Foreign aid to developing countries is often the act of a more wealthy country, not a private company. But experts say private investors may be the solution to some of the toughest foreign policy questions, including illegal immigration from south of the border.
The key is long-term lending for residentsof Mexico and Central America, loans used to spark businesses and build affordable housing ? and to create the jobs that come with both.
“I think there?s no doubt that private investment can have a huge impact on immigration, to the extent that it accomplishes what is largely bringing immigrants to the U.S., which is jobs,” said Robert Mosbacher, president and chief executive officer of the Overseas Private Investment Corp., a Washington-based government agency that assists businesses in overseas investments.
Mosbacher said the agency has partnered with companies that have invested $600 million in Central America. OPIC focuses on two related efforts in Mexico and Central America ? providing credit to small-business owners, and providing long-term, fixed-rate mortgages for low- and moderate-income housing.
The former allows business owners to buy assets and create jobs, he said, while the latter not only encourages people to put down roots in those countries but boosts demand for more houses.
“When you start providing 15-year fixed-rate mortgages, suddenly people want to build a lot more houses,” Mosbacher said. “It would employ a lot of the same people with those skills that come up here.”
Stocks in those countries have been strong in the last year as well, according to an April 30 report by T. Rowe Price on its Latin America Fund. The report showed a 28.27 percent increase in the fund, as well as a 20 percent gain in Mexican stocks over the last six months.
Though inflation and interest rates fell in major Latin American countries, the report notes the political climate in Mexico also cooled with the inauguration of Felipe Calderon after protests over the close election.
“A house is not just an American dream, it?s a universal dream,” Mosbacher said. “If we can make affordable in your own country, there?s no reason to come to the U.S. to try and do it.”
