End of Nicaragua, my Paper, and my Presentation

The last day in Nicaragua, a Saturday, was a free day for everybody. I didn't really end up sleeping in at all, because it gets too hot in the room. Ten guys in one hostel room, five sets of bunk beds, and a pair of fans. The fans didn't help. I think I've gone four nights in a row without using any sheets. Emily and I walked to Parque Central to do some shopping. She got a few pair of earrings, I got a couple bootlegged DVDs (Children of Men and Babel) for 50 córdobas ($2.75), and some other goodies to remain a secret. One of my dvds works, but I have to crank to volume to get decent audio. Haven't tried the other one.

That night we went to a restaurant with a great 6-9 happy hour. Two mojitos for 20 córdobas (just over a dollar). Burritos were on special for 40 córdobas as well. Most of the group headed home by 9, but I hung out with Eric and Megan talking with a couple local Nicaraguans until after 11. It was nice practicing my Spanish for a couple hours straight, just sitting on the sidewalk across the street from the restaurant. One of the most chill nights of the program.

I went to bed immediately when I got back to Hotel Oasis, since we had to be on our buses at 600 am. Sunday ended up being a rididulous travel day. The only thing worth mentioning is that Morgan, Max, Jeff, and myself all lost our white slip receipts while in Nicaragua. Appararently we were supposed to hold on to them to get back. We ended up forging new ones and paying off the customs guy. Oh yeah--I bought 2 liters of Flor de Caña 7 year rum at the Duty Free store for $8 each. It's great stuff. I still haven't broken out my Cubans yet though...

MONDAY AND TUESDAY

School work. Jeff and I are working on our paper and presentation together, which is due Wednesday morning. Monday ended up being an 8 hour day. We split a pitcher and Emily got a whiskey sour at La Choza to wind down around 11 pm. I changed one of the TVs to ESPN to catch the WCC Championship, but they had soccer highlights on instead. I was pretty pissed, but at least Gonzaga won.

Tuesday was another long work day. We put in 13 hours. Not much else to say. The paper is posted below. A few things didn't quite translate in the formatting, but the words are still there.


Jeff Buhrman
Colin Fulton
07.03.2007
Case Study Final Essay

Research Question: In which ways and to what extent has the migration of Nicaraguans into Costa Rica affected the economies of both countries?

OVERVIEW
In the past thirty years, large numbers of Nicaraguans have migrated south to Costa Rica for various reasons. These reasons range from political, economic, and environmental, among others. Though the specific forces encouraging migration have changed over time, Nicaragua has constantly maintained an active role as an exporter of human labor. According to Raphaëlle Bail:
[h]istorically, Nicaraguans have always used their southern neighbor as a refuge during periods of violence, such as the dictatorship of Anastasio Somoza or the war of the 1980s. But since the 1990s migration has been driven by the struggle for economic survival.

In this paper, we will argue that the development and expansion of the Costa Rican economy over recent years has both been aided by, and is a direct result of, the growing need for a larger labor force and the continuing presence of Nicaraguans in Costa Rica. Throughout the paper we will use various sources including books, interviews, scholastic articles, websites, and research studies to support our thesis. The nature of this topic must always be remembered while absorbing the information presented in this paper, because the statistics on immigration are not necessarily accurate. Some sources have potentially overestimated immigration while some have been significantly more conservative. Through our research, we have tried our best to present the most realistic and thorough studies, but incongruencies still appear.

A TUMULTUOUS HISTORY: 30 YEARS OF MIGRATORY FLOWS
Historically, Nicaragua has been torn by repressive dictatorships and civil war, battered by several forms of natural disasters, and the subject of economic sanctions and restructurings. These events have left hundreds of thousands of people displaced—without homes, jobs, or basic necessities like potable water. Naturally, this has caused a great exodus of Nicaraguans to pursue opportunities outside of their country; their nation’s government and economy have been unable to respond to or control their unfortunate situation with efficiency or expediency.

Thousands moved to Costa Rica after the December 23, 1972 earthquake in Managua which killed over 6,000 people, destroyed 90% of the structures in the nation’s capitol, and resulted as the worst seismic catastrophe in the history of the North and Central America. This event threw the country into turmoil, and caused an initial flow of 10,000 Nicaraguans to migrate south to Costa Rica. More followed during the civil war in the 1970s in the battle to overthrow the 45-year-long Somoza family dictatorship. Perhaps the biggest migration was a result of the Contra war under Sandinista rule in the 1980s as the country continued to be plagued with military struggles and a crippled economy. In 1984, an armed conflict between the Contras and Sandinista government broke out, and Costa Rica received over 50,000 Nicaraguan immigrants as a result of citizens fleeing a military draft. The majority of these refugees were between the ages of 16 and 25.

Major structural adjustment policies (SAPs) sanctioned by non-governmental organizations on Nicaragua during the 1990s caused large numbers of citizens to also migrate to Costa Rica. These programs aimed to transform Nicaragua from socialism to capitalism by cutting government jobs and undergoing privatization. This left a huge percentage of the population unemployed and caused catastrophically high inflation rates of over 30% a year. This poor economic performance over the past two decades can be “directly attributed to a large surplus labour force [that] was created by the profound restructuring of wealth and political power that resulted from the 1990 change in government” (Mahler). Finally in 1998, thousands of families fled Nicaragua after the devastating damage of hurricane Mitch, seeking safety, solidarity, and better living conditions.

Regardless of the reasons, the exodus of thousands of educated, skilled, and capable Nicaraguans has starved the country of the intellectual ferment needed for an economic rebound. The families that have stayed in Nicaragua and survived the more difficult times face a dilemma. They can either keep the family unit in tact, usually living in extreme poverty, or send a family member abroad to earn more money. Typically, the family member capable of making the most money is the one who migrates. While this may provide additional income for each individual family, it causes greater problems at a national level.

BRAIN DRAIN AND NICARAGUA’S ECONOMY
The exportation of Nicaragua’s most skilled workers to provide for families back home has caused a “brain drain” on the workforce, hindering the development of Nicaragua’s economy. The brain drain is causing a decrease in the average level of human capital within Nicaragua as the more-educated—and therefore more capable—leave to find better jobs abroad. In the short and long run, brain drain results in negative impacts on Nicaragua’s capacity to achieve an open and innovative economy, thus inhibiting economic progress in a nation struggling in the transition from socialism to free-market capitalism. When examining immigration it is important to understand the history of Nicaragua and the situations today that Nicaraguans face in their country. The circumstances they have faced cause them to seek out a source of income in other countries (typically Costa Rica) that is essentially unattainable in Nicaragua.

REMITTANCES
After stabilizing themselves in another country with economic opportunities for them, the immigrants will then send remittance checks to their families in Nicaragua to help pay for the family’s everyday needs. As seen below in Table 1, remittances became more important for Nicaragua’s economy each year during the 1990s, both in absolute terms and as a percentage of GDP.
Total Remittances Sent to Nicaragua
Year
Millions of US$
% of GDP
% of Total Exports
1990
15,0
1,0%
4,5%
1991
15,0
0,9%
5,5%
1992
10,0
0,6%
4,5%
1993
25,0
1,4%
9,3%
1994
50,0
2,8%
14,9%
1995
75,0
4,1%
16,1%
1996
95,0
4,9%
20,4%
1997
150,0
7,6%
26,0%
1998
200,0
9,7%
34,9%
1999
300,0
13,6%
55,0%
2000
320,0
13,7%
50,4%
Source: International Organization for Migration

Table 1

Remittances to families are now the leading source of income in Nicaragua, making up more than 20% of national GDP in 2003, according to the Inter-American Development Bank. By 2005, the number had jumped to over 30%, and has seen a growing trend each time new figures are compiled. Total remittances to Nicaragua amounted to over $1 billion in 2005, with over one third of them coming from Costa Rica (Agunias). Shockingly, these figures fail to take into account remittance money sent via mail or sent back home with family and friends. Other seasonal agriculture workers save up all of their remittance money and bring home one lump sum after their three or four month stays (Cortés). After taking into account remittance transfers that fail to leave a paper trail, it is easy to understand that the figures released are at least conservative, if not severely underestimated, in revealing the impact of remittances on Nicaragua’s economy. The increasing reliance on remittances is a strong signal that Nicaragua is a country lacking the resources and opportunities to keep its citizens at home.

ENCOUNTERING RACISM AND XENOPHOBIA
When examining this controversial subject, it is important to be cognizant of the general ways in which Costa Ricans perceive Nicaraguans and the recent escalation of racism since the 1980s. Sarah J. Mahler and Dusan Ugrina of Florida International University explain that:
[r]elations between Costa Rica and Nicaragua continue to be strained owing to long-standing border disputes, and these have translated into popular anti-Nicaraguan sentiment. This has consequences for Nicaraguan migration; for example, the Costa Rican government recently passed a punitive immigration law to become effective in August 2006 that raises penalties for smugglers, facilitates deportations of undocumented immigrants, and transforms various aspects of legal residency, making them more restrictive.

It is worth mentioning that the majority of Costa Rican’s view Nicaraguans as a second-class citizen who is uneducated, dangerous, and dirty. This viewpoint is perpetuated by the media’s portrayal of Nicaraguans as being responsible for Costa Rica’s problems, including crime and a deteriorating social security system. As a result, Costa Rica faces a paradox between the fear of the “threatening other” invading their country, and a reliance on their cheap, abundant labor to fuel their booming economy.

THE STATUS QUO IN NICARAGUA
Today, Nicaraguans are still crossing the San Juan River, which separates Costa Rica, the self-proclaimed “Switzerland of Central America,” with Nicaragua, the second-poorest country in the Western hemisphere. However, the forces causing them to move are different than they have been historically. Nicaraguans are migrating both legally and illegally in search of better working alternatives and a higher standard of living, providing an escape from Nicaragua’s ongoing economic recession. The recession has furthered the extent of poverty in Nicaragua to unprecedented heights in the past two decades. The migration that it has sparked is so prevalent that Nicaragua is commonly referred to as a major exporter of human labour (Docquier). Costa Rica has benefited greatly from the increased work force that has willingly filled up jobs in agriculture, construction, and domestic services that are seen as undesirable for Costa Ricans in the status quo.

Poverty is extreme in Nicaragua: the Census of 2000 indicated that 48.9% of the population is classified as poor. According to UPOLI sociologist Areli Mendez, that figure is growing: 64% of the population was considered poor in 2006. The slumping Nicaraguan economy had a combined unemployment and disemployment rate of 50.5% in 2005 (Bail). That translates into over one half of the workforce lacking sufficient employment opportunities. Nicaraguans are finding such opportunities in Costa Rica, their southern neighbor with a thriving economy and a perpetual labor shortage. By looking more closely, it is evident that economic reasons are the primary motive. According to the Costa Rican Census of 2000, 73% of naturalized Nicaraguan immigrants who responded to the survey cited “economic reasons” as the primary reason for migrating.

COSTA RICA AND ITS LABOR SHORTAGE
The recent history of Costa Rica’s economic expansion coincides with the uneasy times that Nicaragua has faced. Costa Rica has historically put all its eggs in one basket, relying heavily on agricultural exports to fuels its economy. Cash crops included bananas, pineapple, coffee, cotton, tobacco, beans, rice, and sugar cane. However, beginning in the 1980s, a shift in the market began to take place due to an economic transformation. Many structural adjustment programs were put in place which accelerated growth and caused an expansion of exports. Towards the end of the 1980s, sweatshops were highly prevalent, further resulting in an expansion of demand for a growing labor force.

As of recently, Intel Corporation has moved a $300 million custom microprocessor plant to Costa Rica and has further advanced the economic landscape of the country. Even more importantly, alongside the increase in manufacturing came the emergence of the mass tourism and eco-tourism industries. Lastly, countless real estate developments catered to affluent Americans and Europeans have ballooned prices of beachfront property and certain areas in San José.

NICARAGUANS WORKING IN COSTA RICA
An astounding 34 percent of Nicaraguan homes report having at least one family member living outside the country (Catholic Relief Services). The overabundant supply of cheap, unskilled workers to fill their labor shortage has stimulated the Costa Rican economy in various sectors, just as the same phenomenon is occurring with Mexican immigration into the United States.

Costa Rica has always had a relative lack of labor force, based on its population versus its development (Cortés). Despite this fact, the rapid economic expansion that Costa Rica has faced has been able to occur because of the presence of Nicaraguans and other migrants to fill the positions and jobs that are no longer wanted by Costa Ricans. As Costa Ricans have moved “up the ladder” to fill higher-paying, skilled jobs, Nicaraguan laborers have gladly filled the unskilled, lower-paying job openings. For the majority of Nicaraguans, these new employment opportunities abroad pay significantly better than jobs in their home country, though worse than most jobs in Costa Rica. For example, nurses in Nicaragua are paid $150 to $200 US per month. If they do the same work in Costa Rica, they can make $500 to $1000 US per month (Mendez). Costa Rican workers are also paid higher wages than an equally skilled Nicaraguan working next to him.

If you see a domestic worker, security guard, coffee picker or construction worker in Costa Rica, there is a strong likelihood he or she is Nicaraguan. These jobs are typical of ones that are no longer pursued by Ticos and thus are filled by migrating workers. Although the xenophobia towards the “threatening other” has resulted in estimates as high as two million Nicaraguans living in Costa Rica, academic scholars estimate that about 350,000 Nicaraguans are actually permanent residents (Cortès et al). Nearly all of the researchers interviewed and academic studies covering the subject agree that the number is somewhere in that range, with up to 450,000 from January to April during harvest season. It is important to understand the level of difficulty that is associated with obtaining an accurate count of immigrants, both legal and illegal. The number of Nicaraguans also fluctuates, mainly because many of the migrant workers come to Costa Rica for harvesting season, then return to Nicaragua.

Alberto Cortés, PhD Professor of Migration Dynamics at UCR, estimates today that between 80% and 90% of all agriculture in Costa Rica is done by Nicaraguans. This number may sound shocking, exaggerated, or even racist. However, it is a reality that Costa Rica is extremely reliant on Nicaraguans for successful harvesting of their crops.

The types of jobs that Nicaraguans are migrating for are the ones that Costa Rica has a relative lack of labor force to fill. Cortés often refers to these jobs as “the ‘3 Ds’: dirty, dangerous, and difficult.” He mentions that now a hierarchy is forming in Costa Rica where jobs are segmented based on country of origin. Clearly, at the top of this hierarchy are Costa Ricans, who boast a 96% national literacy rate and arguable the most advanced economy in Central America. They are able to obtain the jobs requiring more skill and a higher level of education. The bottom rungs are saturated with Nicaraguans who have lower qualifications, standards, and expectations in the labor market. As seen in Table 2, over 80% of Costa Ricans are at least semi-skilled. On the other hand, almost half of Nicaraguans living in Costa Rica are unskilled workers. Furthermore, this only counts legal Nicaraguans who have been residents for more than six months. Undoubtedly, this figure is higher when taking undocumented and illegal Nicaraguans into account. As more skilled jobs are created for Costa Ricans to fill, openings are created in the unskilled labor sectors such as agriculture, construction, and domestic services for Nicaraguans and other immigrants to obtain.


Costa Rica: Skills of Employed Workers by Nationality, 2000

Nicaraguan
Costa Rican
Degree of skills/formal education
100%
100%
Unskilled (0-5 years of schooling)
41.2
18.5
Semi-skilled (6-10 years)
45.8
52.2
Skilled (11+ years)
13.0
29.3
Source: International Organization for Migration
Table 2
Again, the situation of migrants taking low-end jobs has drawn much attention from researchers, in part because of its similarity to the United States and Mexico border dispute. In the United States (Costa Rica), the poor and lesser educated Mexicans (Nicaraguans) willingly fill jobs that have become undesirable to Americans (Costa Ricans). In fact, certain industries are becoming dominated by and reliant upon migrant laborers. One industry of particular interest to researchers in Costa Rica is the production and harvesting of coffee.

COSTA RICA’S COFFEE INDUSTRY
For decades Costa Rica has received an influx of migrant workers to fulfill seasonal labor needs. During harvest season, an abundance of manual labor is needed to pick beans and fruit before they are lost in nature’s natural process. However, in the past two decades there has been a demographic shift among agricultural workers: they are becoming increasingly foreign.

Since the beginning of 1990, when the economic crisis in Nicaragua began, a contingent of Nicaraguans began moving to Costa Rica. They were willing to take whatever type of productive job available, and were more willing to accept poorer labor conditions than native Costa Ricans. Costa Rica’s National Employment Office noted that, “in recent years, we are finding an ample participation of refugees in manual labor, and a decreasing disposition for Costa Ricans to work in the harvesting of crops” (Alvarenga). Of course, this trend signaled the beginning of a huge economic advantage for the coffee plantation owners. They could offer lower wages, force longer hours, and provide fewer benefits to illegal migrants than a fellow Costa Rican would demand.
The ultimate result for these owners has been more competitive prices, greater profit margins, and a growing exploitation of and reliance on Nicaraguan coffee pickers. Guillermo Canet, Executive Secretary of PROMECAFÉ, a regional cooperative program for the development of coffee in Central America, notes that, “Nicaraguan manual labor has prevented the loss of a large part of coffee crops in Costa Rica in recent years” (qtd. in Schmidt 28).

Essentially, the Costa Rican coffee industry has become dependent on Nicaraguans. As of February 1998, 75% of Costa Rica’s agricultural work was done by workers originating from Nicaragua (LimitsToGrowth.org.). “Without foreigners, the coffee doesn't get picked,” said Miguel Badilla, one of more than 750 producers who make up the local cooperative Coopedota in Santa María de Dota (qtd. in Schmidt 46). His region, located south of San José, has struggled to find enough hands during harvest season. Undeniably, without immigrants Costa Rica’s coffee industry would be devastated. Without immigrants, the number of agricultural workers would be reduced by 75% unless Costa Ricans were willing to substitute. As seen in Table 3, this shift in the supply curve to the left would not only reduce the number of agricultural laborers, but would cause farm owners to pay higher wages.
Table 3

FUTURE OUTLOOK
In the future, Costa Rica may not have the luxury of countless unskilled migrant workers to help meet demand during labor shortages. Fewer and fewer Nicaraguans are migrating to Costa Rica each year (Cortés). Instead, they are increasingly opting to move to El Salvador for employment opportunities as its economic climate improves and their labor needs increase. This will ultimately result in some Costa Rican sectors downsizing, particularly agriculture. The future projected lack of labor force, partly a result of Costa Rica’s new immigration laws, has caused estimates of a 15% to 25% reduction in agricultural exports alone in the next year (Bail). The combination of more restrictive immigration laws coupled with El Salvador’s competition for cheap Nicaraguan labor will potentially weaken Costa Rica’s economy down the road.

CONCLUSION
The overall effects of migration on the economies of both countries vary. For Nicaragua, migration is both positive and negative. This is because the remittances received from migrants generate income for families and account for 30% of the country’s gross domestic product. However, since Nicaragua is exporting its most skilled workers to generate these remittances, they are experiencing a decapitalization of their population from the brain drain that is taking place (Howe). Nicaragua is figuratively “treading water” with the remittance money as its final lifeline. Unfortunately, until Nicaragua can develop a plan to prevent brain drain and get heavier returns from human capital, this trend will only worsen. This is evidenced by the increasing impact on remittances every year.

Costa Rica’s economy is benefiting greatly from the migration of Nicaraguans. In fact, what many Costa Ricans fail to recognize is that migrants are essential to the success of their country. Without an abundance of migrant workers, Costa Rica’s economy would not be as strong as it is today. The migrants have filled in the jobs when there was a labor shortage, allowing for economic expansion to be possible.

As a whole, Nicaraguan migrants have contributed significantly to the health of Costa Rica’s economy. By taking care of their children, building Costa Rica’s offices and infrastructure, and harvesting their crops, migrant Nicaraguans are allowing Costa Ricans to pursue more skilled, higher paying jobs. To conclude, we have found that the rapid economic expansion that Costa Rica has faced has only been able to occur because of the presence of Nicaraguans and other migrants to fill the jobs requiring fewer skills that today are no longer pursued by Costa Ricans.


WORKS CITED

Agunias, Dovelyn. “Remittance Trends in Central America.” Migration Policy Institute. http://www.migrationinformation.org/Feature/display.cfm?ID=393 (accessed February 28, 2007).

Alvarenga, Patricia. Cuaderno de Ciencias Sociales: Trabajadores Inmigrantes En La Caficultura. San José: Sede Académica Costa Rica, 2000.

Bail, Raphaëlle. “Nicaragua exports its poor.” Le Monde diplomatique (January 2007). http://mondediplo.com/2007/01/12nicaragua (accessed March 3, 2007).

Catholic Relief Services. “Nicaraguan Migration to Costa Rica —A Call to Solidarity.” Our Work: Nicaragua. http://www.crs.org/our_work/where_we_work/overseas/latin_america_and_the_caribbean/nicaragua/migration.cfm (accessed March 3, 2007).

Cortés, Alberto. Interview by the authors. February 19 and 21, 2007.

Cortés, Alberto. “Nicaragua’s Indispensable Migrants and Costa Rica’s Unconscionable New Law.” Envio 297 (April 2006). http://www.envio.org.ni/articulo/3253 (accessed March 3, 2007).

Docquier, Frederic. “The Brain Drain and Inequality Across Nations. FNRS and IRES, Universite Catholique de Belgium. http://www.afd.fr/jahia/webdav/site/myjahiasite/users/administrateur/public/eudn2006/Docquier_ppt.pdf (accessed March 4, 2007).

Howe, Genevieve. “Nicaragua: Nearly Gone & Almost Forgotten.” Z Magazine. http://zena.secureforum.com/znet/ZMag/articles/may97howe.html (accessed March 5, 2007).

International Organization for Migration. “A Binational Study: the State of Migration Flows between Costa Rica and Nicaragua.” In Migration Course Reader, University of Washington, edited by The State of the Nation Project, 2001.

LimitsToGrowth.org. “Remittances Becoming More Entrenched.” http://www.limitstogrowth.org/WEB-text/remittances.html (accessed March 5, 2007).

Mahler, Sarah J. “Central America: Crossroads of the Americas.” Migration Policy Institute. http://www.migrationinformation.org/Feature/display.cfm?id=386 (accessed February 25, 2007).

Schmidt, Blake. “Coffee Industry Struggles in Today’s Economy.” Tico Times (Feb. 1, 2007). http://humanity.humanbeams.com/index.php/humanity/comments/lbr1007schmidt_coffee_industry_struggles_costa_rica (accessed March 6, 2007).

United States Geological Survey. “Historic Earthquakes.” Earthquakes Hazard Program. http://earthquake.usgs.gov/regional/world/events/1972_12_23.php (accessed February 25, 2007).

Wikipedia, The Free Encyclopedia. “Economy of Nicaragua.” http://en.wikipedia.org/wiki/Economy_of_Nicaragua (accessed March 4, 2007).