How to Spend Money From America Wisely : Economics: UCSD student hopes to create program so that money sent home by migrant workers won’t be wasted.

Richard Boly has seen too many half-built mansions in Third World countries, neglected homes without electricity or furnishings that loom large over streets of otherwise tiny adobe shacks.

A former Peace Corps volunteer in Ecuador, he has seen the locals make impulsive, ill-advised land purchases. And he has watched wide-eyed villagers who never learned to drive suddenly buy new cars and trucks--vehicles that remain wrapped in their shipping plastic, collecting dust in driveways.

They all are examples of hard-earned money--sent from the United States by migrant workers--squandered back at home by uneducated people who have little idea how to invest their savings for future financial security.

But Boly has a plan to show them how.

The UC San Diego graduate student wants to create a Third World management consulting program to instruct often uneducated workers how to save and spend their money so they can one day return home to a rewarding, self-supporting business that might also benefit the local economy.

In all, studies estimate, a staggering $7 billion is wired home annually to Latin America--as much as $5 billion of that to Mexico alone--by migrant laborers in the United States, workers toiling as restaurant dishwashers, hotel busboys and day-labor field hands.

Under his plan, he sees dishwashers returning home to Latin America to open their own restaurants, North County field laborers starting their own nurseries. Better that, he said, than to throw away the dividends of their sweat and sacrifice.

Along with two other students, Boly has written a proposal as part of a class project, titled “Investing in You and Your Community: Harnessing Migrant Remittances for Social and Economic Development in Central America.”

Despite the cumbersome title, the idea is simple enough: to help small cooperative businesses start up in two or three selected villages in rural Ecuador.

If successful, he says, the plan could work not just in Latin America but in more distant communities throughout the Middle East and Africa, southern Pacific islands and even former Soviet Union, anywhere where traveling workers wire home cash--commonly known as remittances--earned on foreign soil.

And while similar ideas have been proposed in the past, the 33-year-old native of Portland Ore., says his program is different from the highbrow academic study or detached bureaucratic report in one very important way.

“My bags are packed, I’m ready to go and get the program started, to see if it works,” said Boly, whose study focus is Pacific International affairs, with an emphasis on program development.

His proposal is the result of an idealistic social worker who returned to the United States to earn a graduate education that he hopes could make a difference in a foreign land whose culture and people he has come to know.

And, although fledgling, Boly’s $60,000 proposal for a yearlong starter program in Ecuador--which, so far, has no financial backing--has received praise not only within the ranks of the university community but among philanthropist groups as well.

“Nothing like this has ever been tried on any significant scale anywhere in Latin America, and I wouldn’t rule out its viability in Mexico either,” said Wayne Cornelius, director of the Center for United States-Mexican Studies at UC San Diego, a teacher of Boly’s who has researched the remittance issue in Mexico.

Cornelius said he was impressed not only with Boly’s project but his motivations for undertaking it.

“This is a case of a Peace Corps worker who saw firsthand in the country where he worked how this remittance money was not being put to good use, and who began asking himself why,” he said.

“He was confronted with a reality that both disturbed and intrigued him. So he went to graduate school to acquire the analytical tools to deal with it. In that way, he is more focused that others who might look at these issues.”

Susan Silk, executive director of the Columbia Foundation, a private philanthropic group based in San Francisco, agreed that Boly’s plan could have far-reaching applications and is interested in exploring it as a possible program to fund.

“The question has always intrigued me, ‘Where does all that remittance money go?’ Apparently it is not in any progressive social or health programs, small business development or agrarian reform.

“And so the idea of a small business incubator to encourage the investment of some of this huge flow of money just sounds like an interesting experiment.”

And yet despite initial interest from numerous funding sources like the Columbia Foundation, Boly has felt like a tennis ball, bounced back and forth between potential donors.

“A lot of groups like the idea but would rather see it come out of Latin America,” Boly said. “They don’t want to fund a gringo with the same idea. My argument is that if the project works, who cares where it originated?”

In Boly’s case, the impulse to lend an economic hand to Latin America came during a mid-1980s Peace Corps stint during which he helped build a regional water system to serve seven villages in central Ecuador.

It was there he got his first insight into the community spirit he says is waiting to be harnessed with the proper investments.

“I have these amazing pictures from the water system project showing hundreds of Mestizo Indians, people with a history of working together, laboring side by side, digging a ditch,” he said. “The line of these people is a half-mile long. There are men and women with babies strapped to their backs.”

Boly’s Peace Corps years in Latin America also introduced him to what has been called a transnational migrant circuit--a close-knit network of journeying workers who pass word of job opportunities in the United States to other villagers back home.

The word-of-mouth network, for example, draws workers from Paraguay to commonly migrate toward New York City and the Bronx, Salvadorans to Washington and New York, and Ecuadoreans to Chicago and New York’s area of Queens.

Living in New York after his time in the Peace Corps, Boly also saw firsthand the sacrifices made in the small transplanted Ecuadorean community where so people could wire money back home each month.

The resulting underground migrant economy has another much-desired effect: It annually pumps stupendous sums back to tiny villages throughout Mexico and Latin America where their wives and parents await.

“People have this image of poor migrant workers barely scraping by,” he said. “These people are living in this country by their wits--all the while sending up to $500 a month back home.”

In the Dominican Republic, for example, out-of-country worker remittances accounted for more than 13% of the country’s gross domestic product for the year 1988, representing more than the profits from sugar, coffee and tobacco exports.

And, until recently in El Salvador, studies show, more money was imported in remittances each year than the total of economic aid provided by the United States government for the war-torn country.

Last year, Boly returned to Ecuador to study more than 100 families in the tiny community of Santa Rosa, following the money sent there by family members in America and investigating how the the average sum of $350 per month was used.

“I got a chance to see firsthand how the remittance system worked,’ he said. “Where it works and where it goes bad.”

Some families used the money to build huge houses and buy automobiles and land--personal investments they believed brought the best returns, he said.

He also met several workers who returned home to begin lucrative businesses--such as the man who turned a truck purchase into a lucrative gas delivery business.

And there were the three restaurant workers from the same family who came home to start successful restaurants in a nearby city--each now employing a dozen local workers.

“One of the men told me he sees so many of his countrymen who blow all their money earned out of the country to build big new houses--then they had to go back north for more money,” Boly said. “He told me he would build his house only after his local business took off.”

Boly’s program would harness that entrepreneurial spirit by encouraging workers to invest in both singular and cooperative ventures, networking local contacts on both financial and technical levels.

“I call it one-stop shopping for returning migrants,” he said. “Instead of running around looking for all the pieces, we can help them put it together. We will also be able to steer people not ready to invest away from any sure-loss ventures.”

The research would involve learning firsthand about business opportunities in each economy. This spring, Boly is headed to the Jalisco province of Mexico to research entrepreneurial success stories there.

But Boly says the jury is still out on the effect such programs would have on the numbers of immigrants pouring into the United States.

Some studies, he says, predict that uplifted local economies throughout Latin America would only allow more residents to pick up and leave. But there will always be an impoverished population who could benefit from new businesses established there.

In Ecuador, Boly has an idea in which makers of Panama hats can dramatically increase their profits by buying machines to construct their product, rather than hand those profits off to middlemen.

Once off the ground, his program includes such fine-tuning as providing videotaping of business meetings at home to send to migrant workers to keep them abreast of their investments.

And he sees a growing distribution network of products sold in the United States--carried by migrant workers traveling to and fro.

If successful, he says, his program could eventually have an appeal worldwide, including the former Soviet republics as unemployed workers there flood Western Europe in search of opportunity.

“Someday soon, the former Soviet Union will become the new Mexico of the world, sending huge numbers of people abroad in an effort to boost their national economy, one family, one village, at a time.”

In the meantime, Boly wants to lend a helping hand to the Latin Americans who have endured years of hard labor in sweaty restaurant kitchens and lonely makeshift migrant encampments north of the border.

“If you’re going to live in a box for three years in some nameless migrant camp,” he said, “the last thing you want to do is squander the money you earn for your troubles.”