The Contrarian: Go South, Joven

Twenty   years ago, when I first headed south to Mexico to launch my Latin American career, I filled my last tank of U.S. gasoline outside of El Paso, Texas.

When the station manager, an old Tejano, learned I was moving to Mexico, he quipped, “You’re going the wrong way, man. They’re all moving here.”
How times have changed.  If estimates are accurate, 2011 was the first year since the 1970s in which more people moved (back) to Latin America than left it.
What induces people to uproot themselves and move to another country is a combination of carrot and stick.  Waving the biggest official carrot is Brazil, where President Dilma Roussef has reformed an outdated and insular approach to immigration by granting record numbers of visas to highly skilled European, American and Chinese technicians, engineers, financiers and entrepreneurs.  In 2011, some 51,353 visas were issued, up 30 percent from the previous year.  Brazil is booming, and, to meet its World Cup and Olympic hosting commitments, it must build $500 billion worth of infrastructure.
But Brazil’s woefully thin output of engineering graduates cannot produce enough native brain power, so talent must be imported.  The refreshing show of humility behind the Brazilian policy also includes sending 100,000 Brazilian university students to study abroad for a year at the world’s leading science and engineering faculties.
The timing of Brazil’s sudden embrace of foreign talent comes at an opportune moment when European (especially Spanish and Portuguese) and American skilled workers are out of work and/or frustrated by the lack of career mobility at home.  Brazil’s program is designed to attract typical unmarried, 30-year-old university graduates with five to 10 years of work experience.  Applicants are responding en masse, but apparently more than half of them drop out of the process when confronted by the time-consuming and costly bureaucracy associated with a Brazilian visa application, including all the verification and notary-laden steps required.  Brazilian leadership might be enlightened, but Brazilian bureaucracy remains a noose around the country’s neck.

Latin America’s favorable demographics

Economic opportunity is what moves most Latin American migrants.  When two differently developed economies share a border, unskilled labor from the poorer neighbor will find a way to higher-paying jobs in its richer neighbor.  An estimated one mi-llion Haitians live in the Dominican Republic today, tending fields, parking cars, washing dishes.  Rural Colombians continue to move, albeit in smaller numbers than before, to Venezuela, where higher wages can be found on farms.  An estimated 400,000 Nicaraguans live in Costa Rica, where per-capita income levels (and wages) are four times their own.  But the biggest magnet for undocumented rural labor is Argentina, where farm families are shrinking even while food production and exports rise.  About 14 percent of Argentina’s population is made up of foreign-born nationals, compared with 13 percent in the United States and 1 percent in Brazil.
The United States wields the stick in today’s continental migration story.  In 2011, the Obama administration deported about 200,000 Mexicans, the most sent out by any U.S. president. More than half of them were indicted criminals whose fingerprints can now be cross-referenced for residency status.  Another 400,000 Mexicans went home of their own volition, a combination of seasonal laborers, frustrated young (mostly) men who cannot find decent employment in the United States, and the families and loved ones connected to deportees.  The more than 600,000 Mexicans heading south virtually equals the 600,000 who tried to move north, one-third of whom were stopped by U.S. marshals at the border and sent home. That number continues to shrink in spite of increased enforcement.
All told, the United States lost 200,000 more Mexican migrants than it attracted.  Perhaps it’s time to make some cuts to the bloated U.S. border security budget.  For all of us, this brave new world requires some brand-new thinking on everything from immigration policy to business forecasting.

John Price is the managing director of Americas Market Intelligence and a 20-year veteran of Latin American competitive intelligence and strategy consulting.
jprice@americasmi.com