Page last updated at 20:51 GMT, Thursday, 18 December 2008

Heading back across the border

By Stephen Gibbs
BBC News, Michoacan, Mexico

Every morning, Mercedes Vanegas sets out a few hundred boxes of shoes in front of her corner shop in Ocampo, a small mountain town in the heart of Michoacan state.

But these days, she often wonders why she bothers.

With Christmas approaching, plenty of passers-by glance at the display as they wander towards the town's central plaza. But no-one stops to buy.

She blames the US economy.


Steve Gibbs reports on Mexicans leaving the US to return home

"The people from countryside areas like this, we almost all have families in America," she says. "But they are sending less money." She cannot remember a year when business was so bad.

Ocampo is one of thousands of towns across Mexico where the ambition of many - perhaps most - adult males has long been to go and work in the US.

Walk through its narrow streets, and you'll see plenty of women, but hardly any men.

The migrant flow is part of an unwritten deal between the two countries - the labour flows North, the dollars trickle South.

Official figures confirm what Mercedes is already noticing in her shoe shop. This year, remittances to Mexico have fallen by around 12%.

Michoacan scenery
People in rural Michoacan state in Mexico rely on dollar remittances
With unemployment in the US soaring, and the Florida construction industry - traditionally reliant on Mexican migrant workers - hitting hard times, it is no surprise that less money is being sent.

So how will this affect the broader Mexican economy? Remittances, after oil and tourism, are the third biggest source of foreign currency here. It might seem a reasonable assumption that the consequences will be profound.

Economic divide

But Carlos Rico, the government's undersecretary for North American Affairs, disagrees.

"Don't confuse us with those countries where remittances account for 25% of GDP," he says as we sit in his impressive offices overlooking Mexico City.

Not only are migrant workers sending back less money to places like Tuxpan, but significant numbers are giving up on the US altogether, and heading home

Unlike many of Mexico's neighbours which really do depend on remittances - such as Haiti, or even Cuba - Mexico has a trillion-dollar, diversified economy. The income from remittances is equivalent to less than 3% of the country's GDP.

But that statistic obscures one important fact: the notoriously wide gap between the rich and poor in Mexico.

In a recent OECD report, Mexico ranked at the bottom of 30 developed and developing countries in terms of economic divide. The wealthiest 10% of Mexicans earn more than 25 times as much as the poorest 10%.

There are millions of people here, especially those living in rural areas, for whom a relation working abroad, sending a few dollars home every month, is their best hope.

Heading home

In the village of Tuxpan, just down the road from Ocampo, the issue is beginning to worry Leandro Alvarez, immigration director from the local city council.

"Remittances, we think, are down by at least 20%," he says. "Small businesses are all complaining that trade is diminishing."

And he is concerned about the effects of another consequence of the US economic crisis.

Not only are migrant workers sending back less money to places like Tuxpan, but significant numbers are giving up on the US altogether, and heading home.

Leandro Alvarez
Leandro Alvarez says local shops are hit by the less money being sent home

In this municipality, no less than 42 families have come back in the last few months - 20% of the those that left.

This puts a potential double strain on the economy. Less money is being sent back, and more people are looking for jobs.

In a micro version of the public investment projects planned by governments throughout the world, Tuxpan council intends to implement several schemes to stimulate the local economy. Road repairs, and river cleaning operations are all scheduled for next year.

But Leandro says he is aware that the fundamental problem facing rural Mexico remains. "People left because there was not enough work", he says. "And that hasn't changed".

On the outskirts of the village, the Garcia family is getting used to life in their hometown once again. They are just back from nine years in the US, where they ran a building company.

In the front drive of their breeze-block house, there is a motorbike, still with its Alabama license plates.

Their particular American dream ended not directly as a result of the economic downturn in the US, but rather as the result of a tightening of the regulations on undocumented workers there.

Mrs Garcia feels that for the sake of all nine members of her family, they had no choice but to come home. But she is worried that economic problems in the US may be following her.

"If it's bad there", she says, "it's going to be worse here."

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