INTERNATIONAL MIGRATION AND BUSINESS FORMATION IN MEXICO

Objective. Prior studies yield the pessimistic conclusion that interna tional migration does not promote entrepreneurial activity and busines s formation. Through a careful quantitative analysis, we seek to show that international migration plays a more positive role in promoting e conomic development than is generally thought. Methods. Using data gat hered in thirty Mexican communities and U.S. destination areas, we fol low male household heads over the course of their lives and estimate a n event-history model that uses personal resources, household assets, community characteristics, local market potential, and macroeconomic c onditions to predict the odds of business formation. We estimate other models to predict the kind of business formed and the number of worke rs employed. Results. The receipt of U.S. earnings by households and c ommunities significantly increases the odds of business formation and productive investment. Conclusions. The fact that migrant-owned busine sses are generally small retail ventures that generate little employme nt reflects generalized conditions of opportunity in Mexico, not a deb ility resulting from the migration process itself. U.S. migration is a n important factor promoting business formation by migrants and nonmig rants alike.