The U.S. – Mexico Border: Integrated Economies

by Jesse Hereford, Policy Director, The Border Trade Alliance

The southern border of the United States has seen a tremendous boom in economic development activity over the last decade. To gain a full appreciation of that activity, one must understand the sheer volume of goods and people that enter and exit the United States through the southern border.

In his testimony before the Senate Committee on Foreign Relations in April 2004, Assistant Secretary for Economic and Business Affairs E. Anthony Wayne quoted some startling statistics. According to Wayne, “approximately 60 percent of the 500 million visitors admitted into the United States enter across the U.S.-Mexico border, as do 90 million cars and 4.3 million trucks [annually], all contributing to the $638 million in trade conducted at our border [with Mexico] every single day.”

The passage of NAFTA in 1992 and its implementation in 1994 have accelerated growth in both imports and exports. In 2004, the top five southern ports along the U.S.-Mexico border processed $182.7 billion in total imports and exports. In 2004, for the third year in a row, the state of Texas ranked as the number one state in terms of export revenues. Texas exports for 2004 totaled $117.2 billion, an increase of $18.3 billion from the previous year.With three of the top five ports along the U.S.-Mexico border – Laredo, El Paso and McAllen – located in Texas, it’s no wonder the state is ranked so high. In 2004, these ports were ranked as the first, second and fourth most productive land ports on the Southwest border, respectively, with Otay Mesa, Calif., ranked third and Nogales, Ariz., ranked fifth. ¹

To gain some perspective on the numbers above, the top ports in the U.S. with respect to the value of imports and exports in 2004 were Los Angeles, New York and Detroit, ranked first, second and third, respectively.Would you have guessed that the port of Laredo is fourth on that list? ²

Booming border industries

On the Mexican side of the border, the emergence of manufacturing plants known as maquiladoras – defined as Mexican assembly plants that manufacture finished goods for export to the U.S. – has played a major role in border economies. The word “maquiladora” is derived from the word “maquila,” which in colonial Mexico was the fee that grain mills would charge to process other farmers’ grain. The U.S. Government Accountability Office estimates that 26,000 American-based companies supply Mexican maquiladoras with both raw materials and components. It is estimated that over 1 million Mexicans are employed in over 3,000 maquiladoras along the border. ³

With the continued expansion of maquiladoras in Mexico, U.S. border cities are taking advantage of their proximity. Maquiladoras are generally found in Mexican border cities where an interstate highway connects on the American side of the border. There is a large maquiladora presence in the Mexican border towns of Tijuana, Ciudad Juarez, Nuevo Laredo and Reynosa. Directly across the border, the U.S. interstate highway system connects these towns respectively to San Diego, California, and El Paso, Laredo and McAllen, Texas.Many of these border cities have become logistical centers to assist in the shipping of these goods.

The transformation of the U.S.-Mexico border into a mega-gateway for global goods has created specific industr and specializing in different industries. Let’s take a closer look at some key border industries – manufacturing, warehousing and transportation, and wholesale/retail trade – and where they are booming.

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¹Laredo Development Foundation

²Ibid.

³Matt Rosenberg,“Maquiladoras in Mexico,” About.com