Mexico and Panama: Who is Coming and Why?
By Jim Karger

As the Baby Boom generation begins retiring, predictions abound that a stream of Americans will flood into Latin America. Indeed, the influx has begun. 

Last year’s study by the Migration Policy Institute (MPI), an independent, nonpartisan think tank dedicated to the analysis of the movement of people worldwide, looked at the movement of US citizens into both Mexico and Panama and found the following:

· US population grew in both countries between 1990 and 2000, with Mexico seeing an increase in US-born senior residents of 17% during that period, while immigration to Panama increased the US population by 136%. Yet, even with the dramatic increase in immigration to Panama from the US, the number of US citizens living in Panama is a tiny fraction of those living in Mexico. 

· Within Mexico, the Chapala area was the fastest growing expatriate community, increasing 581.4% in the decade, Los Cabos increasing 308.3%, with San Miguel de Allende third with an increase in US residents of 47.7%.

In addition to the raw data, the MPI study reveals some of the “why’s” behind US citizens expatriate, including factors that “pull” US citizens to their host countries, the most common being a lower cost of living, better climate, different culture, the ease of acquiring a visa, lower taxes, political stability, and the ability to own property. There are also reasons that “push” Americans to move abroad, including prohibitive health care costs in the US and post-9/11 policies and laws that infringe on civil liberties. 

As between Mexico and Panama, Panama appears to be “the spot” for the moment with the estimated influx of Americans doubling between 2003 and 2005, much as happened in Costa Rica in the 1980’s. Reasons include Panama’s use of the US dollar as its currency, discounts for seniors on everything from medical care, to restaurants, airlines, and hotels, and a moratorium on national real estate taxes for 20 years after purchase of a newly-constructed property, not to mention Panama’s well-deserved reputation as an income-tax and private banking haven. 

Mexico lays claim to one of the most important factors used by US citizens considering relocation—proximity to the United States. San Miguel de Allende, in particular, was noted to be drivable to the US. Ironically, those interviewed in San Miguel found favorable both the “local culture,” at the same time valuing the fact they can navigate here without speaking Spanish. On the other side of the same coin, some respondents in the survey note they found San Miguel a less desirable place to live if one wants to learn Spanish if only because one is not forced to become fluent as they are in many other Mexican cities. 

Not only do expatriates have reasons for leaving but also host countries have reasons for wanting us. Upsides for local populations in host countries include the creation of job opportunities and the philanthropy of expatriates, the latter notably higher in Mexico than Panama, where social relationships rate higher. In San Miguel, for example, participation in charitable organizations was noted to “make [expatriates] feel part of the San Miguel de Allende community.” 

But as one can imagine all does not come up roses when US emigrants show up on the scene. One of the most significant downsides of our presence is the resulting increase in real estate prices, often making it difficult for local residents to buy property. Not surprisingly, the study specifically used San Miguel de Allende as an example of this phenomenon finding, “local people [are] moving to the periphery of the town, changing the demographic characteristics of the historic city center.”

The MPI study is worth the read and can be accessed online at http://www.migrationpolicy.org/pubs/
americas_emigrants.php. 

Postscript: While the current housing recession in the US may slow migration both within and without the US, the over-65 population will more than double between 2000 and 2030 which portends more, not less immigration to Latin America. The only question is how many and where will they land? Whether it is Mexico or Panama, or one of the countries now back in the pack, will depend on certain immutable factors such as geography, particularly proximity to the US and the families of expatriates who remain there. It will likewise depend on political factors such as host government spending on safety and recreation, the relationship between governments of home and host countries, language, with Americans being particularly fond of places where only English is necessary to function, weather, and, of course, the relative cost of living, which tops the list of many US citizens looking at geographic alternatives for retirement. 

Jim Karger is a resident of San Miguel and writes the “Business, Real Estate, and Investing” column twice monthly.