La Linea Fronteriza
SPECIAL FEATURE
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La Linea - The Line. The shared border between the United States and Mexico spans 1,933 miles and touches a great many of the issues that are important to Mexicans and Americans. Americans have become increasingly aware of border issues since the passage of the North American Free Trade Agreement (NAFTA) in 1994 and the terrorist attacks of 2001. And Mexicans are gravitating toward the U.S.-Mexico border, seeking employment in maquiladoras (assembly factories) along the border from Matamoros to Tijuana in record numbers.
Border issues go beyond international commerce and safety regulations, and the ongoing debate over the openness of the border. Knowledge of the border is necessary for everyone to understand the broad issues of both nations, including: health and environmental issues; water resources and agriculture; business and economy; employment and immigration; and, the increasing bicultural character of both nations.
This section will explore people and issues all along the border, with emphasis on the region closest to
We will study the economic imbalance that is drawing immigrants out of their homes to enter the United States, and provide insight into the maquiladoras that attract people from all over Latin America to the border region. With nearly one third of Mexico's jobs on its northern border, we will survey the colonias where many indigent people live, often without water or electricity, on both sides of the line.
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ECONOMY
Mexico's economy remains a controversial subject and a topic of debate. Many politicians, economists and community advocates disagree on NAFTA's affect on the Mexican economy, but the peso has declined steadily since its implementation in 1994.
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The Mexican government devalued the peso to reduce the outflow, or rapid loss of cash leaving the country, as U.S. companies reeled in their record-setting profits.
Today the peso buys less than 10 cents.
Choosing Dollars Over Pesos
U.S. dollars are increasingly worth more in Mexico, especially when earned in the United States. A Mexican worker in the U.S. can earn five to ten times more than in Mexico when providing the same labor. In 2003 the financial resources of migrant workers being sent home to Mexico became Mexico's third largest source of income behind oil and manufacturing.
The peso was seriously devalued many times in Mexico's history, but this time it was tied to the promise of international prosperity with NAFTA, and substantial U.S. investments. Those investments relied on converting Mexican consumers' pesos to U.S. dollars for profits.
Some say it is unfair to link NAFTA with the peso devaluation. The highly contested issue generates theories and opinions to suit various interests.
Theories suggest the peso was ripe for devaluation before January 1, 2004, and that Mexican officials held off the peso devaluation during the early stage of NAFTA-related U.S. investment, essentially leading U.S. investors into a trap. (For example, a potential profit of two million U.S. dollars would be worth only one million dollars within the first year of NAFTA.) According to Christopher J. Neeley of the Federal Reserve Bank of St. Louis, "The first version suggests that the value of the peso was deliberately manipulated to secure political support for NAFTA and that the devaluation-to obtain a trade advantage-was planned well in advance. The second version is less sinister. It suggests only that the Mexican authorities were sensitive to U.S. politics in setting exchange rate policy after NAFTA was passed."(1)
Many believe Mexico could not sustain the large outflow of capital resources (the transfer of wealth to the U.S.) that occurred during NAFTA's first year, and that by devaluating the peso, Mexico literally cut its losses.
A simple view of this devastation to the Mexican economy suggests that no sooner had American-owned companies opened their doors during NAFTA's first year, when Mexicans went on a shopping spree that upset the nation's trade balance by about 8 percent of it's Gross Domestic Product, creating a a deficit of about $28 billion.
Mexico ran out of international reserves and was forced to barrow from the International Monetary Fund (IMF) and U.S. banks.
Growing Imbalance
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It is difficult for Mexican business owners to compete with American companies, such as convenience stores and fast food restaurants, which have become common in Mexican cities. Wal-Mart's capital investment and subsequent draft on the financial resources of Mexican towns is often overwhelming.
Mexican-owned small and medium sized businesses are declining due to increased competition from multinationals. In July 2004, Mexico's three major supermarket chains, Gigante, Soriana and Comercial Mexicana, received government permission to form a cooperative purchasing company in order to lower production and supply costs to compete against Wal-Mart.(2)
Wal-Mart recently won a battle to open one of its stores near the important archaeological site and United Nations World Heritage Site, Teotihuacan, in central Mexico. In a rare concession, Mexico's national historical and archaeological agency allowed Wal-Mart to hire private archaeologists to investigate the site. The store opened in the fall of 2004 on what some critics say are ancient altars and burials. Other residents say they are more concerned with the loss of their own livelihoods than damage to this significant monument of Mesoamerican history.
On Texas' Side
The Federal Reserve Bank of Dallas reported, "After the sharp devaluation of the Mexican peso in December 1994, Texas goods became much more expensive for Mexicans, while Mexican goods became much cheaper for Texans."(3)
"In 1995, Texas exported nearly $22 billion in merchandise to Mexico and imported at least $14 billion in Mexican merchandise."(3)
The numbers tell the reality of the economic imbalance on the border, but border residents on the Texas side may not fair much better than those in Mexico.
Carole Keeten Strayhorn, Texas Comptroller of Public Accounts, developed a forecast for the border economy for the year 2020, predicting that, "while real earnings per capita in the border region will more than double by 2020, the region's standing relative to the rest of the state will deteriorate during this same period."(4)
Learn more about THE FUTURE
POVERTY
Where people often earn less than $6,000 per year on the U.S. side and even less on the Mexican side, health care is one of the greatest needs. According to pharmacist Jose Garcia, "People on the border suffer because they don't have access to the same things people have anywhere else."
"Forty-one million people at some point in time have been without health insurance in the last year. Seventy percent were working people."
Garcia is a pharmacist at the Thomason CARES clinic in Ysleta, a historic Texas town near El Paso, Texas and Juarez, Chihuahua, the largest population massed on an international border anywhere in the world. For many Hispanic U.S. residents and some non-residents, the clinic treats uninsured and underinsured patients with many health problems, such as diabetes, the leading cause of death in Mexico and a serious health risk for many Mexican Americans.
Learn more about HEALTH ISSUES and HOW TO HELP
Sources:
1. "The Giant Sucking Sound: Did NAFTA Devour the Mexican Peso?" Christopher J. Neeley, Federal Reserve Bank of St. Louis, REVIEW, July-August, 1996
2. "Mexico: Migration, Remittances," Migration News, http://www.migration.ucdavis.edu/mn
3. Federal Reserve Bank of Dallas, Southwest Economy, Issue 5, 1996
4. "Bordering the Future: The Economy: Growth Without Prosperity," Carole Keeten Strayhorn, Texas Comptroller of Public Accounts, Window on State Government, http://www.window.state.tx.us/border/ch02/ch02.html
Copyright © 2004 by Mark Lacy and Houston Institute for Culture.