimensions of ecology.

 *Evan Berry is an Assistant Professor in American University’s Department of Philosophy and Religion.

Revitalization of the OAS: More Than an Act of Congress

By Carlos Portales*

OAS logoU.S. Congressional passage in late September of the “Organization of American States Revitalization and Reform Act of 2013” could either help revitalize the troubled body or contribute to its irrelevance. By directing the U.S. Secretary of State to develop and drive OAS reform options, the bill seeks to give much higher priority in the OAS and Summit of the Americas to promoting and consolidating democracy in the hemisphere – “with due respect for the principle of nonintervention” – while recognizing that “key OAS strengths” are also in strengthening peace and security, assisting and monitoring elections, and fostering economic growth. Reducing “mandates” – ongoing programs that tend to get institutionalized – is another priority. The new law also requires Secretary Kerry to devise a strategy for a new fee structure in which no member state would pay more than 50 percent of OAS’s assessed yearly fees. (The U.S. Library of Congress reports that the United States, the organization’s largest donor, contributed an estimated $67.5 million in fiscal year 2012 – nearly 43 percent of the total 2012 budget.)

The reforms parallel ideas presented by OAS Secretary General Insulza in his “Strategic Vision of the OAS” on December 2011 (updated in March 2013) striving for concentration on four main pillars: democracy and conflict resolution; human rights; development (in association with the Inter-American Development Bank); and security (mainly against drugs and organized crime). He also advocated limiting a single state contribution to 49 percent without reducing the OAS’s total budget. The Secretary General embraced similar reforms when the legislation was first introduced by then-Senator Kerry in the previous Congress.

Agreement that the OAS needs reform is nearly universal, but any strategic transformation will have to take into account important developments among the Latin American international organizations. The OAS handily accommodated the creation of subregional organizations such as SICA and CARICOM in the past.  But new bodies – such as UNASUR, CELAC and ALBA – have posed new challenges to the organization’s relevance and effectiveness. Differences among the organizations have emerged over trade, democracy (different value attributed to the independence of powers and to press freedom, as well as of handling of crises in Venezuela, Honduras, and Paraguay), security (withdrawal of five countries from the Inter-American Treaty of Reciprocal Assistance), the strategy against drugs, and relations with the United States.  The organizations have also created new arenas for leaders to meet, at times taxing governments’ ability to keep up. From 1990 to 2012 there have been 272 Latin American regional and subregional summits, including eight Summits of the Americas.  When Secretary Kerry delivers his plan, it will be difficult for him to strike a balance between bringing the OAS more in line with Washington priorities, as laid out in the legislation, and seeking a bigger tent that addresses some of the concerns that gave rise to the plethora of competing organizations.

*Carlos Portales is the Director of the Program on International Organizations, Law and Diplomacy at WCL, American University. He was Ambassador of Chile to the OAS between 1997 to 2000.”

The TecnoLatinas: A Start-Up Revolution

Foro de Ahorro de Energía Eléctrica, México | Photo credit: Alejandro Castro | Foter.com | CC BY-NC-SA

Foro de Ahorro de Energía Eléctrica, México | Photo credit: Alejandro Castro | Foter.com | CC BY-NC-SA

Latin America is experiencing a full-fledged start-up movement amid rapid growth of an innovation and information economy.  Over the last several years the region’s online population has grown faster than in any other part of the world – with approximately 255 million internet users as of last year.  Half of the top 10 markets worldwide, ranked by time spent on Facebook and other social media, are in Latin America.  Clusters of innovation start-ups, such as those around Monterrey, Mexico, are springing up with astonishing speed.  In 2012 Mexico was among the largest exporters of information technology services in the world.  Google is currently building a data center in Chile, while Amazon Web Services opened a data center in Sao Paolo last December.  But these are not information-era maquiladoras. Instead, Latin American entrepreneurs are combining the availability of open-source innovation tools and the emergence of cloud computing with effective bridge building in Silicon Valley to bring collaboration, expertise, and capital to their home markets.

  • Latin America offers multiple advantages for tech start-ups: a low cost of development, an educated and growing talent pool with the necessary technical and entrepreneurial skills, and increasingly available and affordable broadband and internet access.
  • In particular, Mexico, Chile, Brazil, Argentina, and Colombia, along with metropolitan areas across the region, are incentivizing the development of a competitive start-up ecosystem – an advantage attracting a growing number of “angel investors.”
  • Start-Up Chile, a national program begun in 2010 with 22 start-ups from 14 countries, offers seed capital, grants, tax protection, space, mentoring, and networking to “accelerate” promising ventures.  Its most recent competition drew 1421 applicants from 60 countries, including from Singapore, London, and San Francisco.

The lack of tech innovation and incentives for start-ups has been an Achilles’ heel of Latin American economies for decades.  If the start-up trend continues, the region could make significant, lasting progress toward narrowing the sizable gap between itself and the most dynamic developing countries, mostly in Asia.  Latin America’s start-up movement is both top-down and bottom-up, with a tech-savvy generation of entrepreneurs not afraid to take risks and to leverage government support, as part of a collaborative business model built on multiple ties to Silicon Valley.  A core challenge will be whether these initiatives are scalable, and whether governments can move away from stale policy debates rooted in antiquated paradigms to move their economies toward the frontiers of innovation of the information age.  Old elites with a lock on traditional industries are poorly positioned to obstruct the phenomenon, but if these emerging innovation hubs are to succeed, at some point they are likely to confront  the entrenched and oligopolistic business practices still prevalent in the region’s energy, telecom, and other sectors.

Haiti: Not Back, Not Better

Photo by: Gonmi | Flickr | Creative Commons License

Photo by: Gonmi | Flickr | Creative Commons License

The third anniversary of the devastating earthquake in Haiti has passed with no sign of either serious reconstruction or progress toward improving democratic institutions.About three-quarters of the earthquake rubble has been removed, and several hundred thousand individuals have been moved to temporary shelters and some back into permanent housing. A light-industrial park in northern Haiti is providing jobs to some 1,300 workers. The U.S. Government alone has committed over $3.6 billion toward relief, recovery, and reconstruction, of which $2.5 billion has been disbursed as of September 30, 2012. Despite these billions, the infrastructure remains a shambles; the economy is weak; unemployment is around 40 percent; and the World Food Program estimates that 6.7 million people (out of a population of 10 million) are “food insecure.”

Progress in political affairs has also been slow, and incumbent leaders remain reluctant to commit to elections. The head of MINUSTAH, Chilean diplomat Mariano Fernández, last week reiterated calls for the Haitian government to hold legislative and local elections that were supposed to have been held a year ago. He said an agreement reached last month by President Michel Martelly and members of parliament to form a semi-permanent electoral council to stage elections for one-third of the 30-seat senate and local mayors was “an important first step.” The U.S. Assistant Secretary of State for Democracy, Human Rights and Labor, Michael Posner, also tried to emphasize the positive during a recent visit to Port-au-Prince, but noted “there is a lack of faith in the system, the sense that the rule of law is not respected, that institutions like the judiciary and the police and the prisons and the prosecutors are not doing the job adequately, and that the government isn’t living up to expectations.”

The Obama Administration’s pledge to “build back better” may have been slightly bold from the start, but one of the objectives – to use the crisis to drive some reforms in both the Haitian government and how international programs are implemented – was indeed within reach. The business-as-usual approach since the earthquake has led to the loss of a historic opportunity to move the country forward. While the Haitian political class continues to focus on its internecine struggles, the international community has funneled its vast funds to its own NGOs, most of which operate outside a master strategy and far from the political and bureaucratic authorities nominally in charge of overseeing and coordinating their programs. Real progress is unlikely until both local and outside players develop a shared vision for the future – hopefully before another natural disaster pushes the reset button again.