The U.S.-Mexico Relationship
five things to know about how our southern neighbor is benefiting the United States economy, from sea to shining sea
On the sidelines of the first U.S.-Mexico border trade conference held in Tempe, Ariz., in late September, a group of attendees stared at a map of the United States with surprised looks on their faces. The 50 states were colored various shades of blue. The darker the state, the more it exported to Mexico. As expected, California, Arizona and Texas were dark blue but so were Nebraska, Michigan and Wisconsin. The map clearly showed what many on the border have known for awhile: Mexico is vital to the U.S. economy.
A buzz is developing around Mexico’s booming industry and expanding middle class. Businesspeople and politicians in the border region are excited about what this could mean for the U.S. economy but they are also frustrated that, when it comes to Mexico, lawmakers in Washington continue to focus almost exclusively on security, drugs and illegal immigration.
While these issues are real, so is Mexico’s economic success story. Mexico has rebounded strongly from the global economic crisis and has quietly become one of the brightest emerging markets in the world and a global manufacturing hub. It is time that more people in the United States took note.
Here are five clear ways that the Mexican economy is benefitting the United States.
1. Trade with Mexico sustains around six million U.S. jobs. The Mexican economy is expected to grow around 4 percent this year, more than twice as fast as the U.S. economy and much swifter than Latin America’s supposed economic powerhouse Brazil. As Mexico’s middle class swells so does demand for U.S. goods.
2. Mexico is a world leader in the production of computers, mobile telephones and flat screen TVs. Mexico excels in the production of bulkier goods, like cars and refrigerators. One reason is that it is much cheaper to transport to markets in the U.S., Canada and Latin America. The signing of NAFTA and choice to embrace free trade forced Mexican industry to become more globally competitive. After nearly two decades it is paying off.
3. U.S. export sales to Mexico, at $200 billion in 2011, are larger than all U.S. exports to the BRIC countries (Brazil, Russia, India and China) combined. People love to talk about Brazil and China, but we have a fast-growing emerging market right on our doorstep. Mexico is more important than our traditional economic partners as well. The United States exports more to Mexico than to the United Kingdom, Germany, France and the Netherlands all together.
4. Mexico is the number one or number two export market for 22 U.S. states. Mexico is the largest export market to the two largest economies in the country in Texas and California but it’s not just border states that benefit from Mexican demand. Michigan is the third-highest exporter to Mexico (behind Texas and California) while Illinois and Ohio rank numbers five and six. Detroit exports more to Mexico than any city in the U.S., mainly thanks to auto parts exported for assembly.
5. For every dollar that Mexico makes on exports to the United States, it uses 50 cents to spend on U.S. products or services. Let’s face it, our two economies are interdependent. Economists Chris Wilson and Erik Lee point out that “the United States and Mexico do not just sell goods to one another, they actually work together to manufacture them.” The Mexico Institute at the Woodrow Wilson Center says that 40 percent of an average Mexican import to the states is made with U.S. content, compared to just 4 percent from China.
Working together increases our competitiveness and creates jobs in both the United States and Mexico. More jobs in Mexico mean that more middle-class Mexicans can buy Ford trucks and shop at Walmart and Costco. It may also mean that fewer feel the need to cross the border illegally.
The reality is that U.S. and Mexican business interests are linked, and the two are cooperating more than ever before.
A version of this column first appeared www.abcnews.com/abc_univision