The Honduran First Lady recently said that she would like to send her daughter to the United States to study, “but not with a coyote, that I would never do.”  She added that, “the money that [parents] pay to human traffickers would be better used their children’s living conditions here in Honduras, instead of risking a dangerous route that could end up costing their children’s lives.”[1]

There are multiple interpretations of this comment; for some, who choose to leave the country, it is an insult.  For others, it shows the extent to which the government does not recognize the magnitude of the problem, and challenge it to create conditions where migration is an option, not a necessity.

The first interpretation falls to those who chose to leave Honduras.  This is a personal assessment.  The truth is that given unlimited resources and options, no one would make use of a coyote.  However, the first lady assumes that deciding between staying and leaving is simple.  The reality, of course, is much more complicated.  Could it be that she was not well informed?

In order to migrate in a “regular” manner to study in the United States, you must have the lifestyle of the first lady and the president.  That is a very privileged life, very far from the realities of the average Honduran.

What the Numbers Say

Since at least 2009, more than 70,000 adults and 10,000 minors have left Honduras each year.  This year’s total so far is at least 7,000.  These people are not leaving by choice, but rather by necessity, in many cases for security reasons: in 2015 there were more than 5,000 homicides, and, most terrifyingly, these homicides occurred in the exact areas from which citizens are leaving (or rather, fleeing).  Upon mapping violence and migration patterns, the correlation is extremely high.  Could this be coincidence?

A recent survey conducted by Borge and Associates showed that 40% of people believe that insecurity is the most pressing problem in the country, and 12% confirm being victims of gangs.  When asked if they had a relative abroad, 66% of those who had been victims of gangs responded that yes, they had at least one family member who had left the country.  Another coincidence?

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Source: Borge & Associates, 2016.

In towns that migrants are leaving, the majority of people have monthly salaries less than $200.  For example, in the same survey by Borge and Associates, 52% of survey respondents had monthly salaries left than $200.  Furthermore, many would-be migrants do not use a coyote because they lack the resources.  Meanwhile, those who do use them are ultimately weighing the associated costs and benefits.  While their logic may be flawed, an investment of $6,000 USD to migrate can multiply their salary tenfold.  A similar investment in the Honduran informal economy (which is more than 70% Honduran entrepreneurship) will at best double their minimum earnings.

Beyond the Numbers: Risks with New Vision

Given the magnitude of the Honduran emigration and its causes, it is important to focus on solutions instead of just reiterating the insensitivity or negligence of the government in the face of such a harsh reality. 

Reducing migration requires providing options other than migration, so that it is not that the last resort.  This requires ensuring economic change in the country, improving the Honduran quality of life through updated development strategies, and focusing on human capital in place of production.  The president and first lady’s quality of life ought to be viewed as a standard or benchmark—after all, leadership is achieved by example.  The challenge of the government and its president is now to set this example.

The country’s insecurity remains linked to a system of organized crime, which thrives in the face of both the informal and the exporting economy.  Because of this, developing the economy ought to be a key priority.

Honduras’ economy consists of three main sectors, each dependent on unskilled labor.  One sector is agro-exportation or production of low-value merchandise.  Participants in this sector are likely limited to a monthly income of about $300 USD.

Honduran exports are 40% of the GDP, concentrated in textiles and agriculture.  These exports generate $1 million USD and employ more than 500,000 people.  Despite this, the United Nations estimates that Honduras has one of the lowest rates of export diversity. [2]

Furthermore, this sector is private and controlled by a wealthy few—in fact, the wage gap between this group and the rest of the country is enormous.

Beyond the export sector is the informal economy, composed of workers who are neither well-paid nor well-educated.  While at least 60% of businesses in Honduras are considered informal, this sector only accounts for 24% of the labor force,[3] and because of highly saturated markets, their contribution to the GDP is minimal.  These saturated markets are reflected in high levels of poverty as well as the fact that 60% of Hondurans are under-employed. [4]

Paradoxically, the same migration criticized by the first lady is actually a source of economic growth.  Remittances make up seventeen percent of the nation’s income, but migrants’ informal investment and import of nostalgic products brings the total impact of migration to more than 25% of the GDP.

Ultimately, agriculture- and production-based development strategies will not result in substantial improvement of the quality of life in Honduras.  Instead, the focus must be on human capital. 

Strengthening Human Capital and Integrating Migration into Development

The migration problem can be framed as a more economic problem—low productivity.  To solve this, investment in human capital and the labor force must be expanded, the economy must be formalized, innovation promoted, and especially, remittances must be leveraged to promote development.

Promoting Human Capital

Investment beginning from childhood.  A comprehensive strategy to promote the educational environment must improve education quality, increase matriculation rates, and increase the number of students who continue on to universities or vocational centers.  Currently, vocational centers are questionably beneficial—their curriculum is often limited and their career offerings are in short supply.

The right approach to growing human capital should complement pre-existing frameworks and government action.  It should use the support of the private sector to promote extracurricular education.  It should also improve the quality of vocational centers, and create incentives for parents to invest in their children’s education.

More than just detaining those who try to leave the country, actually addressing the migration problem means giving the population real opportunities.  These opportunities must be prioritized, and improving scholastic achievement would certainly help create them.  Some of these improvements would increase the number of students continuing their education past secondary school, along with giving low-performing students more attention.  Within this strategy, governments, parents, and the private sector must all participate.

Furthermore, improving education will assure scholastic permanence and a more solid foundational knowledge.  Given better tutoring and vocational centers, and ensuring proximity of educational institutions to family homes, parents will be incentivized to maintain investment in their children’s education.

Investment in human capital inside the labor force.  As it stands, the labor force lacks the tools necessary to compete in the global economy.  Expanding the abilities of the labor force will require investment in the knowledge economy, which centers in turn on a stock of human capital that is adequately educated and informed.  True preparation for participation in the global economy requires raw knowledge, education, learning ability, innovation capacity, and adaptability to modern societal norms.  In a different sense, the knowledge economy must be able to compete with the economy of organized crime.

Creating financial intermediation for education.  This investment strategy requires a market of economic intermediaries, which will satisfy the demands of both students and the labor force.

Creation of these economic intermediaries requires financing knowledge entrepreneurs—that is teachers, tutors, advisors, consultants, techs, and analysts.  The state must facilitate this investment in knowledge.

This market of intermediaries will rely on private tutors and vocational centers operating through public-private alliances.  Such services reach at least 2% of the labor force and up to 10% of primary and secondary students—or, in the context of migration, these tutors and centers reach twice the number of prospective migrants in the country.

If viable education exists, parents will invest in it.  Therefore, the financial intermediary market for education is necessary for improving the quality of human capital and education in Honduras.

Innovation

Innovation is a strategy that opens unconventional opportunities.  Perhaps most importantly, opportunities created by innovation often lie beyond the traditional growth model, which in Honduras is precarious at best.  Given this, it is crucial to explore unique approaches for increasing equality and productivity.

Discussion of these themes often focuses on the significance of innovation.  In some countries, debates on education often relegate innovation to the margin, partially because authorities often believe that innovation only matters for industrialized economies.  The truth is that innovation in education will be the key to addressing the current problems in Honduras.

The Missing Link: Migration and Development

Migration generates an important source of income in the region—as mentioned previously, close to 20% of GDP.  However, not very many policies are designed to link these economic facets of migration with development.  A proposed strategy to link migration and development would incorporate these components:

  • Financial access and inclusion for remittance recipients
  • Access to credit for small businesses, especially when linked with the knowledge economy
  • Promotion of business opportunities driven by the diaspora (known as nostalgic trade)
  • Involving the diaspora in support of education
  • Extracurricular educational programs in areas of high emigration

These strategies are interdependent, and help link migration and development, while also complementing other areas of development.

Financial education, and particularly the financial inclusion that such education promotes, is an important goal because it could formalize thousands of dollars in savings by remittance recipients.  These resources can then be leveraged to promote investment in the knowledge economy and nostalgic business.  This investment can occur through the mobilization of newly-formalized savings, or in the form of credit for entrepreneurs in the knowledge economy and nostalgic business.

The diaspora’s demand for products from their home country can also be leveraged to promote a higher-quality production of these specialized products.  Furthermore, the diaspora’s philanthropy can be funneled into education services like extracurricular programs in areas of high emigration.

The ultimate objective is creating a critical mass of people who save, who invest in education and most importantly contribute to economic and human development in each of their countries.

This method is fundamentally important, since it results in several strategically desirable outcomes.  First, it integrates investment of migrant capital and the savings of remittance recipients into the formal financial sector, which enables the mobilization of these resources towards development and education.  Second, the strategy expands and complements—though does not replace—current approaches to regional economic development.

Meanwhile, promoting savings and education as business strategies will create job opportunities and ensure the ability to compete in the knowledge economy.

For example, the president and first lady could launch a national financial education program in collaboration with the main remittance banks (such as Atlantida, Ficohsa, and Occidente) and cooperatives, through their federation Facach.  Ultimately this federation reaches a third of homes receiving remittances, and such an alliance could formalize the savings of some 50,000 families.

In Honduras, more than half of remittance recipients (at least 500,000 people) have the capacity to save more than $1,000 USD.  Currently most of these savings are informal.  A gradual five-year strategy to formalize these substantial savings will easily generate the resources to develop the knowledge market (for tutors, teachers, etc.)

Additionally, involving the diaspora will make available the resources of the migrant population in support of education.  This will not only cause an increase in economic growth, but will shift the economic model so that it no longer relies on an underqualified workforce.

Migration and Homicides in Honduras by Neighborhood, 2015

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Indicators of Migrant Economic Activities, 2012

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Source: Orozco and Yansura, Migration and Development in Central America: Perceptions, Policies, and Further Opportunities, Inter-American Dialogue, 2013.

 

[1] Cálix, Darío.  “Ana García: ‘Nunca mandaría a mi hija con un coyote.’”  Tiempo Digital.  August 3, 2016.

[2] UNCTAD STAT. Available at: http://unctadstat.unctad.org

[3] For more information, see http://economiainformalhn.blogspot.com/

[4] Lefebvre, Stephan. Honduras: IMF Austerity, Macroeconomic Policy, and Foreign Investment. Center for Economic and Policy Research, Sep. 2015. http://cepr.net/documents/Honduras_IMF-2015-08.pdf. “Visible Underemployment includes those who worked less than 36 hours in the reference week and expressed the desire to work more hours. Invisible underemployment includes those who worked 36 hours or more in the reference week but who nevertheless earned less than the minimum wage.”