The potential impacts of migrant remittances on agricultural and community development in the Mixteca Baja region of Mexico.

Abstract

Remittances form an important source of revenue for many farm households and rural communities. In spite of their significance, how remittances are expended is not well studied. Neoclassical economic theory indicates that the welfare of recipients unequivocally improves as the household budget line increases. Which new combination of goods, such as production and leisure, is selected on the budget line depends on household and community preferences. The literature suggests many factors influence preferences. The original resource endowment defines production possibilities. Regional economic conditions determine agricultural profitability and alternative investment opportunities. The volume and timing of remittances influence a farmer's willingness to accept risk. Socio-economic survey data from 54 households in the village of El Rosario Micaltepec, Puebla in the Mixteca Baja region illustrate the conditions under which certain households may choose to invest remittances in agricultural production. Data on the activities of the migrant village associations of two villages are used to evaluate the circumstances that favor community investment of migrant-donated funds over their conspicuous consumption.