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Remittances and Microenterprises in Mexico

UCSD, Graduate School of International Relations and Pacific Studies Working Paper

40 Pages Posted: 6 Sep 2001  

Christopher M. Woodruff

University of California, San Diego (UCSD) - Graduate School of International Relations and Pacific Studies (IRPS)

Rene Zenteno

Instituto Tecnologico y de Estudios Superiores de Monterrey (ITESM)

Date Written: August 14, 2001

Abstract

Does access to capital lead to more robust investment in small scale enterprises in developing economies? We examine the effect of capital constraints on investment levels of microenterprises in Mexico. We use a survey of more than 6000 small firms located in 44 urban areas of Mexico. We focus on one important source of investment capital for Mexican entrepreneurs: earnings from migration by the owner or family members working in the United States. We estimate that remittances are responsible for almost 20% of the capital invested in microenterprises throughout urban Mexico, an additional cumulative investment capital among the firms represented by our sample of about $1.85 billion. Within the ten states with the highest rate of migration to the United States, we estimate that almost than a third of the capital invested in microenterprises is associated with remittances. In additional to showing the importance of remittances in microenterprise development, the findings suggest that access to capital is an important factor in enterprise development.

Keywords: Capital constraints, Migration, remittances, microenterprise finance

JEL Classification: F2, G3, O1

Suggested Citation

Woodruff, Christopher M. and Zenteno, Rene, Remittances and Microenterprises in Mexico (August 14, 2001). UCSD, Graduate School of International Relations and Pacific Studies Working Paper. Available at SSRN: https://ssrn.com/abstract=282019 or http://dx.doi.org/10.2139/ssrn.282019

Christopher Woodruff (Contact Author)

University of California, San Diego (UCSD) - Graduate School of International Relations and Pacific Studies (IRPS) ( email )

9500 Gilman Drive
La Jolla, CA 92093-0519
United States
858-534-0590 (Phone)
858-534-3939 (Fax)

Rene Zenteno

Instituto Tecnologico y de Estudios Superiores de Monterrey (ITESM) ( email )

Av. Eugenio Garza Sada #2501
Col. Tecnológico
Monterrey, Nuevo León 64849
Mexico

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