The number of high-skilled Mexican entrepreneurs migrating to the United States has increased in recent years, but the trend is not solely in response to organized crime activity in Mexico, according to a new research paper from Rice University’s Baker Institute for Public Policy.
Based on in-depth interviews with Mexican entrepreneurs working and living in the Greater Houston area, the paper analyzes the various push and pull factors that lead these entrepreneurs to seek opportunities in the U.S.
“New Migration Patterns: High-Skilled Entrepreneurial Migration from Mexico to the United States” was authored by Elizabeth Salamanca, a summer 2015 Puentes Visiting Scholar in the Baker Institute’s Mexico Center and associate professor of international business at Universidad de las Américas Puebla in Mexico.
“It has been assumed that insecurity is the main driver encouraging Mexican entrepreneurial migration to the U.S.,” Salamanca said. “However, I found that frequently, migration has not been motivated by insecurity but by other forces that act as push, pull or retention factors. The Mexican institutional context characterized by such elements as corruption, fiscal uncertainty and bureaucracy may be the primary force that stimulates such entrepreneurial migration, but conditions in the U.S. play a key role in attracting and retaining migrant entrepreneurs. In other words, Mexican entrepreneurs do not react only to structural disadvantages; they also try to profit from the market dynamics emerging abroad.”
Even though a large number of poorly educated Mexicans continue migrating to the U.S., contemporary migration also includes a growing influx of highly educated immigrants –38.9 percent of new migrants have an education level above a basic high school diploma, according to the paper. This figure rises to 52.4 percent if the full population of Mexican-origin residents in the U.S. is taken into consideration. The number of Immigrant Entrepreneur (E5) visas issued to Mexicans by the U.S. government increased notably over recent years, from only six in 2007 to 129 in 2014. Texas, where six out of 10 cities with the largest number of Mexican-owned firms are located, illustrates this entrepreneurial migration.
Among the push factors, corruption in Mexico carries significant weight because entrepreneurs do not want to start and sustain businesses within an environment that fosters pervasive practices such as clientelism or nepotism, Salamanca said. Moreover, the tax system is perceived as complex and uncertain, particularly as a result of fiscal reform, while a stagnant bureaucracy adversely affects entrepreneurship due to the longer time it takes to open a company in Mexico compared with the U.S., she said.
As for the pull factors, the education system and the high quality of life offered by the U.S. are both fundamental factors that not only attract Mexican entrepreneurs but that also promote their stay, Salamanca said. Likewise, the supportive policies of the U.S. government also play a pulling role due to the assistance offered to minorities and to specific initiatives that provide free support to startups. Other pulling forces include nongovernmental initiatives that encourage information-technology startups, guide entrepreneurs to access business startup credit lines or loans and inform them about scholarships. Access to credit is not a major pulling factor but it can become a retention one. Salamanca said Mexican entrepreneurs find it difficult to create a financial background with the U.S. credit bureaus; however, once the person or the company has developed this financial history, access to credit is very easy and more affordable than in Mexico.
From a public policy perspective, these findings have relevant implications for Mexico, Salamanca said. “For the Mexican government, addressing the brain drain caused by the migration of entrepreneurs does not depend necessarily on solving the problem of organized crime, but must focus on the implementation of appropriate and manageable actions that provide a friendlier business environment,” she said. “Furthermore, the Mexican government could play a key role in fostering transnationalism among Mexican migrant entrepreneurs through their constant participation in business, political and social initiatives that allow the transfer of knowledge, skills, competences and even capital back to the country.”