PARADISE LOST?

MIAMI, IMMIGRATION AND ECONOMIC

DEVELOPMENT

Terry F. Buss
and
Marcela Tribble
National Academy of Public Administration
Florida International University

Abstract

For some, Miami has become a prototypical global city, driven by

immigrant entrepreneurs and serving as an economic development model for other
places. Immigrants, beginning with exiled Cubans in the 1960s, followed by
successive waves of talented people from Latin America, turned this sleepy tourist
destination into the Gatewa y to the Americas, quite literally. Ironically, those
factors—location, immigration, culture, and finance—that made Miami grow and
develop also have a severe downside. Miami is the poorest city in America, with
one-third of its population living in poverty, and has been so for three decades.
Miami is a global player in the illicit drug trade, a capital for money laundering
and criminal activity of all kinds. Miami is a place steeped in racial, ethnic and
cultural tensions. Miami teaches us that culture, ethnicity and race are important
factors in the economic development of cities for the new millennium, factors not
yet fully understood or appreciated.

INTRODUCTION

Miami is a place of conflicting impressions about its economic

development—Paradise gained, or Paradise lost? Some observers refer to Miami as
the Gateway to the Americas, the new capitol of Latin America, a Global City, or
the new Havana, held up by many as a model of how immigrant entrepreneurs
turned a sleepy, vacation-destination city into an economic power. The
implication: other under- or less-developed cities might do the same. Others are
not so charitable, viewing Miami as a banana republic, the Cuban-American
Republic, or a Latin colony. To them, Miami represents the importation of some of
the worse features of Latin American economic development and politics, not to
mention poverty. No one who knows Miami well seems neutral in their
perceptions. We believe that the truth lies somewhere between these two extremes.
Because Miami attracts a lot of attention from those interested in promoting the
global economy, it is important to unravel what’s going on so that others might
learn from the experience.

Economic development in Miami, however perceived, arises from the

confluence of five factors, all in one way or another associated with cultural
change, global economics, and geographical location:

§ Development of Cuban exile culture over the past forty years and
its relationship to:
§ Influx of newly-arrived immigrants from economically distressed
or war-torn Latin American and Caribbean countries;
§ Circumstances of non-Hispanic Americans, especially African
Americans.
§ Influence of laundered drug money from Latin America; and
§ Attraction of flight capital from, economic growth in, and
burgeoning trade with Latin America and the Caribbean.

This article discusses the contribution of each factor to Miami’s economic

development.

BACKGROUND
Before turning to economic development issues, we provide an overview
of Miami’s geography, immigrant population, and local economy.

Geography

Miami is an elongated urban area—Miami-Dade County—sprinkled with

municipalities of differing size, including: the cities of Miami, North Miami,
Hialeah, Coral Gables, Kendall and Homestead, as well as a necklace of cities
along the beach, among them Miami Beach, Bal Harbor, Surfside, Sunny Isles,
Golden Beach, and Aventura. Miami is bounded on the west by Everglades
National Park and associated wetlands. Not surprisingly, environmentally
protected areas on the west and ocean on the east reduce the amount of land for
development that in turn drives up the value of scare real estate along the Atlantic
coast.
Immigrant Populations

Miami is a city of immigrants, even more so than cities in the U.S. West
and Southwest, and even New York (Suro & Singer, 2002). Miami’s population
numbered 2,253,362, according to the 2000 Census (see Table 1). Some 57.3%, or
1,275,029 people, reported their ethnicity as Hispanic or Latino (we use the term,
Hispanic, hereafter). About one-fifth—457,214 people —are non-Hispanic Blacks
or African Americans. Miami’s population is dominated by Cubans, 667,150,
about 30% of the population overall, and 52.3% of the Hispanic population. Miami
City, with a population of 362,470, is 65.8% Hispanic; while Hialeah boasts
226,419 people, 90.3% Hispanic.

Table 1
Racial Makeup in Miami (in 1,000s)

Area Total White Black Native Asian Other Two Hispanic/

Pop. Am Race or Latino
more
Races
Miami- 2,253 1,571 457 4 31 103 85 1,291
Dade
Miami 363 242 81 1 2 20 17 238
City
Hialeah 226 199 5 0 1 12 8 205
City

Miami’s Hispanic population is diverse. Some 16.7% are South

Americans, 14.2% Central Americans, 5.4% Puerto Ricans, and 4.0% Mexicans. A
few countries contribute most to the Hispanic population: Colombians account for
8.2%, 104,058 people, and Nicaraguans for 8.0%, 101,743 people. Other countries
are represented by substantial numbers as well: Hondurans, 34,679, Venezuelans,
32,456, Argentineans, 20,348, Ecuadorians, 19,938, Peruvians, 18,579,
Guatemalans, 14,470, Salvadorans, 14,947, and Chileans, 11,841.

One-half—1,124,100 people —of Miamians are foreign born. Many are

recent arrivals: 39.1%, 439,052 people, immigrating between 1990 and 2000,
26.9%, 302,795, between 1980 and 1989, and the remaining 34.0%, 382,253,
before 1980.

There are no reliable estimates of Miami’s illegal alien population, but

illegals greatly inflate numbers of immigrants there. The Immigration and
Naturalization Service estimates that there are 350,000 in Florida. One can assume
that the lion’s share resides in South Florida. Around 3,000 illegal aliens are
expelled from Miami annually and about 1,300 leave voluntarily.

Miami’s Hispanic population grew 123% from 1980 to 2000. Much of this
growth occurred outside the City of Miami. Signaling a substantial population shift
away from the central city. The metropolitan area grew 36% and the suburbs 45%
from 1990 to 2000. But the central city grew only 7%.

Local Economy

Even though Miami is known for tourism, the economy is somewhat

diversified. According to the latest economic census, there are around 75,600 paid
employees work in the accommodation and food service industry. There are 635
hotels, 117 motels, and 390 other accommodations for tourists. There are 3,422
restaurants and drinking places. In addition to the usual concentrations of
employment in retail wholesale, health care and services, Miami has a vibrant
manufacturing sector. There are 638 textile/apparel-related manufacturers
employing 18, 000 workers. Somewhat surprisingly, there are 127 computer and
electronic manufacturers, employing 6,250 workers. Because of the large number
of people, owning but not living permanently in Miami, there are numerous—
3,378 establishments, employing 19,800 workers—in the rental/lease industry.

Two Fortune 500 companies are headquartered in Miami: Lennar, ranked

298 with $6 billion in sales, and Ryder Systems, ranked 341 at $5 billion in sales.
A great many Fortune 1,000 companies have branch offices in Miami to serve
Latin American and Caribbean interests.

Miami competes in the global economy. Miami ranked ninth in export

sales among the Nation’s 253 metropolitan areas according to the International
Trade Administration. Some 31.9% of exports go to the Caribbean and Central
America and 46.2% to South America. Brazil alone receives 15% of Miami’s
exports.

Miami International Airport processes 16.2 million passengers from

international destinations annually, just behind New York Kennedy and Los
Angeles International airports (see Table 2). Miami’s airport moves 1.43 million
tons of cargo annually, making it the first ranked airport nationally.
 Table 2.
Passenger & Freight Rankings for Miami

Rank Among Airports Ranking Factor

3 International Passengers in U.S.
13 Total Passengers in U.S.
17 Total International Passengers among all World
Airports
19 Total Passengers among all World Airports
4 Total Freight in U.S.
1 Total International Freight in U.S.
9 Total Freight among all World Airports
7 Total International Freight among all World Airports
9 Total Cargo among all World Airports
Source: Airports Council International.

Miami is also a major seaport in the global economy according to data

from the Port of Miami. Miami is ranked first among ports in the tourist industry.
Eighteen cruise ships are home-based in Miami. One of every three—3.4 million—
cruise ship passengers sails from Miami. Most tourist destinations are to the
Caribbean or Latin America. Miami is also a world-class cargo port. Forty
shipping lines are home-based there. Two-thirds of the port’s total volume—8.2
million tons—represented imports to or exports from the Caribbean or Latin
America, even so, Hong Kong, Italy and Spain, represented Miami’s fifth, sixth
and seventh largest trading partners by volume, respectively.

The global economy is also reflected in the presence of foreign owned

banks (see Table 3). Only New York, Los Angeles and Chicago have a greater
presence. Foreign banks hold nearly $22 billion in domestic assets. The two
countries with the largest banking presence in Miami are the United Kingdom and
Spain. This is likely because of the large number of British tourists with interests
in the local economy. Spain is prominent because of its ties with the Latin
American economy. Most Latin American countries have a sizable banking
presence in Miami because of the volume of trade they facilitate, and possibly to
manage the accounts of the growing number of immigrants from that region.
 Table 3.
Foreign Banks in Miami

Country # Banks Domestic Assets

(millions $)
France 2 401
Germany 4 1,511
Italy 2 780
Luxemburg 1 426
Netherlands 2 646
Portugal 1 97
Spain 8 6,380
Switzerland 7 437
United Kingdom 5 6,707
Canada 4 1,580
Argentina 1 92
Brazil 2 341
Israel 4 563
Bahrain 1 462
Venezuela 3 255
Peru 1 24
Ecuador 2 248
Costa Rica 1 194
Colombia 3 300
Chile 2 381
Total 59 21,825

Source: Federal Reserve Bank Board, “Call Reports.”

MIAMI’S CUBAN CULTURE

Cuban immigration, so important to understanding economic development,

has two components: waves of exodus from Cuba and a distinctive Cuban exile
culture.

Cuban Immigration

Cuban presence in America occurred in three waves. The first mass

emigration resulted from the aftermath of Fidel Castro’s successful Communist
Revolution against the right wing dictatorial government of Batista in 1959.
Cubans not in favor with the new regime fled the country to Miami en mass as
political exiles. From mid-1959 through October 1960, 37,000 refugees came to
Miami. After the unsuccessful American-backed Bay of Pigs invasion in 1961
through 1962, 200,000 more refugees arrived in Miami.

A few Cuban exiles secreted away their wealth, some already held
investments in the United States, but most brought only skills, experience and
connections to their new home. Exiles were primarily families of wealthier
entrepreneurs, business managers, and educated families (Portes & Bach, 1985).

Unlike other Hispanic migrants who located across the United States,
Cubans journeyed nearly exclusively to Miami. Why Miami? Miami had only a
modest Hispanic presence before the exodus, so it was not especially a magnet for
Cubans. But many Cubans had visited Miami before the revolution and liked its
climate and ambiance, while others had business ties or owned homes there. Most
wanted to be close to their homeland: Miami is only 90 miles from Cuba. No other
city would do as a destination.

This initial wave of Cuban exiles established a beachhead from which they
were able to eventually capture Miami’s economic, cultural and political life.

The second emigration occurred in 1980. Castro—principally to annoy the

Carter Administration and to solve some social problems at home—emptied his
prisons, asylums and hospitals of 125,000 people in a massive, private boat regatta
headed for Miami—the Mariel boatlift. Not surprisingly, these exiles were very
different from their counterparts of 20 years earlier, very much dominated by low
or unskilled laborers, many with problems. (We discuss the impact of this below.)
Boat people came to Miami because they had no where else to go and no way to
get there even had they wanted to.

The third emigration is underway in the 1990’s. Cuban immigration is now

decided by lottery. These immigrants come primarily for economic reasons: they
believe they might do better in Miami. These exiles represent low and unskilled
laborers, Castro having already wrung most of the entrepreneurial talent from the
Island.

More recent Cuban immigrants seem very different from their

predecessors. They do not appear to have prospered as have those coming before.

Cuban Exile Culture

As noted, waves of Cubans arriving since 1959, remained mostly in

Miami, at first living in ethnic neighborhoods, then gradually relocating to more
diverse communities. As might be expected, these neighborhoods tend to promote
Cuban cultural traditions, probably in ways similar to Chinatowns in San Francisco
or New York. Numerous public and private schools acculturate young people in
Cuban ways and traditions. Newspapers and radio and television stations, all in
Spanish, cater to the Cuban community, but recently, to other Hispanics as well.
The major newspaper, The Miami Herald, also is published in an all-Spanish
edition, el Nuevo Herald , with $95,000 subscribers. Business associations,
community groups, and social clubs concentrate on Cuban exile interests. A
religious sect, Santeria, prevalent in Cuba and the Caribbean, has tens of thousands
of members in Miami. The language of daily discourse is Spanish in many places,
especially Hialeah.

Miami’s Cuban exile culture centers around two perceptions, detractors

would say myths: an idealized view of life in the pre-Castro era—the “Cuba of
Yesteryear,” or La Cuba de Ayer—that no longer exists and of the successful
struggle of exiles to prosper in Miami (Franco, 2001). These perceptions are
continually inculcated in political, social and, for our purposes, the economic life
of the city.

Many Cuban exiles view pre-Castro Cuba as a land of prosperity, a kind of

paradise, where capitalism flourished and families were well-functioning and
happy, and life was good and tranquil. In coming to America, exiles found a poorly
functioning economy, a welfare state, a land devoid of values, especially in the
family, and a place of crime and deviance. Many Cuban exiles reject American life
and culture in favor of the more idealized La Cuba de Ayer.

The Cuban exile “success story” goes something like this. Castro’s regime
drove out Cuba’s most productive citizens—business managers, educators,
political elites, skilled labor, and entrepreneurs—once dominant under the Batista
dictatorship. Cuban exiles fled with the clothes on their backs. Upon arrival, they
faced a hostile American culture, but by drawing on experience, a strong work
ethic, their entrepreneurial experience, and cultural solidarity, they transformed
Miami’s backwater economy into a global capitol. Successive waves of Cubans
fleeing Castro’s government from 1960 to 1961, to cite one example, were offered
character loans—no collateral required—by wealthy Cuban immigrant bankers,
willing to invest in recently-arrived refugees. The success story has been touted
periodically in nationally known publications. George Gilder in The
Entrepreneurial Spirit, a work that ignited an interest in entrepreneurship under the
Reagan Administration in the 1980s, discusses the Cuban contribution to
capitalism.

The U.S. government aid program for exiles illustrates the strength of
these cultural bonds. In 1959, the Kennedy Administration established the Cuban
Refugee Program (CRP) to manage about 300,000 exiles descending on Miami.
Miami’s Cuban Refugee Emergency Center could not find enough homes, jobs and
services for Cubans locally, so it, by law dispersed them nationwide. By 1967,
CRP had relocated 53,000 outside Florida. By 1973, one-fourth of Cubans in
Miami were actually returnees, indicating that exiles had made their way back
when benefits ran out (Wilson & Portes, 1980).

Not surprisingly, Cubans in exile, longing for a bygone era yet feeling
successful, do not intend, on the whole, to want to return to Cuba under a
Communist regime, or a democratic one for that matter. Cuban exiles seem to
realize that they cannot rebuild in a future Cuba what they have in a present
Miami. Additionally, some having not fully assimilated into mainstream American
culture, are wont to migrate out of Miami where their way of life may not be
accepted and or even valued.

In many ways, Cuban exile culture became exclusive: them and us. This
helped immensely when they banded together to pursue common economic
development goals. But, as will be seen below, the price was cultural disharmony
and a dual economy of rich and poor.

IMMIGRATION & ECONOMIC DEVELOPMENT

Immigration and economic development theories tell us what we might

expect to find in an economy dominated by ethnic forces. Indeed, two decades ago,
Miami’s economy served as the inspiration for a theory of immigrant
entrepreneurship—the ethnic enclave (Portes & Bach, 1985) and more recently the
revis ionist ethnic economy. The theory holds that some immigrant groups tend to
concentrate in geographically-bounded areas within cities where
entrepreneurship—self-employment really—among them begins to prosper. For
many, self-employment is the only means to thrive because of discrimination by
majority populations and disadvantages associated with poor language skills, little
education, or low skill levels. Start-up entrepreneurs rely on families and friends to
get started in business (as is the case in most entrepreneurial endeavors). They hire
fellow immigrants, form vertical and horizontal and forward and backward
linkages to other immigrant enterprise, keep competition out and serve local
markets exploiting cultural bonds and language. In other words, they turn
discrimination and disadvantages into economic advantages. Eventually, ethnic
groups may gain sufficient economic and political power, often through the shear
force of numbers, to break out of ethnic enclaves and control cities.

On the downside, ethnic business concentrations exploit the immigrant

workforce. Workers who do not speak English and have lower skill levels, many
perhaps illegal aliens, must work for lower wages and few benefits. This in turn
perpetuates poverty and may even spread it. To complicate matters, immigrants—
employers and workers alike—tied to their homeland through relatives, further
retard economic activity by sending money home to support others, while
lessening their own resources. Poor economic circumstances in turn force
employers and workers into the underground economy. Poverty breeds crime.
Because economics is culturally-based, rather than economic, racial and ethnic
tensions are high as some feel threatened by cultural change and others perceive
themselves to be worse off.

In the case of Miami, we must add two additional factors: the impact of
illegal drug money and Latin American foreign direct investment, both of which
swell the region with excess capital, but not necessarily in productive ways.

All taken together, we expect to find an economy loaded with apparent

contradictions and conflicts.

MIAMI’S ETHNIC ECONOMY

A Dual Economy

Miami may be a global city, but its overall economy is poor, and has been
for decades. It is not an economic miracle. Or if it is, such a miracle was necessary
just to keep it viable. Miami is an extreme case of a dual economy, separating the
rich and poor—Paradise gained and lost. In 2001, according to the U.S. Census
Bureau, Miami now ranks first—32%—as the most impoverished city in America
among places of 250,000 or more people. In the 1990 census, Miami ranked fourth
in poverty; in the 1980 census, third. Because of large concentrations of poverty,
Miami-Dade County now ranks sixteenth in the nation among urban counties at
20% below poverty. Miami’s per capita income in 2001 at $25,320 was
substantially below the U.S. average at $29,469.

Large numbers of poor immigrants certainly explain much of Miami’s

overall poverty rate. But other factors are at work in the economy. Miami is home
to large numbers of elderly, retired people whose incomes have not kept up
(although this trend is rapidly abating as Miami becomes too expensive for
pensioners). The tourist industry, a high-growth sector over the 1990s, is a low
paying employer with many part-time, unskilled workers. The annual wage for
tourist industry workers in 1997 was $11,559. As discussed above, wealthy
Hispanics and non-Hispanics alike have left Miami for Broward County to the
north, apparently to escape problems associated with immigrant culture. Finally,
Miami is heavily populated with tourists and foreign visitors who are not residents,
and therefore, do not contribute to per capita income figures. Miami leads the
nation with the most “second homes.”
 The dual economy is likely to worsen. September 11, 2001’s terrorist
attacks on America, the downturn in the business cycle and economic distress in
Latin America devastated Miami’s economy. Airline passengers and hotel
occupancy has fallen by 22%. Trade has declined 3.6%, displacing 9,500 jobs in
the tourist industry. The unemployment rate is high in 2002 at over 7%, although
Miami’s rate has always been one or two percentage points higher than the Nation.

Economic hard times are not visible in much of Miami. Construction,

especially high-rise condos, hotels and housing developments, is everywhere. But
much of this was financed long before the economic downturn. The real estate
bubble may burst in Miami’s future.

Ethnic Economy

Miami is by any measure an ethnic economy. Miami-Dade County ranks

second among all U.S. counties in number of Hispanic -owned businesses; Los
Angeles ranks first. Miami City ranks fourth in the country just behind New York,
Los Angeles and San Antonio. Cubans own 72,369 businesses or 60% of Hispanic -
owned businesses in Miami, only slightly more than their share of the population
at 50%.

Sole proprietorships, likely with unpaid family members, dominate

Miami’s ethnic economy. According to the Economic Census of Minority-Owned
Businesses for 1997, about one-fourth of businesses in Miami-Dade and Miami
City have employees, about 20% have employees in Hialeah. When looking at
Hispanic businesses only in these areas, roughly the same percentages apply:
Miami-Dade, 22%, Miami City, 21%, and Hialeah, 20%. Micro-businesses do,
however, dominate the Black community to a much greater extent: Miami-Dade,
11%, Miami City, 6%, and Hialeah, 2%.

Hispanic businesses, even though they have employees, are much smaller
than non-minority firms. Hispanic businesses in Miami-Dade, Miami City and
Hialeah all average about 5 employees, while businesses overall average about 13
employees. Cuban firms average 5.3 employees, while other Hispanic -owned firms
average 3.8 employees. Black-owned businesses average slightly higher than 5
employees in Miami-Dade, Miami City and Hialeah.

Miami’s immigrant business owners concentrate in traditional ethnic

businesses. The 1997 Census of Minority Owned Businesses showed that only
2,404 firms—1,064 with employees—or 2% of businesses were engaged in
manufacturing. Services, by contrast, accounted for the lion’s share of business
ownership—40%—and employment—31%—in Miami. Construction is a sector
that draws immigrants: there were 12,892 construction firms, 2,228 with
employees, in Miami in 1997. They employed 8,911 workers. Likewise, retail
trades also attract immigrants: there were 11,427 retail establishments—4,304 with
employees. Transportation was well represented: there were 11,062 firms—2,257
with employees.

Cuban-owned firms specialize in manufacturing (textiles, leather,

furniture, cigar making), construction and finance, restaurants, supermarkets,
health clinics, law firms (Logan, Alba & McNutty, 1994). These firms tend to be
horizontally and vertically linked which is not so much the case for other ethnic
businesses.

Hispanic -owned firms in Miami pay workers less ($22,414) annually than
firms generally ($26,832). Black-owned firms pay even less at $17,192 annually
on average. Yet Hispanic -owned firms are much more productive on average
($191,532/worker in sales and receipts annually) compared to firms generally
($170,624/worker in sales and receipts annually). Black-owned businesses are
much less productive at $68,647/worker annually.

Ghettos Seen and Unseen

As is the case in many American cities, Miami is dotted with poor

neighborhoods, some resulting from immigrant concentrations, others from poor
African Americans. More often then not, poor immigrants, especially illegals, are
forced either into distressed neighborhoods where housing is inexpensive or into
more prosperous neighborhoods where multiple families share single -family
dwellings. “Little Haiti” in Miami is a poor neighborhood abutting the airport,
dominated by Haitians and Dominicans. Poor African Americans have tended to
concentrate in Liberty City, Overtown, Opa Locka and Coconut Grove. These poor
neighborhoods have persisted for decades. Developers originally recruited African
Americans from the Carolinas and Bahamas in the 1930s to build the beach resorts
especially in South Beach’s famed Art Deco district, but were not permitted to
enjoy them.

But much of Miami’s poverty, even when concentrated remains unseen.

The City of Miami Beach, playground of the idle rich, also houses poor families in
single rooms who survive by pooling resources. Recently, groups of poor
Argentines have begun to occupy more upscale apartments along the Beach. They
then work in restaurants and small businesses owned by other Argentines. When
the City of Miami faced a fiscal crisis in 1996, officials set out to identify illegal
residences and collect taxes (Franco, 2001). About 4,500 illegal residences were
found and $2.1 million in property taxes collected. This phenomenon gives the
impression of economic well being on the surface, but poverty lurks just beneath.

Poor areas, unlike many cities, abut richer communities. In North Miami
on the west side of the Intercoastal Waterway a mall serving poor Black
neighborhoods has all but failed, while on the east side in Aventura one of the
more lavish malls in America thrives. Some poor neighborhoods, occupying prime
real estate, Coconut Grove and parts of South Beach, for example, are rapidly
disappearing as gentrification overtakes them.

Remittances

Remittances are transfer payments made by immigrants living in the

United States to relatives living in their country of origin. Some critics worry over
money being sent overseas, not only because it drains local economies and often
helps dictatorial governments, but also because it depletes money that could be
used to improve the circumstances of recently-arrived poor immigrants. According
to the World Bank, immigrants earning less than $20,000 annually send as much as
$3,000 home each year. The current poverty level in the United States for a family
of four is around $17,000.

A report on President Bush’s visit to Miami in May 2002 by National

Public Radio estimated that Cuban exiles in South Florida send about $500 million
to Cuba annually. Castro’s government receives more money from remittances
than from exports of sugar and nickel, and net payments for tourism. The Inter-
American Development Bank estimates that immigrants in America will send
about $300 billion home over the next ten years. The World Bank estimates that
Latin America and the Caribbean receive about $15 billion in remittances annually
from America.

But, the longer immigrants remain in the United States, the less likely they
are to continue sending money home.

Underground Economy

Many people believe that some immigrant groups are prone to illegal
activity either because they come from a culture that condones such behavior or
because they adopt this activity out of necessity. Immigrants, especially illegals,
from poor countries may be forced into the hidden or underground or “lo
informal” economy just to get a start in America. Miami is awash with
“handymen” from Latin America who operate home repair businesses, some quite
large, all outside the view of the tax collector and business regulators. Many of
these businesses produce low quality work. When the supply of cheap labor dried
up after the Mariel Boatlift, Cuban entrepreneurs in the garment industry
“contracted” with Cuban immigrants to do “homework” for low wages, no benefits
and employment instability (Franco, 2001). Tourists are likely unaware that when
they eat in high-class restaurants in Miami Beach, they are being served by
illegals.

The hidden economy is large, but there are no accurate, reliable estimates.
And, it is impossible to parcel out underground activity among natives, foreigners
and immigrants. One study of the informal economy in Hialeah, Florida, a city
with a high concentration of Cuban immigrants, estimated that there was a $300
million off-the-books economy in operation (Franco, 2001).

It goes without saying that large underground economies reduce tax

revenues for services and amenities, but not the number of people needing them. It
also is the case that underground workers are exploited: they have few rights and
likely earn little money and no benefits.

Assimilation and Racial/Ethnic Conflict

Cuban and Hispanic ascendancy in Miami’s economy has probably

contributed to racial and ethnic tension between Hispanics and Blacks and between
Hispanics and Anglos.

Hispanics & blacks

The Mariel boatlift in 1980 set the stage for Cuban-Black, and subsequent
Hispanic -Black tensions that have lasted two decades. Miami experienced four
race riots in recent years, 1980, 1982, 1984 and 1989, largely attributable to
conflict among Black natives and Cuban and Hispanic populations. The 1980 riots
killed 18 and wounded 400 people. The 1989 riots in the Liberty City killed 1
person. Twenty-two others were wounded and 385 were arrested.

Card summed up the situation. “The experiences of the Miami labor

market in the aftermath of the Mariel Boatlift form [a] natural experiment. From
May to September 1980, some 125,000 Cuban immigrants arrived in Miami on a
flotilla of privately-owned boats. Their arrival was the consequence of an unlikely
sequence of events, culminating in Castro’s declaration on April 20, 1980 that
Cubans wishing to emigrate to the U.S. were free to leave from the port of Mariel.
The available data suggest that 50-60% of the Mariel immigrants settled
permanently in Miami. The result of this influx was a 7% increase in the overall
population and labor force of Miami, and a 20% increase in the Cuban population
and labor force of Miami” (Card, 1990: 2).
 “Homicide rate in Miami increased 50% between 1979 and 1980. On the
weekend of May 17, 1980 a three day riot occurred in mostly black neighborhoods
of Liberty City, Coconut Grove and Opa Locka that killed 18. A Governor’s Task
force appointed to investigate the riots found that labor market competition
between blacks and Cuban boat people was a contributing factor.”

Ironically, Card found no short- or long-term impacts of the Mariel

immigration on the wages or unemployment rates of non-Cubans, in spite of strong
perceptions to the contrary. Even so, Blacks likely have been excluded from many
sectors of Miami’s economy because of discrimination—racial and cultural—many
do not speak Spanish and cannot identify with Spanish culture.

Studies have also found that Blacks in Miami lacked a tradition of

entrepreneurship and had limited access to capital. Blacks tend to work for whites
who pay more. Blacks, therefore, cannot hire blacks and entrepreneurship is
retarded (Wilson & Martin, 1982).

Some degree of geographic concentration is beneficial for

entrepreneurship, but higher levels of residential segregation may retard
entrepreneurial activity and foster poverty. “Although blacks are concentrated
regionally, they are simultaneously segregated residentially, yielding a high
geographic concentration of poverty that discourages business formation and
yields low rates of black self-employment. In contrast, Cubans are concentrated
regionally, but not residentially, yielding the benefits of propinquity without the
costs of concentrated poverty” (Fischer & Massey, 2000).

Interestingly, there are racial tensions within groups. “The social hierarchy
among black groups in Miami: those whose ancestors came from the Anglophone
Caribbean are socially superior, those from southern U.S. next, those from Haiti at
bottom” (Grenier & Stepick, 1992). This affects the local economy. Evidence of
this in the Haitian population is easy to find: the Haitian economy is nearly all
informal: less than 1% of Haitians report having a job (Light & Karageorgis,
1994). Haitians have had difficulty breaking into either the African American or
Hispanic cultures, remaining isolated. The fact that they speak Creole, and poor
Spanish or English, has been a problem for some.

Hispanics & anglos

As Cubans came to increasingly out number Anglos in Miami, Cubans

began to take over the economics, culture, and politics of the region, displacing
other cultures. Expectedly, Cubans began to incorporate Spanish language and
Cuban culture into economic and public life. Nearly all businesses and public
offices have either bilingual or Spanish-only speakers. Major boulevards—Jose
Canseco, famous major league baseball player—are named after Cubans. Cuban
cultural days—birthday of Jose Marti, a Cuban freedom fighter against the Spanish
and Cuban independence day, are celebrated. The Santeria, a cult-like religion, is
estimated to have nearly 100,000 members in the region. Cubans dominate
important political offices in local government.

Not surprisingly, Cubans have used their economic and political power to
celebrate their success through the development of symbols of exile culture. Cuban
heritage reclamation efforts in Miami center on the Freedom Tower and Tower
Theater in Little Havana. The tower, modeled after the Giralda Tower in Seville,
Spain, was built in 1925. For 32 years it housed the Miami Herald. Later it
processed 150,000 Cuban refugees airlifted to Miami on more than 3,000
“Freedom Flights” from 1965 to 1973. Freedom Tower is just as much a symbol of
exile freedom as New York’s Ellis Island and the Statue of Liberty. “Tower
Theater” first began screening American films dubbed in Spanish.

Recent immigrants, though, are following suit. Colombian, Salvadorans,

and Haitian immigrants, and numerous others, all have national celebrations,
festivals, and cultural days.

Ascendancy of Hispanic culture has lead to conflict. Anglos successfully

launched an English First movement that compelled the public business to be
conducted in English. But this only deepened existing divisions. Now Anglos are
migrating to Broward County just north of Miami to escape the area. Ironically,
prosperous Hispanics are following in their wake also to escape. Flight has further
contributed to the dual economy of rich and poor.

Immigration in Miami, unfortunately, has always had a discriminatory

component. Anglo merchants tried to keep Jewish merchants out of their
commercial districts, were unsuccessful, then they moved away. Earlier Cuban
arrivals found many trades closed to them because of ethnicity. White-dominated
trade unions erected barriers to Cuban participation when they could (Portes &
Stepick, 1993: 133). These efforts also failed, and white dominated firms began to
decline. Tensions are occurring between recent and long-established Hispanic
groups, although not to the extent as with other groups.

Assimilation

Racial and ethnic competition and conflict naturally raises questions of

assimilation. If immigrant groups assimilate, then perhaps tensions would abate.
 As observed above, many Cubans actually eschew American culture. Even
though many Cubans may perpetuate the Cuba of Yesteryear mythology, the
reality may be less drastic then detractors suggest. Numerous studies bear this out.
Some 52.2% of Hispanic children reported that they spoke only English in the
home. Some 80% preferred to speak English with friends rather than Spanish.
Some 66% considered their ability to speak English as “well” or “very well”
(Boswell, et al, 2001). Many who speak Spanish read and write it poorly. Large
numbers of Hispanic speak “Spanglese,” a mixture of Spanish and English.
Assimilation seems not to be so problematic for the children of Hispanics.

Even the case of Elian Gonzales points positively to assimilation. Elian is

a youngster who fled to America by raft from Cuba, losing his mother to drowning
in the process. Elian’s Cuban father, or the Castro government, tried to get Elian
back. Janet Reno, then Clinton’s attorney general, forced the return of the boy,
who was living with his Cuban relatives in Little Havana. Even though the
circumstances were an affront to many Cubans, only sporadic, relatively small
protests against Castro and the Clinton Administration occurred. Cuban exile
culture was not sufficiently robust enough to mobilize armies of Cubans in the
cause.

Indeed, studies show that younger Cubans are now less intense about their
cultural heritage than were their parents and grandparents. Inter-racial marriages
and partnerships seem to be reducing some conflicts.

But the army of new immigrants arriving annually in Miami ensures, to

some extent, that race and ethnicity will remain a problem at least for awhile. The
numbers are staggering: one-half—1,124,100 people —of Miamians are foreign
born, of these, only 44.4% are citizens.

TRANSITIONS

As successive waves of immigrants arrived in Miami, one ethnic group

began to replace or displace another in residential and commercial sectors of the
city. Take Flagler Street as an example. Before the 1930s, this district was
dominated by Anglo merchants and residents. From the 1930s through the 1950s,
the district became heavily Jewish. In the 1960s, Cubans began to take over, so
much so that the district became known as “Little Havana.” Later, beginning in the
1980s, Cubans began to leave. Now city economic development professionals refer
to the district the “Latin Quarter.” Cubans also located in Hialeah to take
advantage of jobs in industry. Other Hispanics are now replacing them. Not too far
away in Sweetwater, Nicaraguans have concentrated to such an extent that the area
is referred to as “Little Managua.” Although it has yet to be studied, it appears that
Argentines, fleeing their economically devastated nation, are now replacing other
Hispanic populations. The legions of new Argentine steakhouses along the beach
offer poignant evidence of this. When ethnic groups displace one another, they
tend to do so because they become economically better off and move to more
prosperous suburbs, as reflected in the population growth patterns already
discussed.

Relatively recent immigrants from Haiti have taken over portions of North
Miami and the areas adjacent to Miami’s airport, establishing “Little Haiti.” For
now, they too seem to remain in ethnic enclaves, unlike their Hispanic
counterparts.

DRUG MONEY
What effect does drug money have on Miami’s economy? Many consider
Miami the drug capital of the world, taking in $50 billion annually, according to
Drug Enforcement Administration estimates. In 1979, the Federal Reserve Bank in
South Florida had a cash surplus of $3.2 billion, an amount representing 77% of
the Federal Reserve System’s cash surplus nationally. In FY2001, the U.S.
Customs Service reported seizing 69,044 lbs. of marijuana, 27,460 lbs. of cocaine,
and 1,089 lbs. of heroin. Miami accounted for one-third of the heroin seized in the
United States. To fight money laundering in the drug trade, Florida passed a tough
statute to catch thieves. Miami set up the Money Laundering Strike Force that in
the first year made 14 arrests and seized $3 million.

Miami’s status as a collection point for Latin American and Caribbean

trade, according to the Drug Enforcement Administration (DEA), makes it a prime
location for drug trafficking. In testimony before Congress, the DEA administrator
reported that Cuban immigrants working on the docks and in airport facilities in
Miami were under contract from drug cartels, particularly in Colombia, moving
drugs into the United States and cash out.

Drug money deeply affects economic development primarily by distorting

the market and perhaps driving away those adverse to crime—organized and street.
Drug lords have billions they need to launder in the United States either through
the banking system or through legitimate or illegal business transactions. Huge
amounts of cash flowing into the economy give the impression that Miami is a
good place to invest, when in reality, all economic deals are distorted. Housing
prices, for example, are artificially high because the market is not well-
functioning—money launderers are willing to pay high prices in cash to get rid of
excess cash. After laundering in the United States, drug money often finds its way
to offshore banks further distorting economics.
 Immigrants pay a large share of the cost of drug trafficking. Many are
forced into the illegal economy where they are subject to arrest or deportation.
They earn little and have no benefits to show for it. With prices distorted in the
area, their quality of life is not as good as it might be. Because a lot of money is
exchanged illegally, cities cannot marshal the resources to provide effective
services to many immigrants. Because a lot are illegals, they may not be able to
consume them even when offered.

Government is losing the war on drugs. The “bad guys” are winning if
they take in $50 billion annually and loose only $10 million to law enforcement.
As such, drug trafficking will continue to retard economic development in Miami.

LATIN AMERICAN FLIGHT CAPITAL

Much of the globalization of Miami is attributable to Cuban entrepreneurs

who had the business knowledge, capital, language, and cultural background to
take advantage of the Latin American economic opportunity. Miami’s power
brokers deliberately set out to attract flight capital from Latin America to the
region, as this anecdote reflects: “In Miami, a Downtown Action Committee began
a publicity project in 1975 for a “new World Center,” which envisioned Miami as
center of the hemispheric past and future. Omni International Complex—
containing a luxury hotel, shopping mall, theatres, and restaurants—helped
Biscayne Boulevard emerge as the “Fifth Avenue” of the South. Biscayne Bay
became not only an exclusive resort for the idle rich but also a vital hub for the
transshipment of tourists and commodities in the Latin American and Caribbean
rim. The Port of Miami became the largest cruise ship port in the world. A free
trade zone was created near Miami International Airport. Fortune 500 companies
began making Coral Gables the site of their Latin American headquarters (Lin,
1998).”

Flight capital is a two-edged sword for Miami. Money flows from Latin
America when returns on investment are higher and when investment is safer. But
these monies fluctuate, making Miami tied to the fortunes of Latin America. As an
example, foreign banks, so prominent in Miami lost hundreds of millions in the
past two years. So, ironically, globalization for Miami means a lack of
diversification in some ways.

CONCLUSION

From our analysis, its clear that Miami’s economic development is

schizophrenic —both Paradise gained and Paradise lost. Economic development
experts know that in order for entrepreneurs to succeed they not only require
knowledge, skills and abilities (KSAs), they also need opportunities that match up
with their KSAs. Cuban ethnic entrepreneurs not only were in the right place at the
right time, but were also able to develop and exploit the economy. Cubans set the
stage, others followed suit. Miami became a true world class global city. Paradise
gained.

But the very things that lead to Miami’s economic success also contribute
to its weakness. Miami attracted immigrant entrepreneurs, but also others who are
much less competitive. Miami immigrants succeeded, but left some native
minorities behind. Miami’s location allowed it to become a trade center for Latin
America, but locational factors attracted drug money and crime, and made the
economy subject to boom and bust cycles in another hemisphere. Miami attracted
the super rich, but their presence has contributed little to the legions of poor people
in the area. Paradise lost.

Perhaps the real lesson Miami offers practitioners and experts is that
culture, ethnicity, and race matter in economic development to a greater extent
than is now recognized, not only in America but globally. The trick of it will be to
figure out how to encourage the best immigration has to offer without thwarting it,
but at the same time ameliorating its negative effects so that more people will
survive and thrive.

REFERENCES

Boswell, Thomas D., et al. (2001) “Facts about Immigration.” Gainesville,

FL: University of Florida [www.ailf.org/polrep/2002/]

Card, David. (1990) “The Impact of the Mariel Boatlift on the Miami Labor
Market.” Industrial and Labor Relations Review, 43 (January) 245-57.

Fischer, Mary J. and Douglas S. Massey. (2000) “Residential Segregation

and Ethnic Enterprise in U.S. Metropolitan Areas.” Social Problems, 47,
408-424.

Franco, Alexander. (2001) The Impact of the Miami Cuban Exile’s Political
Culture. Miami: Dissertation, Florida International University.

Grenier, Guillermo and Alex Stepick (eds.) (1992) Miami Now:

Immigration, Ethnicity and Social Change. Gainesville, FL: University of
Florida Press.
Light, Ivan and Stavros Karageorgis (1994) “The Ethnic Economy.” In Neil
Smelser and Richard Swedberg (eds.) The Handbook of Economic
Sociology. New York: Russell Sage Foundation.

Lin, Jan. (1998) “Globalization and the Revalorizing of Ethnic Places in

Immigration Gateway Cities.” Urban Affairs Review, 34 (November) 313-
339.

Logan, John R., Richard Alba, and Thomas McNulty. (1994) “Ethnic
Economies in Metropolitan Regions: Miami and Beyond.” Social Forces, 72
(March) 691-724.

Portes, Alejandro and A. Stepick. (1995) City on the Edge. Berkeley, CA:
University of California Press.

Portes, Alejandro and Robert Bach. (1985) Latin Journey. Berkeley:

University of California Press.

Suro, Roberto & Audrey Singer (2002). Latino Growth in Metropolitan

America. Washington, DC: Brookings Institution.

Wilson, Kenneth L. and Alejandro Portes. (1980) “Immigrant Enclaves.”

American Journal of Sociology, 86, 295-319.

Wilson, Kenneth L and W. Allen Martin. (1982) “Ethnic Enclaves: A

Comparison of the Cuban and Black Economies in Miami.” American
Journal of Sociology, 88, 135-160.