The Revitalization of Mexico

By Karl Reiner

Through September 2012, Arizona's exports to Mexico were running $415 million ahead of last year's level.  Almost unnoticed by Arizona's politicians, Mexico is changing in ways that will benefit the state's economy.  It may be time for political leaders to rethink their view of the country across the border.

The U.S.-Mexican border is the world's busiest.  Border crossings have slowed because of security considerations and port of entry Mex 5 12bottlenecks.  Some of Arizona's politicians seem to like it that way.  The undervaluing of trade and the fear of migrants has led the  legislature to pass such controversial legislation as SB 1070.

Four-fifths of Mexico's exports go to the U.S.  If present trends continue, Mexico will be the largest U.S. supplier by 2018.  Mexico has become the world's largest exporter of flat-screen televisions.  It is moving up in the automobile and aerospace production rankings.  In terms of GDP, Mexico ranks ahead of South Korea.  Mexico is Latin America's largest economy, having free trade arrangements with 44 countries.

In 1994, the North American Free Trade Agreement (NAFTA) eliminated most tariffs between the U.S., Canada and Mexico.  In global economy Mex 1 12rankings, Mexico has moved up to 14th place, the U.S. is 1st and Canada is 10th. The biggest city in North America is Mexico City with 21.7 million inhabitants, a bit larger than New York's 21.3 million.

After many false starts, Mexico is beginning to realize its potential.  Mexico's economy will grow 4% this year.  For many years, it only grew an average of 1.6%, barely half the rate of Brazil.  Rising wages in China, improving industrial efficiency and shipping costs have helped the once feeble Mexican economy turn around.

Migration to the U.S. jumped in the 1970s and continued to grow in the 80s and 90s as Mexican nationals moved north to find work.  The movement was the result of an underachieving Mexican economy and lax border enforcement.  The border flow is now reversing due to fewer available U.S. jobs, stiffened border security and expanding opportunity in Mexico.

Border Patrol apprehensions are at a 40 year low, falling to 286,000 in 2011.  Mexico's sharply declining birth rate has reduced the supply of potential migrants.  In the 1960s, the average Mexican woman had seven children, now she has two.  One in 10 Mexican citizens lives in the U.S.  About a tenth of America's population is of Mexican heritage.

The U.S. and Mexico share accountability for the violent illegal drug trade.  America's illegal drug consumption has a yearly street value in the range of $60 billion.  As the drugs move north, the traffickers buy assault weapons in the U.S., returning them to Mexico along with the drug receipts.  Supplying America's drug demand has grim consequences, 60,000 have been killed in the Mexican drug wars.

Mexico is inching toward economic reform. The country realizes it has to deal with corruption and bad government, especially at the local level. Mexican households pay $2.5 billion yearly in bribes to get things done that should mostly be free.  The government realizes it has to tackle monopoly and education problems.

The Real Arizona Coalition (made up of business, faith and leadership organizations) promotes attention to immigration facts, not negative rhetoric.  The coalition wants to contain the damage done to the state's reputation and have the immigration matter handled at the federal level.

The coalition is promoting a set of immigration policy recommendations.  The legislature should take a look at it.  State lawmakers also need to pay attention to the happenings across the border.  If they can't help, they can at least avoid being detrimental.                         

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