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October 1, 2003

Juana Perez photo

Migrant farmworker-turned-entrepreneur Juana Perez runs a successful store in the colonia where she resides along the U.S.-Mexico border.

Microenterprise on the U.S.-Mexico border: Translating economic survival into success

Juana Perez captures the American mythos of the self-made individual. After struggling for 16 years as a migrant farmworker in the United States, Perez decided she wanted a better life for herself and her family. In 1991, she pooled together the few resources she had and opened a small store that she ran out of her home, located in a colonia along the Texas-Mexico border. Today, she runs a profitable grocery housed in its own building that features an expanded storefront, which serves as a gathering spot for customers. Perez says she owes her success to Acción Texas, a nonprofit microlender, that considered her a good investment while traditional banks rejected her as a bad credit risk.

“Microenterprise lenders are nonprofit institutions that use private or government funds or a mix of both to help the smallest of small entrepreneurs who would otherwise have no access to capital,” said LBJ School Professor Bárbara Robles, a financial policy expert and native of the border region. “Microlenders charge higher interest rates than banks – around 12-16 percent – but they also provide technical assistance on how to plan, market, and manage a business.”

Perez is part of what Robles identifies as the “microenterprise phenomenon” that is occurring along the U.S.-Mexico border. Because of limited opportunities in the formal labor market, increasing numbers of men and women are turning to self-employment as a means of economic survival. Robles is examining ways that government policies can tap into this grassroots entrepreneurial spirit as a way of reducing poverty and fostering long-term economic development in the region. Her research shows that expanding the provision of financial services along the U.S.-Mexico border is essential.

State and federal policies that encourage microfinance organizations like Acción Texas are a solid start, but Robles’ research shows that more can be done to bridge the gap between financial services and entrepreneurs. She proposes a dual approach. The first deals with building community coalitions to increase financial literacy among border residents. The second involves demonstrating to mainstream financial institutions that investing in small businesses in the border region is a good credit risk. In order to be successful, says Robles, both approaches require a deep understanding of border culture as well as the social and economic problems that exist in the region.

It is easy to see why mainstream financial institutions overlook the border as an area of capital investment and entrepreneurs from the border tend to operate outside the formal financial sector. The region suffers from low rates of educational attainment and high rates of poverty and unemployment. The complexities of its bilingual, bicultural, and transnational features make it truly unique.

Robles argues that financial institutions must look beyond traditional measures of wealth in assessing the border region and take into account “intangible financial capital,” such as human, social and cultural capital. She notes, for example, that bilingualism is a form of cultural capital that can be used to increase an individual’s wealth opportunities. “Being bilingual and a business owner means you can widen and expand your customer base, increasing your revenues and profits,” she said.

Robles photo

A financial policy expert and native of the border region, Professor Bárbara Robles conducts research that aims to bridge the divide between financial institutions and low-income Latino communities along the U.S.-Mexico border.

Robles is using the classroom as a vehicle for her research on these issues. The central focus of her fall 2003 policy seminar at the LBJ School is on wealth inequality and asset building policies for Latino populations in the U.S. As part of the coursework, graduate students will make recommendations on how human capital, social capital and cultural capital can contribute to wealth-enhancing policies for low income and working-poor communities. She is also leading the Latino Financial Issues Program through UT Austin’s Center for Mexican American Studies this fall, which has received funding from the State Farm Companies Foundation. Designed for undergraduate students, the program couples university service learning with financial services delivery and literacy initiatives. A major feature of the program will be a summer internship working with community-based organizations along the border.

Robles joined the LBJ School faculty in January 1998. She holds a Ph.D. in economics from the University of Maryland-College Park and a B.A. in Spanish/French Comparative Literature from UT Austin. Prior to joining the LBJ School, she worked for two years as an economist for the U.S. Congress Joint Committee on Taxation. She is the author of Women in the U.S.: An Economic Profile; Finance Capital in Dynamic Factor Demands; and Credit, Money, and Production: Empirical Evidence. A member of the Hispanic Business Board of Economists, she will speak about Hispanic consumer purchasing power at the U.S. Hispanic Economic Summit this October in Washington, D.C.

When asked why she has decided to focus her research on the border region, Robles said, “I was gone from the border for 15 years, only to find that despite Hispanic/Latino numbers increasing, access to opportunities have not changed and that indeed things have gotten more distressing.”

“I believe that research should be about finding solutions to old, lingering problems, not just descriptions but recommendations and coalition building,” she said.

Related Links
“Latina Microenterprise and the U.S.-Mexico Border Economy,” by Bárbara J. Robles
The Estey Centre Journal of International Law and Trade Policy, Summer 2002

Latino Financial Issues Program, Center for Mexican American Studies, UT Austin

Acción Texas

2003 U.S. Hispanic Economic Summit

2003 Lyndon B. Johnson School of Public Affairs
P.O. Box Y
Austin, TX 78713-8925

1 October 2003

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