A study of cross-border economic issues and developments comparing the disparate industrial growth and income gap between the regions on either side of the U.S.-Mexico border.
The U.S. and Mexican border regions have experienced rapid demographic and economic growth over the last fifty years. In this analysis, Joan Anderson and James Gerber offer a new perspective on the changes and tensions pulling at the border from both sides through a discussion of cross-border economic issues and thorough analytical research that examines not only the dramatic demographic and economic growth of the region, but also shifts in living standards, the changing political climate, and environmental pressures, as well as how these affect the lives of people in the border region.
Creating what they term a Border Human Development Index, the authors rank the quality of life for every U.S. county and Mexican municipio that touches the 2,000-mile border. Using data from six U.S. and Mexican censuses, the book adeptly illustrates disparities in various aspects of economic development between the two countries over the last six decades.
Anderson and Gerber make the material accessible and compelling by drawing an evocative picture of how similar the communities on either side of the border are culturally, yet how divided they are economically. The authors bring a heightened level of insight to border issues not just for academics but also for general readers. The book will be of particular value to individuals interested in how the border between the two countries shapes the debates on quality of life, industrial growth, immigration, cross-border integration, and economic and social development.
2008 Book Award
Associaton for Borderland Studies
- Preface and Acknowledgments
- Introduction. The United States-Mexico Border
- Chapter 1. Along the United States-Mexico Border
- Chapter 2. Population Growth and Migration
- Chapter 3. U.S. Border States and Border Relations
- Chapter 4. Trade, Investment, and Manufacturing
- Chapter 5. The Environment
- Chapter 6. Formal and Informal Labor
- Chapter 7. Income, Equity, and Poverty
- Chapter 8. Living Standards
- Chapter 9. Human Development in the Border Region
- Chapter 10. The Future of United States-Mexico Border Regions
Communities along the United States-Mexico border have a great deal in common, including a shared history, two deserts, rapid population growth, thriving tourism, and deepening economic integration. Day-to-day life for people living along the border is shaped by these common elements, plus the distinctive feature of an international border that divides families, friends, and businesses. The challenges posed by an international boundary that draws into proximity two vastly different countries while simultaneously dividing local communities of great similarity represent a complex mix of economics, politics, culture, and language. Directly or indirectly, the international boundary affects the daily life of nearly everyone living near the border through its impact on economic and political relationships, family and social ties, and the shared natural environment.
Throughout this book, we use the terms border area or border region as a linguistic shorthand; in fact, the U.S.-Mexico border comprises many regions. In an effort to discern the nature of the borderland, however, we will look first to a more general description. Culturally, the U.S.-Mexico border marks the intersection of cuisines, music, and languages from North America and Latin America. Economically, the border separates a developed country and a developing country, with one of the largest cross-border income gaps in the world. Nevertheless, in every economic and demographic category, the local and regional disparities are less than those between the two countries as a whole: whereas the Mexican border region is wealthier than Mexico as a whole, the U.S. border region is mostly poorer than the rest of the United States, thus bringing communities on either side of the border closer together than the enormous economic differences at the scale of the nation would suggest. The relatively smaller economic differences and greater similarities at the level of communities straddling the border make the border area unique.
Most public attention on U.S.-Mexico relations is focused on Washington, D.C., and Mexico, D.F. The latest statements from ambassadors, the personal relations of the presidents, or position papers on national migration policy capture most of the headlines, but beneath these high-level contacts and debates is a vast array of person-to-person contacts, most operating far outside the notice of the respective capitals or the major media. These contacts occur within the business and social networks of families that live on both sides of the border, of friends and colleagues who work, shop, socialize, and collaborate across the border, and of businesses that draw materials and labor from either side of the border to produce goods and services that are sent to local and distant markets. Borderlanders take note of the latest blowup in U.S.-Mexico relations and the policy maneuvers of political insiders in border states and the national capitals, and then they go about their activities as before.
The irony of the border is that it is the source of most of the integration between the United States and Mexico, but the national attention of both countries is focused elsewhere, as if the national capitals were in control. National policies are not unimportant, but those policies do not determine the enormous current of activities that is carrying the United States and Mexico toward a deeper level of integration. Rather, integration is rooted in the shared histories, migration and demographic changes, foreign investments, businesses, local governments, and the decisions of millions of families and friends engaging in activities that require border crossing. This ocean of local activity is largely beyond the control of national policy makers, who are viewed by many borderlanders as incompetent at best, and often positively harmful.
Within the border region there is a high level of recognition that national governments impede border relations at least as often as they enable them. At times this interference is by design, as when border crossing is intentionally slowed in order to interdict drugs or to search for other contraband, but at other times it is an unintended consequence of policies, as when border restrictions prevent twin cities from efficiently moving emergency responders and their equipment from one side of the border to the other. (Twin cities is the term given to a pair of cities, one Mexican, one U.S., that lie on either side of the border. This pairing of cities occurs along the entire length of the border. For example, Brownsville and Matamoros are twin cities, as are San Diego and Tijuana.) A problem for borderlanders is that they are a long way from Washington, D.C., and Mexico, D.F., and often are unable to make their needs known to national policy makers, who tend to view the border as a law enforcement and security problem and only rarely as an economic development challenge and opportunity.
It is beyond the scope of this book to offer a catalog of all the issues affecting the daily lives of borderlanders. However, within the limited domain of economics and demography, eight major issues set the terms of cross-border relations. These issues or areas of concern are not exclusively economic or demographic, but they spill into those arenas and therefore are relevant to our discussion of the current history of economic development along the border. In what follows, we briefly take up each of these issues: (1) trade and investment, (2) barriers to border crossing, (3) migration, (4) cross-border labor, (5) the environment, (6) poverty and income distribution, (7) exchange rates, and (8) governance and cross-border collaboration.
Trade and Investment
Much of the economic and demographic growth of the border region over the past fifty years has been fueled by two intertwined economic factors: trade between the United States and Mexico, and investment in manufacturing plants on the Mexican side of the border. The United States is Mexico's number one trading partner, and by 1999, Mexico had passed Japan to become the United States' second largest trading partner in total volume of trade.
Growth in both trade and investment came as an indirect response to the debt crisis that hit Mexico and much of the developing world beginning in 1982. Up until the mid-1980s, Mexico's economic development strategy looked inward, set strict limits on foreign investment, and emphasized investment in import substitutes over the production of goods for export. The Border Industrialization Program that began in 1965 was an effort to employ agricultural workers who were no longer allowed to enter the United States legally, but for many years the plan was relatively small and did not contribute significantly to Mexico's national economy. Beginning in the 1980s, with the pressure of the prolonged stagnation that resulted from the debt crisis, economic policy began to shift to an outward orientation. In 1986, Mexico became a signatory to the General Agreement on Tariffs and Trade, unilaterally cut its tariffs, and began to ease regulations on foreign investment.
Changes in Mexican economic policies attracted investment, and when the changes were institutionalized with the ratification of the North American Free Trade Agreement (NAFTA), Mexico went through a period in which it attracted a disproportionate share of the world's foreign direct investment in developing countries. Much of the investment was in manufacturing along the border, where proximity to the U.S. market created advantages, and in the mid-1970s through the mid-1990s, periodic peso devaluations increased the U.S.-Mexican wage differential and contributed to the growth in border industrialization. Jobs were plentiful in the cities on the border, and people from the interior of Mexico migrated there to take advantage of the new opportunities.
The impact of these changes did not stop at the border but spilled across to the U.S. side as well. Mexican demand for consumer goods stimulated growth in the U.S. border retail sector, while transportation services expanded to handle the increase in commerce, infrastructure was built to accommodate part of the growth, and affiliated manufacturing and warehousing activities stimulated the economy of the U.S. border region.
Barriers to Border Crossing
In 1853 the first man-made barriers, consisting of a series of cement obelisks, were constructed along the border to demarcate it. In the 1930s, Border Patrol observation towers were built, then removed two decades later, in the late 1950s, when U.S. ambassador to Mexico Robert Hill declared them an insult to Mexico. In 1975, Congress approved the construction of chain-link fencing between the two most used border crossings, San Diego-Tijuana and El Paso-Ciudad Juárez. These fences, dubbed the "tortilla curtain" amid strong negative reactions, were completed in 1978.
In 1990s, contradictory U.S. policies with respect to Mexico led to freer trade in goods and services and the freer movement of capital, on the one hand, in concert with more restrictive labor movements on the other. Around the same time that NAFTA was signed and implemented, the United States instituted programs to "protect its borders" and stem the flow of undocumented workers. Operation Hold the Line was inaugurated in 1993 in El Paso, and in 1994, Operation Gatekeeper was set up to control the western end of the border, followed by additional initiatives in other parts of the border region. In addition to increases in the size of the Border Patrol, the programs included high-tech detection equipment and higher and stronger border fences. The porous chain-link fences of the 1980s were replaced with high steel walls, which were then doubled, and the areas between the fences were lighted at night. After September 11, 2001, U.S. border security and inspections increased dramatically. Under the Homeland Security Bill, double walls were expanded to triple walls near major urban areas. Crossing the border, especially by car, slowed to a crawl at the busiest border crossings and increased the opportunity costs of economic and social interaction.
The United States as a nation is deeply divided over the issue of migration. U.S. workers worry that Mexican migrants depress wages, while employers and consumers enjoy the higher profits and lower prices that low-wage migrant labor provides. Mexico badly wants an escape valve for its restless and unemployed, and border residents cannot escape the fact that they live in two very different nation-states.
While Mexican migration into the United States is a national issue, both because migrants go to all parts of the country and because migration policy is a federal responsibility, most migration law enforcement takes place in the border region. After passage of the Immigration Reform and Control Act (IRCA) in 1986, enforcement gradually became much less focused on work sites and more on restricting entry at the border, using methods that included the construction of higher, less porous walls, the installation of infrared lights, the creation of no-man zones, and expansion of the Border Patrol to 12,000 agents. The increased cost of crossing from Mexico into the United States without documents sent migrants out of large urban areas and into the mountains and deserts, where they were much more vulnerable to both natural and criminal elements. Between 1994 and 2003, more than 2,300 bodies of Mexicans who had died while attempting to cross into the United States were found, representing a significant increase in the death rate associated with attempting to cross the border.
The unfortunate reality of the border region as the location of migration policy enforcement serves to strengthen the perception in Washington, D.C., and Mexico, D.F., that border matters are primarily law enforcement issues and sources of diplomatic tensions. An unintended consequence is that economic development issues, infrastructure, cross-border integration, and cultural vitality receive less attention than they deserve. Perhaps the best that can be hoped for in the short run is that the United States and Mexico will find an approach to migration that results in many fewer economic refugees dying in the deserts and mountains, and that the issue of migration will cease threatening good relations between the countries.
During 2002, an estimated 7.7 percent of the economically active labor force of both Tijuana and Mexicali worked in the United States. Using 2000 census figures for the size of the economically active population, an estimated 34,697 residents of Tijuana and 22,114 residents of Mexicali crossed the border from one to five days a week to work in San Diego and Imperial County. Figures for the Texas border region are smaller but still significant. For example, the share of the labor force in Ciudad Juárez that worked in the United States (most likely El Paso) was 3.6 percent, equivalent to 17,404 people, based on 2000 population estimates. These workers are not undocumented immigrants but rather people who live on one side and work on the other, many complying with all the rules for entering and working in the United States.
Based on data from the Mexican Survey of Urban Employment, in 1998, 14 percent of the 35,943 transmigrant workers were U.S. citizens and another 33 percent had U.S. work permits (green cards). Another 43 percent of the cross-border workers had a tourist or other visa, and 10 percent had no visa. In other words, slightly more than half the workers were undocumented. In Tijuana and Mexicali in 1998, the average salary of cross-border workers was slightly above $1,000 per month, almost three times the average earnings of workers who remained on the Mexican side. However, at the eastern end of the border the average salary for cross-border workers was $663, just over twice the average earnings of workers in Matamoros.
Cross-border employment runs in the other direction as well, but even less is known about U.S. workers commuting to Mexico than about residents of Mexico working in U.S. border cities. Managers of foreign-owned manufacturing plants, some of whom are U.S., Japanese, or Korean citizens, are an important component of the daily north-to-south flow of workers, but so are college professors teaching in Mexican universities, lawyers employed by Mexican law firms, and other professionals and business people who earn enough to live on the northern side of the border.
There are two major sources of environmental stress in the border regions. One is the increase in emissions and industrial wastes associated with increased industrial activity, the environmental side effect of economic development. The other is the environmental effects associated with the rapid growth of population, including urban sprawl and congestion, increased motor vehicle use, increased waste generation, and increased depletion of natural resources. The rapid growth in both industrial output and population presents a number of environmental stresses related to water supply and quality, air quality, sewage disposal, industrial waste disposal, and wildlife preservation. These environmental stresses are not unique to the border but rather are the side effects of economic growth, with the difference that pollution is not contained by international boundaries. Rivers polluted with sewage and air currents laden with particulates flow across international boundaries without going through border checkpoints.
Since polluted water and air do not respect international borders, the environmental issues associated with the surge in Mexican border industrialization have not been confined to the Mexican side of the border. Sewage overflows from Tijuana have contaminated beaches in Southern California, and Southern California's polluted air blows over Tijuana, while raw sewage dumped into the Rio Grande at Nuevo Laredo has contaminated drinking water on both sides of the border, and pesticides from the agriculturally rich Imperial Valley flow into Baja California. Adding to the problem is the fact that the border regions are relatively fragile, semi-arid to arid environments that lack the resources, including sufficient water, to keep up with the demands for infrastructure to accommodate rapid population growth.
Binational efforts are required to meet the environmental challenges of this rapidly growing border. While some institutions have been developed to carry out these efforts, so far they lack sufficient funding to meet all the pressing demands. At the time of the NAFTA agreement, estimated environmental infrastructure needs were between $5 and $12 billion, but by 2005 the North American Development Bank, charged with lending to communities for infrastructure development, had lent less than half a billion, which was divided between the two countries. To meet the environmental needs of the border regions, both nations will need to contribute much more in the way of financial and human resources.
Poverty and Income Distribution
Poverty is a fact of life on both sides of the border. On the U.S. side, the proportion of families that fall below the official poverty line is greater than the national average, and along the Texas border, in the colonias (neighborhoods lacking some or all the basic services of electricity, water, sewage disposal, and paved roads), poverty is very visible. In the United States, poverty rates are highest at the eastern end of the border and lowest at the western end. By contrast, poverty rates on the Mexican side are lower than the national average but higher than on the U.S. side, and are still a huge problem. The availability of discarded materials from the U.S. side of the border to turn into functional salvage—old garage doors used for house walls, old tires for steps and retaining walls, used clothing and appliances recycled—makes the lives of the Mexican border poor a little easier.
In the United States, income inequality is also greater along the border than it is nationally, with the worst inequality located in Texas border counties and a tendency toward less inequality in the western half of the border region. As is true for the United States as a whole, income inequality along the border is worsening over time. In Mexico, development has long been hampered by a highly unequal distribution of income, but income distribution in the Mexican border states is more equal and median household income is higher than in Mexico as a whole. The trend in income inequality during the 1990s appears to show a slight decrease in inequality in the Mexican border states, though it remains above the level of inequality found on the U.S. side.
Exchange Rates and Exchange Rate Fluctuations
In most places, the dollar is accepted on both sides of the border. Some places in Texas also accept pesos, but that is the exception rather than the rule. The relative stability of the peso until 1976 made exchange rates a non-issue until inflationary finance and then the debt crisis of 1982 led border residents to begin to worry about the value of the peso. Devaluations of the peso were a common feature of macroeconomic volatility in Mexico for the twenty years between 1976 and 1995. Exchange rate volatility has a large impact on border residents, although it is largely unnoticed outside of border cities. Retail sales are estimated to have fallen 80 to 90 percent in some Texas border stores when the peso was sharply devalued in 1982, and the overall impact on Texas border cities was greater than the impact of the steep U.S. recession of 1981-1982. U.S. border retail and visitor industries are especially affected by slowdowns in border crossings brought on by large peso devaluations because all of the U.S. border metropolitan areas have historically had larger than average retail sectors, reflecting the fact that they serve a larger population base than their own urban area.
Residents in the larger Mexican border cities are also squeezed at home by devaluation as landlords, electricians, plumbers, and other service providers demand payment in dollars, or in constant-dollar-value pesos. That is, when devaluation hits, dollar-denominated goods in the United States become more expensive and Mexican rents go up in order to keep the dollar value constant. Perhaps more important, Mexican incomes are squeezed as the higher cost of imported goods leads to a price inflation that historically has not been offset by a corresponding increase in wages. Hence, the value of inflation-adjusted income declines, and residents of Mexico are made worse off. This decline in real incomes hits the border region particularly hard, since a large number of people regularly cross into the United States to make purchases. As evidence, two separate surveys of Baja California south-to-north border crossers found that shopping was one of the primary reasons for journeying to the other side.
Governance and Collaboration Across the Border
Both Mexico and the United States are federal systems of state and local governments. In the United States, state and local governments have a relatively wide scope of action, along with revenue streams to finance their activities. Mexico's thirty-one states are subdivided into municipalities, or municipios, which are similar to counties in the United States and include both urban and rural areas. Municipios in Mexico are not nearly as independent as U.S. cities and counties, nor do they have substantial revenues, since urban planning and funding are traditionally federal responsibilities and there is no such thing as a municipal bond market where local governments could raise money for infrastructure or other capital projects. Although Mexico is decentralizing many of its public administration functions, its municipios are not likely to transform into the equivalent of U.S. counties, and significant differences in federal, state, and local functions will persist. Another important fact is that governors, mayors, and their administrations serve only one term in Mexico. This undermines continuity in policy making and limits the development of social networks among public officials.
Despite the resource gap and the differences in decision making between U.S. and Mexican cities, a number of notable examples of successful collaboration exist. Given the immediacy of many cross-border issues such as public safety, health care, emergency response, and environmental protection, twin cities along the border have had to find ways to collaborate, even when it did not come easily. The asymmetry in decision making and resource availability often makes collaboration difficult, and the legal status of many cooperative agreements is questionable, but necessity often wins out in the crush of day-to-day operations. The key, as the authors of a recent study of comparative borders pointed out, is for both sides to know what they want and to approach their respective national governments with clear and consistent ideas. In this regard, some parts of the border are further along than others.
Is the Border a Region?
The purpose of this book is to explore the economic and demographic changes that have occurred in the U.S.-Mexico border region over approximately the last fifty years. Throughout the book, we speak of the border region as if it were a single, geographically and economically coherent region. We recognize that it is no such thing. What distinguishes our area of interest is the presence of an international border, but the border region is divisible into a number of different geographic and economic regions. For example, the Lower Rio Grande Valley is about as different from the Tijuana River Valley (which unites San Diego, California, with Tijuana, Baja California) as the Midwestern state of Iowa is from the state of Guanajuato in central Mexico. Nevertheless, the impact of economic integration and the presence of an international border make it useful to look at the entire border as an area or region of analysis. As a compromise, we have included detailed county- or municipio-level data in a data appendix on the Web site that accompanies this book (http://latinamericanstudies.sdsu.edu/BorderData), and throughout the book we point to differences within the regions.
This focus does not resolve a number of additional problems, however, as it still remains to determine how "deep" the border is. That is, how far into the United States and Mexico do border influences extend? This is an area of investigation for future research. Given the state of border studies, any definition we might offer now would be somewhat arbitrary; consequently, we have adopted a definition that includes the twenty-five U.S. counties and thirty-eight Mexican municipios that touch the border. There is an element of convenience in this definition, as it follows the major data collection units of both countries and permits use of the U.S. and Mexican decennial censuses taken between 1950 and 2000 as the primary data source. The census data are supplemented by additional data where necessary and possible, but in all of the following chapters, we strive to maintain analytical symmetry between the United States and Mexico. There are a few exceptions, such as in Chapter 3, where we felt compelled to try to explain the reasons for the differences in the policies of U.S. border states (primarily Texas and California) toward Mexico, and in Chapter 7, where we had to use different variables in discussing income and poverty. Much of the previous research on the border has taken an exclusively Mexican or U.S. perspective and has ignored the other side, or else it has been limited by asymmetry in data and information sources. Although the two nation's censuses are not identical in scope or format, they overlap in their information, and consequently they do provide a rough equivalence between Mexican municipios and U.S. counties. The data appendix on the Web site provides an extensive set of border data, arranged symmetrically, and allows examination of much of the raw data we used in forming our analysis.
Our hope is that this work will provoke more quantitative analysis to be done to illuminate the historical patterns and contemporary trends of the border region. Given the historical trajectory of U.S.-Mexico relations and the degree to which contemporary integration is rooted in a deeply persistent trend, a closer examination of the economics of the region where integration is most advanced and most profound is warranted. Historians, fiction writers, sociologists, cultural geographers, and others have contributed enormously to our understanding of the border between the United States and Mexico. With this work, we hope to add an economic perspective to this growing body of knowledge.