GmfW tnitttttaux8
Key Judgments
migration to the United States from Central and South America is growing more rapidly than from any other area. Suchnonexistent two decadesnow estimated0 persons annually, and (Re region mavMon^vertake the Caribbean area.
important source
of illegal alicnsnnmscountry. At any one time, roughlyercent ofillionillion illegal migrants residing in the United States are of Central or South American origin.
Most of the illegal flow comesew countries in Central America and on the west coast of South America. The five most importantllegals per. and Perufor three-fourths of the flow with only one-fourth of the region's population. Ifndre added to the list, we find that seven countries withercent of the area's population supplyercent of the illegal migrants.
ypical year, the six countries of Central America are the source of more than one-half of the illegal flow.
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Ii is difficult to uy why some countries arc major sources of illegal migration and others are not. Almost all South American illegals come from the Andean nations of the west coast: Colombia, Ecuador. Peru, and Chile, withercent of the continents population, provide more thanercent of South American illegals. Tbe relatively rigid social structure of theits'.sharp division between the middle and uppertoajor factor. The ambitious and educatedof the middle class in these countries has less "headroom" than his counterpart in the more fluid societies of the east coast. Headroom is further increased in those countries such as Brazil. Venezuela, and Argentina where there is rapid economic growth and/or already high per capita incomes. Population densities also tend to be lower in the east coast countries. Distance, small populations, and poverty sharply limit the source potential of Bolivia and Paraguay.
Tbe case is simpler in Central America. Here illegal migration is roughly proportional toonce distance is factored in. El Salvador is the only exception to this rule: withercent of Central American population, itf the area's illegal flow. Explanatoryaside from distance, include population density (more than six times Ihe average in other Central American countries) and perercent of the average elsewhere in Centralelatively slow economic growthore rigid social structure than in most Central American nations act as added incentives for migration.
On balance, we believe that illegal migration from Central and South America will continue to grow over the next two decades. The pool of potential migrants is large and expanding. Many in tbeopulation bulge that emerge in there now entering theyear age group. Of equalthe demonstration effect of pastllegal migration will be increasingly felt. In I
radition of illegal mi^raitortand the exigence of friends orin the United Slates arc major factors in an individuals decision to migrate.jiese factors were almost nonexistent as far as Central and South America were concerned; now they are strong.
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Introduction
Central and South American countries' are (he third-largest source of illegal aliens in the United States and
?cene indication of this growth is the fact that illegal aliens from Central and South Americahare of those who are deported have jumped from lessercent in theoercentoreover, like his Caribbean counterpart, the illegal from this area is much more likely'to remainently in the United States and eventually bring in other family members. Given the agethe archaic social order that severely limits upward mobilityumber of countries, and the large and growing gap between USitin America wage rates, the problem will likely worsen.
We estimate that0 illegals from Centra) and South America have entered the United States annually in recent years,with0 illegals from the regionlthough most enter with nonimmigrant visas which are subsequentlyarge minority surreptitiously cross the MexicanThe area supplies only about one-sixth as many illegals as doesonetheless, their tendency to stay indefinitely means that atne time roughlyercent ofillionillion illegal migrants of all nationalitiesin the United States are of Central or South
Dynamics of Migration
Large-scale Central and South Americanlegal andless pervasive than that experienced inCaribbean. The largest singlepattern has been from rural to urbanminimum wages exceed rural payercent. This internal migration,relatively short distances, hasrestrained in Central America whereand communication links areand fewer employmentoffered even in the larger cities. Even so,of Central and South Americanin urban areas has climbed0 toercent at present,illion people
Until the, to tbe extent that outmi-gration occurred, it focused on illegal border crossings by agricultural workers fleeing to neighboring countries to escape depressedconditions at home. For example, large numbers from Bolivia, Paraguay, and Chile have gone to nearby areas in Argentina to engage in farm work or to look for employment in urban areas. Thereimilar pattern of migration from Colombia and El Salvador to Venezuela and Honduras, respectively. Much of thishas been seasonal, however. In addition, during0 growing numbers of relatively skilled Salvadoran urbanites migrated to Hondu-duras, where
living. This migration fueled national animosities that culminated in theof Salvadoran agricultural workersar between the two nations
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intrarcgional movcmenls wereby some legal migration, mainlywell-educated urbanities going to the United Stales. This flow has stagnated at just0 persons annually during the past decade, while illegal immigration has picked up speed (secn fact, three times as many aliens from Central and South America now enter illegally as do through legal channels. Legal migration to countries other than the United States has been occurring with some regularity, but the numbers involved are fairly small.
ong time, legal migration to the United States from independent countries in the Wcst-
Hemisphere was unreslicted by nationalquotas.5 amendrhents to theand Nationality Act restrictedto (a) aliens wilh US family tics, (b) aliens with needed job skills, and (c) political refugees. Tbe amendments also established anor all Westernesult of the changes, growingof South and Central Americans most likely to seek entry to tbe United States increasingly
are unable to do to legally.
igrant
Despite the surge in illegal migration to the United States, the impact on overallpatterns in Central and South America has been slight. Together with legal migration, this outflow offsets lessercent of the annual growth in the regions population andercent of the increase in the area's labor force. Thb contrasts sharply wilh the significant slowing of labor force expansion in Mexico and the Caribbean prompted by outmigration to the United States.
|rowing minority' are^isin^neUaribbeanway stations to the United States. Entering the Caribbean region under valid documents, these migrants then payto transport them illegally to the USThe illegal migrant also finds material and psychological support among legal and illegal residents from his own country in the United States; this support becomes even stronger as their numbers increase here.
Table 2
of Illegal Migrolion
Rate*
Indel; US Orallimen
A venae US daily
CrafUEoer.
Nardann Uboten
Agricultural
Private houiebolU woriten
i
Salvador
Other Central and South Americandaily aajIcuUuialSalvador
Eoaadc*
Per-
Other Central and South American
C^tnmela
Al ihe same time, certain psychological and economic costs must be weighed by persons thinking about pulling up roots to come to the United States. The psychological costs ofchanging culture and language arehigh for rural Central and SouthThe need to renew tics to their antecedents explains why so many illegal aliens apparently are willing to risk apprehension to return to their homeland for short visits.
The financial cost of migration is of even iicr importance
ie typical
imcncan00 in similar fees lo reach the US east coast US rules add to the costs for those migrants who enter withvisas. For example, the visitor mustound-trip ticket, which costs at0 between most South American countries and the United States. These costs effectively keep the poorest persons from migrating.
r>
jr-inF
it ap-
is the origin ol nearlyercent of the illegal migrants from Central and South America. Guatemala and Colombia rank second and third, respectively, with about IS percent each, followed by Ecuador, Peru. Chile, and Honduras (seeogether theseercent of theercent of the illegal aliens from the region (sees might be expected, these countries also supply most of the legal immigrants from the region.
Population size alone cannot explain why some countries supply large numbers of illegals and others do not. Only Central American countries, with the important exception of El Salvador, appear to supply illegal migrants in roughto their population. Similarly, geographic distances only partly explain why relatively few illegal migrants come from the east coast of South America. More importantly, it seems that fewer illegals come from countries such asVenezuela, and Argentina because relatively high social mobility favors economicthat has resultedtrong middle class.
Economic Character!)tict
Despite the world oil shock, the five major sending countries since theenerally have experienced impressiveercent in real terms comparedercent for overall Latin America. Moreover, annual per capita incomes in these countries, ranging0 in Peru5 in El Salvador, are equivalent to that of middle-income less developed countries (secy itself, however, income levels do not correlate well with the flow of illegals. For example, relatively few illegals come from Bolivia, the poorest country in South America, in partfew Bolivians can afford the cost ofto the United Slates. Higher income countries, on the other hand, arc not source states because of their broader capacity to absorb labor growth.
aalaUaeVtaaBaaBBa--
Toble 3
Central and South Amerkai Population 1
Average Annual Growth Bale
0 Thouund Penno*
Percent
America
Rica
...
1
America _
4
B
i
..
-
<
1
Population data, from US Department ol Commerce. Bureau ol the Cent
Took 4
Control and South America: Selected Economic ond Social Indicator*
-rriinFinenTlnl
most cases the economics of the major source countries are based on agriculture,the industrial bases in Guatemala andSalvador are by far the largest in CentralMoreover, despite stepped up outmigration since the start of, and relatively good growth performance, the major source countries have become increasingly unable to absorb labor supply growth (seehis is especially true in the rural sector, where populationare particularly strong, despite substantial rural migration over the pastears. Because of overcrowding, agriculturalthe exception ofwell below other countries in the region. Even in Colombia, above average productivity largelylowing of the growth in the agricultural work forceirtual standstill
Growth outside the farm sector has not been sufficient to absorb the expansion in the urban labor force. While generally impressive industri-
si sains In the major source countries have addedillion newincrease0his expansion fell well belowpcrccnt increase in the urban labor force. Industrial jobs in Peru grew by onlyercent during this period because especially rapid expansion in the manufacturing and mining sectors relied on capital intensive production methods.esult, the share of industrial workers dropped slightly to justercent of the total Peruvian labor force. Even in Guatemala and Ecuador, the only major source countries in which industrial employment was nearly able to match the growth of the urban labor force, the industrial sectors were too small to have much impact on labor absorption. In fact, industrial workersccounted forillion persons or less thanercent of the total labor force in the five countriesessercentage points higher than0 share.
Although employment in the service sectors of the five major sending countries has risen sharply over the years, these gains mask substantial underemployment. In the, service workers in these countries lakenillion persons, double0 level. In the case of Colombia, Ecuador, and Peru, tbe service sector accounts for roughly two-thirds or more of total nonagricultural employment. Much of this employment, however, has been injobs, and earnings are frequently below the government-sponsored minimum for urbanNonetheless, earnings in many instances are enough to accumulate the funds needed to make the trip north.
a ro<c a
The demographic characteristics of the main source countries generally are similar to those of other LatinCs in the same stage of economic and social development. In particular, urban population growth0 has been rapid,nnually. Rural population growth by comparison hasercent annually, largely reflecting rapid outmigratton to urban areas. The availability of large tracts of unused arable land in most major sendinghowever, has helped to keep the rural exodus below that experienced in the Caribbean.
Because of rapid population growth the age distribution of the sending states is heavily skewed in the younger ages. As may be seen in tablet leastercent ofn the main source countries was below the age ofthe same as in Mexico and the Caribbean. The population was even younger than the Central and South American norm in El Salvador, Colombia, and Ecuador. Strongresistance to family planning programs has resulted in meager government efforts to cut population growth; only in Colombia havepopulation programs had much impact since the start ofopulation growth for Colombiaercent compared withercentfor all sending countries in the area.
Unlike Mexico and the Caribbean, outmigra-tion has done little to reduce rapid population growth in Central and South America. Even in the five main source countries, the outflow of legal and illegal migrants to the United Stales offsets lessercent of the natural increase in these countries' total population. One major exception is El Salvador, where this outflow currently is reducing overall population growth by nearlyercent per annum leaving the countrytill high growth rateercent.
Development Pormlinl
While most of the main source countries enjoy reasonably good growth prospects, economicis unlikely to have much effect on migration during the next decade. Agriculture will remain the single largest source ofover the foreseeable future. However, it will not expand fast enough to absorb thenumber of entrants to the rural labor force thus keeping rural wages depressed. Because the industrial bases in most of these countries are relatively small, expansion of industry andservices almost certainly will not be rapid enough to fully absorb rural migrants as well as those already living in urban areas. Moreover, the most dynamic growth will probably be in capital-intensivein the petroleum and other mineral sectors of South America sourceproducefew direct jobs.
El Salvador ond Guatomala
Despite their predominantly rural populations, strong dependence on coffee earnings, and low literacy rates. El Salvador and Guatemala face somewhat different development prospects. Only moderate economic growth at best may bein El Salvador over the next few years because of shortages of available land, necessary infrastructure, and investment capital. Public efforts to attract foreign capital arc hampered by the country's inability to control terrorism: not only are foreigners reluctant to invest, but El Salvador is finding it more difficult to secure infrastructure loans from multilateral agencies because of the government's poor human rights record coming out of its antitcrrorist efforts.
Although Guatemala's growth potential beven here underutilizalion of labor will likely persist indefinitely. Promising exploitation of mineral and forest resources will produce few direct jobs. While Guatemala has experienced industrial growth ofercent yearly0 along with concomitant employment gainsercent, this expansion falls short of absorbing new entrants to the urban labor force because of the small size of the industrial base. Even continued rapid industrial expansion will not have much impact on job creation during the next decade.
nd Peru
Colombia and Peru are grappling with tight austerity measures that will restrain economic development over the next few years. In the case of Peru, its struggle to restore economic balance will especially hurt iu economic growth prospects until the. Additionally, stronggrowth will slow per capita income gains and divert limited public funds to social welfare programs that could otherwise be spent onto create needed jobs.
Although Colombia and Peru arc the only major source countries in the group to emerge as essentially urban societies over the past IS years, they arc likely to retain many of the hierarchical and paternalistic features of agrarian societies that restrain upward mobility for some time. Moreover, structural features will Ijkcly cause job creation to continue lagging labor force growth in the years ahead, labor-intensivethe single largestnot expanding fast enough and industrialization will continue to be spurred by mining and other relatively capital-intensive enterprises. The result may wellidening wage gap with the United States.
I In
Despite Ecuador's good economic growththe country faces longstanding devclop-
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constraints that will hamper improving the lot of most Ecuador cans in the years ahead. In particular, dynamic oil-led economic expansion is highly capital intensive and produces few direct linkages to the rest of the economy. To the extent that oil reserves boost public investment inand manufacturing projects in urban areas, rural-to-urban migration probably will increase without significantly reducing urban unemployment. Moreover, any sharp drop in world prices or adverse weather conditionsEcuador's narrowly based agricultural sector would only heighten urban laborproblems, particularly sincein agriculture already is extremely high.
Danger
Despite an apparent slowing in the rate of growth of illegal migration "from Central and South Americahis flow is still expanding more rapidly than that from otherigh probability exists that it will surpass the flow from the Caribbean during the next few years.
Many in thege bulge that emerged in therc now entering the large,year age group. Their numbers alone almost certainly will cause illegal migration to increase over the next decade. Based solely on demographic characteristics,migration would jump toersons annually by the. Moreover, the demonstration effect of past successfuland the establishment of Central and South American colonies in many US cities will encourage the potential migrant.
Economic development in the sourcethe next decade atunlikely to greatly reduce the flow and under somecould increase it. Even very rapid economic growth would not cut the absolute numbers of unemployed or more than slightly reduce the huge differential between US and Latin American wages. To the extent that it is successful, development might only increase the pool of potential migrants with the financial means to make the trip. On the other hand, slow economic growth could greatly increase migratory pressures, especially in Central America. Only the type of economic growth that opens up the social structure and allows greater economicfor talented and ambitious members of all classes could have a
The shares of the individual source countries in the illegal ilow are not likely to change much over the next decade. El Salvador, given its demographic and economic characteristics, may become somewhat more important. Currentsocial, and economic difficulties in Peru, Colombia, and Guatemala could increasein these countries if not soon resolved, while marginal improvements in Chile'sand political situation should have the opposite effect. We do not expect any country in the area that is currentlyajor source.of illegal migrants to become one during this period.
12
_
APPENDIX A
El Sorvodw
El Salvador is the principal source of illegal migration from Central and South America to the United States. An0 persons enter illegally each year, more thanimes the number of legal entrants. Pressures for emigration are strong. El Salvador is the second poorest country in Central America (after Honduras) and by far the most densely populated. Its population continues to grow rapidly, despite some slowing in. Population pressures that had ledalvadorans to emigrate to sparsely populated, neighboring Honduras between World War II and theere an indirect cause of9 "Soccer War" with that country. Legal and illegal emigration is heavy and probably will remain strong into, despite government efforts to provide more employment in both rural and urban areas.
The Economylance
The Salvadoran economy and society are among the most rigid in Latin America. Income distribution is highly skewed and economic opportunity for members of the lower and middle classes is extremelymall oligarchy controls much of industry and agriculture and has great influence on the quasi military government in power. Rural and urbanendemic since the earlyintensified during the past year. The increased violence reflects several factors, including general economicand tbe government's failure to crack down on dissident activity.
The modern economy is largely service oriented. The serviceschiefly government, construction, trade, and transportation andfor more than one-half of GDP and is growing slightly faster than the economyhole. Agriculture, however, remains the economic base; it accounts for more than one-half of total employment and is the chief source of foreign exchange earnings. Coffee, cotton, and sugar are the leading export commodities, together making up more thanercent of all sales abroadhe manufacturingprocessed food, textiles, andfor about one-fifth of GDP and employment, but the share is rising.
The Salvadoran economy has been growing atercent per year in this decade. Theorld recession bit El Salvador hard because of the country's heavy dependence on foreign trade. Nevertheless, because of increased sales of coffee and cotton, the current account, which was in deficit4egained equilibrium6espite this
Popubiion (ihninapid persons)
Kuril .
tier (go*)
^ j
annua] popubtkon *rowrti (percent)
Rural
Urtu
&4
m
7
ft
(thotaiaod persons)
Agrkultun*
Manufacturing and-
1 K)
(USrban minimum
L60
annual real CDP crtiwth {prroeotj
rfomettic prodoct (million US $)
Mrlcvlbae
Manufacturing and mining
added per worker (USanufacturing nod mining
Service*
t
CDP (Indci
M-jnofji luftn*m Labor prooVx^rfy (lad*.
Agrk-uhiiflv -MaWartawtagifafcag
aotajiufri.
MirnifacUiriric rjrorraslng.fa
crarftikflk MiningtlieXLr
*2I
land (uSorom) hectares)
Cultivated hectares per flgrfcMhufal worker
1
700
1.1
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improvement, foreign investor interest in El Salvador is being undercut by worsening violence, which has already included kidnapings of foreign businessmen.
Population Patterns
El Salvador's population growth, justercent annually in, spurted to an averageercent inut has now returned toevel. Extensive emigration toate below the natural rate of increase. Forced repatriation of some of these emigrants helped boost the rise in. Inhe natural rate has declined moderately, probably in large measureesult of family planning programs instituted in the latter half of. The population became slightly younger during.8 percent of total population was underears old.
. Earlier emigrants were primarily farmers who moved into neighboring countries to find land, because half of El Salvador's productive land is held byarge landholders, leaving the rest of theninto the remaining half With movement into Honduras virtually halted since9 "Soccerural residents who otherwise might have crossed the border instead moved into towns, principally provincial centers. These towns, in turn, are apparently the chief source of new settlers moving into the capital, San Salvador. Urban population has been growing much faster than the general population in thepercent aconsequently urban residents, many of them skilled or semiskilled, are becoming increasingly important in the illegal flow.
Employrnont ond Labor Force
The urban labor force has been increasing much more rapidly.05 the labor force in the manufacturing and services sectors doubled, white the rural labor force grew less thanercent because of population movement into the towns and emigration to Honduras. Labor productivity has been rising very slowly. Productivity in manufacturing has not risen much faster than agricultural productivity, reflecting the generally low level of capital investment. The overall unemployment rate is veryan estimatedercent, includingwages arc low in both industry and agriculture.
Outlook
Over the next several years illegal emigration will continue to be heavy. The growth of emigration may exceed the increase in the number of people entering the migration-prone years as overcrowding becomes more acute and new labor force entrants exceed the number of jobs created. The United
" mvinnfiiTiiiii
GOMFIPFNTIil
States is likely toreferred destination for urban workers, who will probably make up the majority of emigrants for the foreseeable future. With the improvement of relations with Honduras, movement of rural residents into that country may resumemall scale, as Tegucigalpa may be inclined, as in, to overlook small incursions of farmers while opposing the entry of skilled or semiskilled urban workers.
16
<i)
uolamala
Guatemala ranks secondource of Central and Southmigration to the United Slates. An0 persons makeannually, compared with the legal flowersons. Mostfrom rural areas by way of Guatemala City, where unemploymenthousing is scarce, and minimum wages extremely low. The hugebetween the United Slates and Guatemala and the existence inCity of readyllegalare the principalnextnumber of illegal immigrants io the United States is expected toin line with the increase in the share of the population inyears.
Economylance
The economy is basically agrarian with agriculture absorbingercent of the labor force. Alongside the agricultural base, however,eveloped manufacturinglargest in Central America. On the strength of the growth of plantation agriculture as well as industry, real GDP growthercent annually0hen adverse weather retarded expansion., real growthercent annually, in part because of reconstruction programs that followed the devasting6 earthquake. High coffee prices in the past several years gave an added push to growth.
Benefits of the country's solid economic performance have been poorly distributed. For three-fourths of the population, annual per capita income is still less than one-half the national average. Worst off are Ibe indigenous Indians whose principal activity is subsistence agriculture. They have.been unaffected by recent increases in agricultural production on new lands dedicated to capital-intensive industrial crops such as cotton and sugar. In manufacturing, as well, labor has benefited little from the largely capital intensive new enterprises in the food processing and beverage industries.
Population Patfornt
Guatemala's population is divided into two ethnic groups, each with its own language and culture. The Indian group makes upercent of the total population and remains culturally and linguistically separate from the larger Spanish-speaking group. Assimilation of the Indian population has been extremely slow and limited largely to use of Indians as plantation workers.
17
rn^riPEliri'ifr
PepuUlion (ihouund pmral
fbnl
UrUn
GiMiIemola
)
)
Ruinl
U.Un
(pett*nt>.
Ubor force (Uwannd penens)
Asrlcalam
MuiufMturim <od minlr*
Diily(US I) Rural *veridw
8
4 6
2
3
4.1
4
perKtw (US S)
Avenge annual real GDP trowtli (pereeM)
million US f)
Airkoitur* _
Muiuhcturb*
Serricai
Value- -Hod per works (US
Mimjfactxuina and mWt
Bod GDP
ManuftcfuHoa and
1
prodWflVfry (Inda:_
M.i,ltd
207
produdi
anana).
ion. cm bears. poUIOH tvlanufaclurijtctnltSra, dolton*.
Mlnlnc: taAti unlet, copperttrcte-
land (thooaand hactam)
awd hwUm pet asrtculrural worker
1.5
I -Si
Virtually all illegal migrants coming from Guatemala are from the larger Spanish-speaking population which accounts for the overwhelming share of the country's urban population and one-third of the rural population.
Guatemala's population growthercent annually is about average for Central America. The urban growth rateercent, however, is among the region's fastest. The rural population has been growingercent annually, becauseigh rural mortality rate and because of migration to urban areas where employment and wages are more attractive. Family planning has had no impact on population growth. The population is relatively young, withercent underears of age as
employment and the labor forte
Despite rapid economic growth, job creation failed to keep pace with the number of new entrants to the labor force, causing unemployment and underemployment to increase over the past decade. The postquakeboom temporarily reduced unemployment and raised wages, but underemployment is endemic. The economically active proportion of the population is among the lowest in Latin America:ercent of all females andercent of the entire population, reflecting the population's youthful-ness and the low level of activity outside of subsistence agriculture.
The structure of the labor force has changed with the growth of urban concentrations0gricultural workers' share in the total tabor force declined fromercent toercent. Agricultural labor showed the largest gains in productivity, however, as new lands and capital-intensive cultivation boosted production. Employment in services registered thegains in numbers, albeit the least gain in productivity. Nonetheless, value added per worker in largely urban occupations in services and manufacturing remained substantially higher than in agriculture, indicating that Ihe rapid pace of migration from rural to urban areas will continue.
outlook
We foresee little easing of pressures for illegal emigration to the United States over the next decade. The principal motivation, the large wage differential, will certainly persist, while improvement in the upward mobility of the labor force will come only slowly. Encouragement of investment in labor-intensive industries would speed the pace of job creation, but programs now on the books almost certainly will fall short of absorbing growth in the urban labor force.
19
ffuriflflfntiil
arlrovfdiorffiuse
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APPENDIX C
Colombia
Colombia ranks as the area's third largest source of illegal migrants to the United States and the largest South American source. Except for the illegal flow of large numbers of Colombian agricultural workers toVenezuela, the United States is the main destination for most Colombians escaping the rigid social order and crowded urban labor market at home.0 Colombians have illegally entered this country each recent year. Despite fairly good economic growth prospects and slower population expansion, the large backlog of those already born will continue to fuel illegal migration over the next decade. Ironically, any success in curbing Colombia's lucrative drug traffic would heighten local pressures that encourage illegal migration.
The Etonomylance
Coffee is the mainstay of Colombia's economy, although largeoperations, mainly narcotics traffic, accountrowing share of the nation's output. Despite expanded credit and extension services that spurred coffee production during thend, agricultures share of GDP continued falling, reachingercentonetheless, agriculture still employs more than one-third of the labor force and supplies raw materials to the important food processing industry.ajor source of income for rural workers; high profits from narcotics have helped to finance urban construction, legitimate business ventures, and have significantly supplemented legitimate private capital markets.
Bogota's shift from import substitution to export promotion policies in theelped to spur industrial expansion. The result was real economic growthercent annually7ooming coffee exports boosted economic growth to an averageercent annually. The rapid expansion of demand and serious food shortages spurred price hikes that eroded real wages, making inflation Colombia's chief economic problem.
Recent austerity measures to reduce cost-of-living increases have been especially harsh to compensate for the strong illegal econony that dilutes the impact of official economic policies. Real economic growth is expected to slow over the next few years, perhaps,ercent or less annually because of continuing austerity and lower coffee prices. While more successful drug interdiction would create serious problems, it would improve the government's ability to manage austerity without so severely hurting the legitimate economy.
21
TT7NFinF*UT'*'
Population (thounnd pemici)
Urban
)
)
Average annual population growth (percent)
Urban
0.1
M
14
as
fore* (Uwutand penoto)
Maaufacturlfaf tad mining
Servicer.
wuo (US I) Urban minimum
Rural air.Iilr!
1 75
per capita income (US I)
760
domouc product (mllaon
Astarihm
Manufacturim; and miniroi
Servtoe*
Value added pa warier (US 8)
Anneal tan
Manufacturing and mining
847
CDP (Indn
Agriculture
Manufacturing and
Ubw produeOvWy
ManurKturaagaafaag
Uajor produet.
A*r^ jkure cvr'lfle.
MajmfacOirW MHIIaa. loud paotiuatag.
ttodUng, ,Minlna- nude oil, natural coal. Iron ore..
land (thnuand hnffiroi)
Cultivated hectare* per agricultura] worker
Population Pattern*
Family planning programs instituted over the past decade have cut population growthercent annually inercent during. Despite opposition from the Catholic Church, the government7 added family planning services to the nation's public health centers to help ease the burden of supporting an increasingly younger population. The decline in population growth comes in spite of improvements in health and sanitary* conditions that have sharply cut infant mortality and contributedopulation that is among the youngest in South America.8 percent of the population was underears old.
Colombia has emergedredomincntly urban society. Aboutercent of the population lives inhighest urbanization rate among the major source countries. The tide of political violence that swept rural areas duringpurred heavy migration to urban areas that peakedercent annually.esult, growing numbers of Colombians were exposed to contrasts of wealth and poverty, while adding to the ranks of urban unemployed living in slum areas. During, continued domination of rural landholdingsew owners, the fragmentation of small holdings, and expanding urban employment opportunities contributed to an especially strong rural exodus, even by Latin American standards. This outflow has reduced rural population growthercent annually during the past two decades.
Employment and Labor Forte
Because of rapid industrialization, employment in the manufacturing sector has increasedercent annuallyoreover, the accompanying construction boom encouraged the influx of migrants that has strained absorptive capacity in the service sector. Because of the rural exodus, the agricultural labor force has virtually stagnatedillion persons
Official statistics indicate that unemployment approachesercent of the labor force in urban areas, with underemployment affecting an additionalercent of the labor force. Agricultural underemployment,ay of life in Colombia, has been somewhat eased by the rapid growth in illicit narcotics traffic. These earnings combined with recent high coffee prices have probably resulted in per capita rural incomes increasing faster than these in urban areas.
Outlook
Illegal migration from Colombia probably will increase, albeitlower pace, in the years ahead. Reasonably good economic growthnot undermined bygradually improving social and
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economic conditions. As the middle class expands, highly uneven income distribution apparently is flattening. Moreover, with the sharp drop in population growth, the government will be able loreater share of its expenditures to investment rather than expanding social services.(he large numbers already born willpercent expansion in the migration-prone age group over the next decade, thus spurring emigration. To the extent that drug interdiction efforts are successful, pressures for illegal immigration will increase.specially true of any drastic cuts in marijuana cultivation, which employs far more people than cocaineEfforts to eliminate this crop would heighten rural migration, thus increasing urban unemployment and prolonging the existence of the huge wage gap between Colombia and the United States.
24
cuador
The pull of high wagesteady stream of ambitious urban workers to illegally migrate from Ecuador to the United States. Rising growth rates of the labor force since theave increased pressures to migrate, making Ecuador the region's fourth largest sending country. Although the current migration of ancuadorean illegals annually has little impact on unemployment and population growth, it has drained off some of the more ambitious and skilled workers. Despite large areas of untapped agricultural lands and prospectstrong petroteum-financed growth. Ecuador's massive surplus labor supply should continue to encourage illegal migration near current levels.
Tha Economylance
Agriculture dominates Ecuador's economy, employing more than one-half the labor force, generating one-fifth of GDP, supplying the raw materials needed for most of industry. Expansion of export cropcocoa, coffee, andunexploiied lands in the coastal provinces spurredercent agricultural growth. Consumer price controls have discouraged production for domestic markets, however, forcing Quito to import large quantities of wheat, vegetable oil, and dairy products.
Agriculture dominates, but oil from Ecuador's remote eastern provinces has led the economy's rapid growth in recent years: in fact, this growth has averaged II percenthighest in Latin Americaotal exports quadrupled4 billion75 millionnd oil generated more than one-half of the increase. The boom has boosted consumer demand and allowed Quito to rapidly increase public investment for electric power, petroleum refining, and agricultural production andGrowth in oil output beyond thearrels per day will be slow; nationalistic policies virtually halted explorationnd uncertainty over the return to civilian government should inhibit the response of foreign companies to recent tax concessions offered by Quito.
otion Pattern*
Ecuador's annual population growth jumpedercent0 and has remained there ever since. Duringnd, birth and death rates stabilizedercentercent, respectively. Birth control and improved medical programs have expanded since the, but their simultaneous impact has left the natural population increase
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unchanged. Overcrowding in agricultural areas of ihe aliiplano has fomented internal migration to the major urbanandto new agricultural regions in the coastal and eastern provinces.
Although rural-to-urban migration continues, the differing regional impact of birth control and medical programs has narrowed the gap between urban and rural population growth rates. Duringrban population growth hasercent annually, raising the share of the total population in urban areas toerceni last year, compared withercentural population growth has beenercentlight increase from.7 percent of the population was underears old.
and Labor Force-
The jump in population growth has engendered increasing labor force growth rates since the. The sectoral distribution of Ecuador's labor force virtually remained unchanged0owever, despite huge differences in productivity between agriculture and Ihe nonagricultural sector. Relatively strong labor unions and import incentives for capital equipment restrained the growth of nonfarm employment but boosted productivity in this sector lo nearly five times the level of agricultural workers. To some extent, this has held down the rate of rural-to-urban migration by limiting job creation. In any event underemployment affects three-fifths of tbe country's agriculturalpercent of Ecuador's total labor force.
Outlook
Continued public investment of oil revenues should maintain annual economic growthoercent in tbe medium term, but illegal migration to the United States probably will not diminish much and might even increase. Even if job creation doubled from Ihe recentecade would pass before Ecuador's surplus agricultural workers would be fully employed. During the nextears accelerating growth of the work force will addercent lo the labor supply. Employment pressures together with continuing large wage differentials between United Slates and Ecuador will attract Ihe more industrious workers. Ironically, growth in urban employmentwillreater number of Ecuadorians to afford the trip lo tbe US border.
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APPENDIX E
Peru
Peru ranks as ihe region's fifth largest source of illegal immigrants to the United States.eruvians annually enter the United Slates illegally, double the number of legal immigrants. During this decade, illegal immigration from Peru has increased sharply because of the slow rate of job creation at home, particularly in the urban areas around Lima which incorporate roughly one-fifth of the4 million population. Pressures to migrate legally or illegally promise to intensify in the years immediately ahead because of recently imposed economic austerity measures and continued rapid growth of the population in the migration-prone ages.
The Economylance
uring the past two decades, the Peruvian economy has experienced several phases of stop-go growth, largely reflecting shifts in government policies. During much of thend, for example, expropriation of foreign-owned business and ill-conceived social reform programs greatly reduced foreign and domestic investment and hampered growth of agricultural and industrial output. Thanksining sector which generates the bulk of export earnings, however, Peru managed to average real growthercent annually during the first half of this decade. Despite its importanceoreign exchange earner, the mining sector employsmall share of the labor force. Even the relatively large manufacturing sector provides employment for only aboutercent of the labor force.
Serious overspending by the government put the economyailspin inusterity measures designed to redress the payments deficit and avoid debt default caused real GNP toercent last yearcrccnt decline is likelyhe outlook for next year is also grim in view of lough measures the International Monetary Fund is requiring the govern-ment to adopt in exchangetandby credit agreement. Substantial rioting has already occurred in urban areasesult of sharp price increases on basic commodities; unemployment can also be expected to rise sharply as the latest round of austerity measures takes hold.
In addition to these problems, Peru is plagued with some of the worst poverty in South America. Its agricultural resource base is extremely limited. The arid coastal strip where many Peruvians live requires costly irrigation systems to produce crops while the fertile intcrmountain valleys of the Andes are densely crowded and largely devoted to subsistence crops. Theof Ihe Amazon region east of the Andes has precluded development and thus any easing of population pressures in the coastal and Andean regions.
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Population Pattern*
Peru's population growth rale has increasedcrcenl annually inoercent annuallyhis largely reflects higher birth rates while death rates remained stable. Population control was not officially encouraged5 when the government endorsed family planning based on family health and welfare. Peru stilt docs notarge contraceptive distribution program, however. Along with rapidgrowth there has been extensive rural to urban migration, especially to the area surrounding Lima.esult of this shift, urban areas holdercent of the total population compared withercent0 andercent
Peru continues to experience rapid rural-to-urban migration. Even so, the rural growth rate jumpedercent annually in this decade, partly reflecting government attempts to settle migrants from rural areas in regions outside city limits, The urban growth rateercent annually. More than one-half of Peru's total population is of Indian descent, living mainly in small mountain villages and often speaking Indian languages. The small European upper class controls much of the country's economic wealth; Spanish-speaking urbanitcs comprise almost all illegal migrants to the United States.
Employment and Labor Force
Growth in the labor force has mirrored the rapid population increase. With most of the rise in urban areas, the share of agricultural employment slipped fromercent toercent. Since risinghas sharply limited the gain in labor requirements in manufacturing and mining, aboutercent of the increment in the urban labor force has been absorbed by the low paying service sector. This has contributederuvian minimum urban wage scale among the lowest of the Latin American source countries.
Because many service jobs are casual, involving less than full lime work, the growing share of the labor force in the services sector has contributed substantially to increased underemployment. Although no reliable statistics are kepi, the increased importance of services coupled with Peru's current economic difficulties are thought to have pushed the combinedand unemployment rate as high asercent. The hardships for urbanities arc further exacerbated by the lack of unemployment insuranceelfare system.
Outlook
As Peru struggles to restore its international credit ratingtrict austerity program, economic growth is expected to remain low.ith renewed economic stability and growing export earnings from new petroleum
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and mining output, per capita income should again be rising. Nevertheless, the continuing large gap between Peruvian and US wages and the increase in the number of people in the migration-prone years should keep the number of illegal emigrants from Peru growing.
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Original document.
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