Latino community provides huge boost to economy

Listen now:

ABERMAN: One issue that I believe we don’t spend enough time talking about in the local business community is the importance of immigrants and multinational businesses, particularly Latin American businesses, and people of Latin American descent. To talk about that issue is Leopoldo Martinez. He’s principle of LMN Consulting and he specializes in the inner American markets, places like Mexico, Colombia, Chile, business development, government relations. I can’t think of a better person to talk about this issue, as we are having in this town a really big conversation about immigration and immigrants. So, Leopoldo, thanks for joining us. Let’s come up with a common definition: there’s so many definitions used when you say ‘Latino’ or ‘Latin American’. What is that defined as?

MARTINEZ: Well, usually, we speak about Latinos and Hispanics when we talk about immigrants coming from Latin America or other Hispanic countries, like Spain, so to speak, but mostly Latin American people coming from Latin America that have already immigrated into the U.S.. We define ourselves as the Latino community or the Hispanic community in the U.S.. It’s a large community, it represents now one of the largest minorities in our country. The debate normally focuses on on the undocumented immigration discussion, but there is a big subject that is not addressed, which is the power, the economic power as consumers: not only the workforce that is documented and undocumented immigrants from Latino origins, are represented in the country, but also the entrepreneurship.

Twenty-eight percent of new businesses in the U.S. startups are owned by Hispanics, by Latinos. So that’s almost a third of the backbone of America’s economy, business owners. Then you look across the spectrum: the President of MIT, Rafael Reif, is a Latino, is from Venezuela, my own country. You have Latinos in NASA, you have Latinos in Silicon Valley, who are–the founder of CreditKarma.com is a Latino. So you have all these forces that are making, shaping also, the U.S.

On the other hand, you have Latin America, our neighbor to the south, our partner to the south, where an incredible number of incredible things are happening, interesting things, and the discussion normally focuses on demonizing NAFTA and that we need to get away from NAFTA and so forth, and I think also the facts are not straight there. Because, when we think of NAFTA and the trade relation with Mexico, which is one of our biggest trading partners, people try to think about the deficit, the trade deficit there. But they don’t realize that a significant part of that trade deficit is because of shared economies with Mexico. And what happens is that you have American multinational companies working in Mexico for advantages that they find there, but then re-exporting those goods into the U.S. at a larger profit. Or, exporting those goods from Mexico to the Caribbean or to the rest of the Americas, with a higher profit than they would have if they did it from the U.S. as the platform, because they take advantage of all the trade agreements that do not apply beyond the NAFTA relation. So what happens is that you have multinational American corporations having an incredible opportunity to make profits in Mexico that come back and do not reflect in the trade deficit, because it’s the capital account. That’s money, that’s American money in Mexico and that’s what I define as shared economies. There is a shared economy with Mexico, but there are also trade agreements with Colombia. There are trade agreements with Panama, there are trade agreements with the Caribbean and Central American countries, and all of that compounded represents a significant opportunity for our economy’s exports. I was just thinking, you know, when I thought about this, the opportunities that this represents for the state of Virginia, for instance. So for the state of Texas, you know, when you look state by state, Mexico is one of the biggest trading partners with our own state of Virginia. It’s among the top ten countries to which Virginia exports goods and from which Virginia imports goods.

Subscribe to the What’s Working in Washington podcast on iTunes.

So that’s an opportunity. And you have the phenomenon of the multi-Latina, which are these multinational corporations that have grown in Latin America and are doing business in the United States. They’re based in Texas, they’re based in Florida, and they become part of a larger segment of our Hispanic-owned, or Latino-owned businesses in this country, because they are bigger than small businesses, they are multinational corporations, sometimes are public corporations. Sometimes they are companies that have scaled up to the size that they are at present in five, ten, or seven markets, and you have very long traditional businesses. Like, you know Goya, this huge American corporation of Latino ownership.

ABERMAN: Last thing before I let you go: There, I believe, are a large number of Latin American business owners that have been very successful here. Are you aggregating or marshalling those folks together to educate our politicians about the reality?

MARTINEZ: I think we need to, and I think we need to educate our politicians of the potential of the Latin America-U.S. connection partnership. Because two things are happening: one is that the U.S. has conceded leadership in the region, and somebody’s taking their place, and the place is being taken by China and Russia. Right there, next door to us. Second problem is that when you don’t develop these partnerships, issues continue to be a problem in countries that are close to our border. Central America, the Northern Triangle in Mexico with the drug trafficking, when you don’t address this with a holistic perspective of the problem, you’re going to have migration issues. Mostly, the migration problem from Central America to the U.S. is related to the violence of the drug cartels in the Northern Triangle in Central America. But at the same time, the shared economy with Mexico has created a situation where we have less undocumented immigrants coming to the U.S., because people are going back to Mexico because because there are jobs in Mexico. So when you do address this as a partnership, you can resolve issues that domestically are important by creating economic opportunities for both economies.

ABERMAN: Leopoldo, thanks for taking the time to unpack these big issues. I hope folks are paying attention. There are a lot of realities here that all of us should be focusing on if we’re going to have a conversation about what it means to have an immigrant community here in the United States. Thanks so much.

MARTINEZ: Absolutely. Thanks so much.