Los Niños Microcredit Study

2007-09 TBI Development Project

Overview

Reducing poverty and promoting sustainable, equitable economic development are arguably the greatest challenges of our time. Despite tremendous growth and prosperity in the last quarter century, almost half of the world's population lives on less than two dollars a day. This persisting problem is due in part to the fact that as the global economy expands, the disparity between the rich and poor worldwide concurrently broadens at an alarming rate. As little as one percent of the world's population owns up to forty percent of the worlds wealth. In stark contrast, the least wealthy half of the world possesses only a little more than one percent of the world's wealth.

Perhaps nowhere are the gaps and inequities of the expanding global economy more glaring than in the U.S.-Mexico relationship. While roughly 40% of its population lives in poverty, Mexico is nonetheless the world's twelfth largest economy and one of the largest trading partners of the United States, to the tune of an estimated $330 billion in cross-border trade. While Mexico's situation is illustrative of the many problems that developing countries face throughout the "global south," the economic might of the United States is representative of the "global north." Above all, the dynamic 2,000-mile border -which both links and separates these disparate economies- is the primary locus of these contrasts, and of the increasing integration and shared opportunities between the two countries. As such, the border region provides a useful laboratory to help us understand and address the challenges of globalization, poverty reduction, and economic development.

Accordingly, the Trans-Border Institute (TBI) of the University of San Diego has initiated a project -the TBI Development Project- to examine the challenges of economic development in the U.S.-Mexico border region, and the larger North American context. The first research project of this initiative will be the TBI Microcredit Study, an effort to evaluate the effects of a microcredit program in the San Diego-Tijuana border region. This study will be in collaboration with Los Niños , a non-governmental organization based in Tijuana, Mexico. In an ever-expanding number of places, microcredit lending or "microfinance" is being implemented as a tool for alleviating poverty and encouraging growth and development. In Tijuana, Baja California, Los Niños has created numerous programs aimed at creating opportunities for individuals and families through community development and education. TBI will work to assess, analyze, and document the microcredit operations of Los Niños in the border city of Tijuana. Collaboration with Los Niños will enable TBI to evaluate current strategies for implementing microfinance in Mexico and the border region, and, ideally, contribute practical suggestions for improving microlending practices.

Microcredit in the U.S.-Mexico Border Region

Microcredit, microfinance, and microlending as means by which to encourage community development and self-sufficiency have become increasingly popular in recent years. These programs provide capital in the form of small loans to people who otherwise were denied feasible access to capital, enabling the recipients to start a small business or purchase some improvement needed to make an existing operation more efficient and profitable. There are a variety of models and variations of these programs, but the majority of microcredit institutions rely on a basic model that uses some form of group lending and small short-term loans as a basis. Specific models are usually adapted according to the priorities of the institution and the geographical and political context in which they operate. Though primarily utilized in rural settings, microcredit operations have also been successful in urban settings with proper structural adaptations.

Los Niños, founded almost 30 years ago to help create the capacity for self-reliance in the border region through programs that provide education, strives to create financial opportunities, build communities, and increase food security. Its microcredit program works towards these goals by creating financial security and enterprise opportunities for families and individuals. The activities of this program have shown to successfully increase household income for its participants. Increasing disposable income in this manner makes it possible for families to provide adequate nutrition, basic healthcare, and education for themselves and their children.

Project Description

In collaboration with Los Niños, the Trans-Border Institute's Development Project has started an initiative to study the implementation and impacts of its microcredit programs in Baja California. The TBI Microcredit Study will have the primary objective of gaining information about and documenting the efforts of the Los Niños microcredit program, as well as the wider impact of Los Niños efforts in the U.S. - Mexico border region. Drawing on existing research in the area of economic development, in-depth interviews with Los Niños staff and participants, and a review of available program materials, the primary project outputs will include the following:

• Extensive literature review on theory and practice of microcredit programs
• Comprehensive bibliography on theory and practice of microcredit programs
• Documented interviews with Los Niños staff and participants
• PowerPoint presentation visually documenting Los Niños programs
• Database quantitatively documenting Los Niños programs and their results
• Paper documenting the history, programs, and impact of Los Niños
• Published TBI brief discussing Los Niños and microcredit operations in Mexico
• Final Report on Project: Documenting culmination of research

Plan of Action

The Trans-Border Institute and Los Niños established explicit terms of agreement for undertaking the study, in the form of a memorandum of understanding that clearly identifies the expectations for this study. The Trans-Border Institute will obtain authorization from the University of San Diego to conduct interviews with human subjects, and will work with Los Niños to develop the specific protocols and questionnaires to conduct semi-structured interviews with staff and program participants.