Dr. Alejandro Diaz Bautista Presentation U.S. Congress Washington D.C. March 2010
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Dr. Alejandro Diaz Bautista Presentation U.S. Congress Washington D.C. March 2010



“Immigration Reform, Labor Mobility and Regional Economic Growth in North America 2010” ...

“Immigration Reform, Labor Mobility and Regional Economic Growth in North America 2010”
Alejandro Díaz-Bautista, Ph.D.
Professor of Economics and Researcher at DEE, El Colegio de la Frontera Norte (COLEF)


Prepared for the 14th Annual U.S. - Mexico Congressional Border Issues Conference Immigration Reform and Security Cooperation, March 17-18, 2010, Rayburn House Office Building, Capitol Hill, Washington, D.C.



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  • “ [The goal of this slide is to put in perspective the size, population and economic power of the border states’ region]” In the 10 states of the Mexico-U.S. border region, we have a population of 92 million, which represent almost 1/4 of the combined populations of both countries. In this sense, one fourth of the population in each country is directly more influenced by the neighboring country’s culture.

Dr. Alejandro Diaz Bautista Presentation U.S. Congress Washington D.C. March 2010 Dr. Alejandro Diaz Bautista Presentation U.S. Congress Washington D.C. March 2010 Presentation Transcript

  • “ Immigration Reform, Labor Mobility and Regional Economic Growth in North America 2010” Alejandro Díaz-Bautista, Ph.D. Professor of Economics and Researcher at DEE, El Colegio de la Frontera Norte (COLEF) adiazbau@hotmail.com Prepared for the 14 th Annual U.S. - Mexico Congressional Border Issues Conference Immigration Reform and Security Cooperation, March 17-18, 2010, Rayburn House Office Building, Capitol Hill, Washington, D.C.
  • Recent History
    • In February 2001, President Fox got to host the new U.S. President's first foreign trip. President Bush brought gifts to Fox's ranch in Guanajuato, while immigration was placed on top of the U.S. and Mexico bilateral agenda.
    • The offer was accepted and the commission was empowered to work out a bilateral migration agreement. One week before September 11, 2001, Mexican President Fox got to address a joint session of Congress.
  • After the 9/11 attacks, the top level talks on migration were put off.
    • When the North American Presidents next met at an international meeting in Monterrey, Mexico in March 2002, Bush said that the immigration deal would come manana. The prospects of a comprehensive immigration reform and legalization of millions of migrants for starters, was now beyond the political horizon.
    • The mood had shifted in the U.S. In national polls after September 11, more than 80 percent concluded that the United States had made it too easy for foreigners to enter the country; in another, 77 percent said the government was not doing enough to control the border and screen people.
    • In a May, 2006 Gallup Poll, which asked, “Which comes closest to your view about what government policy should be toward illegal immigrants currently residing in the United States,” only 21% responded “deport all”; 61% said, “remain in the U.S. and become citizens,” and 15% said “remain in the U.S. in order to work.”
    • When undocumented immigrants are seen as persons rather than objects or caricatures, the U.S. public is much more sympathetic to their plight.
  • If it were possible to locate most illegal immigrants currently in the U.S., would you favor deporting as many as possible or would you favor setting up a system for them to become legal residents? Source: Fox News poll, June 2007
  • Economic Integration in North America
    • Mexico and the United States already share the highest level of economic integration between the most unequal pair of rich and poor neighboring countries anywhere in the world. A longstanding economic relationship continues to grow all along the 1,952-mile U.S.-Mexico boundary and its 14 large sister border cities. At least 10 million people live along the border (92 million in the 10 Mexico- United States border states), and its twin cities share common airsheds and watersheds. The U.S.-Mexico border is the world's busiest, with an estimated 270 million legal crossings from Mexico each year.
    • The area north and south of the U.S.-Mexico border is a unique region that is economically distinct from the rest of the United States and Mexico. For example, the border regional per capita income (with the important exception of San Diego) is low relative to the national U.S. average. While regional per capita income in border states are above the average for the Mexican side.
  • United States - Mexico Border Geography
    • Geography:
    • 10 border states.
    • 1,952 miles of border.
    • Population: 92 million in the 10 border states.
  • Increasing Economic Ties in the Border Region.
    • Millions of Mexicans and Americans cross the border every workweek, depend on each other for their livelihoods, and live and work over the same watersheds. Americans have been crossing into Tijuana from San Diego since it was founded more than a century ago, sampling food and culture. Today, the San Diego-Tijuana regional economy is a large center for television manufacturing, and produces many of the cellular telephones and VCRs sold in the Americas. The Tijuana San Diego border region is a massive economic engine for both countries. Mexican residents spent approximately between 2.6 and 3 billion dollars in 2003 on goods and services in San Diego annually.
    • More than $28 billion in goods moves across the San Diego-Tijuana border annually in both directions. It is estimated that in 2007, Mexicans will spend $6 billion a year in San Diego County, or more than $1 of every $8 in retail sales. More than 10% of all Tijuana residents cross the border five to seven times a week; during Christmas day they spend approximately 50 to 65 million dollars.
  • NAFTA Agreement
    • The North American Free Trade Agreement (NAFTA) was signed and effective in 1994. It's known as TLCAN in Mexico and ALENA in the French-speaking parts of Canada. NAFTA eliminated most tariffs or import taxes on goods moving from one of the three countries to another.
    • After 16 years, most economists believe this has been good, overall, for the economies of all 3 countries. But like all trade agreements, NAFTA has hurt some industries and sectors.
  • NAFTA’s Trade Impact at 16
    • In terms of trade, Canada, Mexico, and the United States have broadened substantially since NAFTA’s implementation, though researcher and trade experts disagree over the extent to which this expansion is a direct result of the deal.
    • Trade with NAFTA partners now accounts for more than 80 % of Canadian and Mexican trade, and more than a third of U.S. trade.
  • NAFTA’s impact on the U.S. labor market
    • The labor impacts are also not a straightforward exercise, and researchers and analysts disagree on how to measure NAFTA’s effects. The USTR claims a broadly positive influence, showing an increase in overall U.S. employment of 24 percent since NAFTA’s inception, as well as declining unemployment rates before the economic crisis of 2008-2009.
    • Inflation-adjusted U.S. wages rose 19.3 percent between 1993 and 2007, as compared to only 11 percent in the fourteen years prior (1979-1993).
  • FDI and Regional Economic Growth
    • The impulse caused by the opening of the economy and the signing of NAFTA in 1994 had a positive effect in the growth of regional northern border economies of Mexico and FDI in the northern border, where the maquiladora sector is one of the main motors of economic growth on the Northern Mexican Border.
    • In almost all the regions of the Northern Border, a process of economic growth is observed, and the impulse due to the commercial opening is apparent. The exporting sector being one of the most dynamic sectors of the Mexican economy.
  • Economic Integration in North America
    • The economic relationship between Mexico and the U.S. is evident in the evolution of some of their economic indicators since 1993. For example, it is apparent that, since 1993, Mexico's GDP shares its trend behavior with the U.S. GDP.
    • Nevertheless, during the 1980s and the beginning of the 1990s the synchronization of the real sectors of both economies was unclear.
  • Economic Synchronization Between Mexico and the U.S.
    • Castillo, Fragoso Pastrana and Diaz-Bautista (2004) studied the synchronization between the economies of Mexico and the United States with special reference to the manufacturing sector. The authors examined the dependency between the assembly plant industry for export in Mexico and the performance of the economy of the United States.
    • Herrera (2004) found also synchronization of GDPs in Mexico and the U.S. became evident with the implementation of the NAFTA.
  • Mexico is dependent on the American Economy as seen during the economic crisis
    • Other structural reforms, like the labor and political reform are needed in Mexico, to boost economic growth and job creation in Mexico.
    • President Calderon has talked of a desire for the two countries to think creatively about new programs for job opportunities that would halt migration at its source, deep inside rural Mexico, instead of at the border. Mexico needs to create more jobs to slow the exodus of Mexicans who migrate to the United States. The economic analysis of the labor market in Mexico shows us that about 400,000 of its most productive citizens leave each year because they can’t find decent-paying jobs in Mexico .
  • U.S. Unemployment during NAFTA
    • In the 14 years before NAFTA, the U.S. average unemployment rate was 7.1 percent. From 1994 to 2007, the average was 5.1 percent. U.S. manufacturing has grown at nearly 4 percent annually since NAFTA was enacted, nearly double that of the previous 14 years.
    • By 2009 and 2010 we were seeing unemployment figures at two digit levels.
  • The North American Model
    • The North American model is increasingly economic integrated as seen by the current economic crisis.
    • An economic downfall in the U.S. has a contemporary economic impact in Mexico.
    • Withdrawing from NAFTA would affect the economies in the U.S. border communities, and rip apart North American supply chains and information systems, and devastate North American exporters. In short, it would cause incredible damage to the economies of North America in the long run.
  • ( % annual variation) Sources: INEGI and US Federal Reserve. Industrial Production in Mexico and the United States during the Fox and Calderon Administrations
  • Contribution of Mexican Immigrants to the U.S. Economy Since the enactment of the NAFTA agreement in 1994, more than 10 million Mexican immigrants have crossed the border. Some recent studies suggest that the contribution of Mexican immigrants to the U.S. Economy is greater than the impact of NAFTA in the economy. First generation Mexican immigrants are estimated to be more than 11 million, which is equivalent to 11 percent of the population that resides in Mexico and 64% of the Hispanic work force in the U.S. If we add second and third generation migrants, the number comes out to be close to 18 million people. The number of people with Mexican decent is estimated close to 30 million living in the United States. Mexican migrants that live in the United Status are relatively young with an average age of 35 years old. In 1994, 63% of migrants did not reach 10 years of education. By 2007, 47% of migrants did not have more than 10 years of education.
  • Contribution of Mexican Immigrants to the U.S. Economy
    • Some studies suggest that the contribution of Mexican immigrants to the GDP in the United States is close to 3.7% of the GDP, which is equivalent to 57.7% of the total value of goods and services produced in Mexico in a year.
    • The U.S saved 723 billion dollars, by not spending on the human capital formation of Mexican migrants. Mexico has transferred to the U.S. close to 356 billion dollars due to reproduction and education of migrants, which is equivalent to 41% of the GDP in Mexico.
    • At the state level, there’s a positive incidence of migrants in the state budgets (State of Texas).
  • Contribution of Mexican Immigrants to the U.S. Economy
    • Migrants also contributed by 7 billion dollars a year to the social security system.
    • Mexican migrants also pay more in taxes in the U.S. than the remittances sent to their families in Mexico. Between 2000 and 2006, Mexican migrants paid taxes in the amount of 202 billion dollars, while during the same period, they sent remittances in the order of 85 million.
    • Alan Greenspan also mentioned that illegal immigration contributed to the economic growth of the United Status by providing the country with a flexible labor force.
    • While Governor Arnold Schwarzenegger mentioned that illegal immigrants were not responsible for the budget crisis in California.
  • Contribution of Mexican Immigrants to the U.S. Economy
    • The annual change in U.S. GDP in 2011 under different scenarios:
    • With a comprehensive immigration reform in 2010: Increase 120 billion dollars.
    • With mass deportations:
    • Decrease 220 billion dollars.
  • Hot Topics in the U.S. Mexico Agenda during the year
    • Some of the topics in the North American and U.S. - Mexico agenda during the past year were climate change and clean energy, swine flu, trade, border security and organized crime, the economic crisis and recovery, unemployment and the immigration reform.
  • Immigration Reform
    • When it comes to immigration in North America, the status quo that is simply unacceptable.
    • In the meeting of Guadalajara, Mexico in 2009, President Obama, with his counterparts from Mexico and Canada, reiterated his commitment to pursuing comprehensive immigration reform, despite his packed political agenda and the staunch opposition such an initiative is likely to face. But in a detailed outline of his timetable, President Obama said that he expected Congress, after completing work on health care, energy and financial regulation, to draft an immigration bill, and that they would begin work on getting the measures passed in 2010.
  • President Obama and the Immigration Reform
    • President Obama has called for a system in which the U.S. have strong border security and an orderly process for people to come in the United States, at the end of a summit meeting of North American Leaders aimed at increasing cooperation in the region and resolving some of the issues that have long strained trilateral relation among North American countries, whose people and economies depend heavily on one another.
    • On November 14, 2009, the Obama administration, via DHS Secretary Janet Napolitano delivered an historic speech for immigration reform in which she succinctly outlined:
    • A strong economic, national security, and humanitarian cases for a comprehensive U.S. immigration reform in 2010.
  • President Obama and the Immigration Reform 2010
    • “ In recent days, the issue of immigration has become once more a source of fresh contention in our country, with the passage of a controversial law in Arizona and the heated reactions we’ve seen across America. Some have rallied behind this new policy. Others have protested and launched boycotts of the state. And everywhere, people have expressed frustration with a system that seems fundamentally broken.”
  • President Obama and the Immigration Reform 2010
    • “ President Obama calls for both parties to come together to fix a broken immigration system and implement comprehensive reform that demands accountability from government, from businesses, and from individuals.”
  • President Obama and the Immigration Reform 2010
    • “Our borders have been porous for decades.  Obviously, the problem is greatest along our Southern border, but it’s not restricted to that part of the country.  In fact, because we don’t do a very good job of tracking who comes in and out of the country as visitors, large numbers avoid immigration laws simply by overstaying their visas.”
  • President Obama and the Immigration Reform 2010
    • “ The result is an estimated 11 million undocumented immigrants in the United States.  The overwhelming majority of these men and women are simply seeking a better life for themselves and their children.  Many settle in low-wage sectors of the economy; they work hard, they save, they stay out of trouble.  But because they live in the shadows, they’re vulnerable to unscrupulous businesses who pay them less than the minimum wage or violate worker safety rules -– thereby putting companies who follow those rules, and Americans who rightly demand the minimum wage or overtime, at an unfair disadvantage.  Crimes go unreported as victims and witnesses fear coming forward.  And this makes it harder for the police to catch violent criminals and keep neighborhoods safe.  And billions in tax revenue are lost each year because many undocumented workers are paid under the table.”
  • National Guard in the Border
    • The analysis has shown that the U.S. has made security its borders and in particular the United States-Mexico Border as one of the highest priorities to follow in the near future.
    • New Mexico Gov. Bill Richardson has ordered National Guard troops patrol the border with Mexico, after the murder of a rancher in Arizona two weeks ago. The order for the National Guard came a day after Gov. Richardson announced he had ordered the deployment of additional security officers to the area. With this measure, Richardson became the first governor of a border entity exercising its authority to send troops to guard the border using the institution's own resources.
    • Governors Rick Perry of Texas;and Jan Brewer, Arizona, have asked the federal government to send National Guard troops to the border with Mexico, but have not yet received precise response from Washington, although it has indicated that it will be sent in the near future and even mentioned a single command of National Guard soldiers and federal agents.
    • The Ministry of Foreign Affairs has mentioned that in termos of border violence, the answer is cooperation, while respecting the right of the United States to decide on security measures as deemed necessary.
    • But the United States must undertake additional efforts in combating trafficking of weapons and cash, that comes from Arizona and the U.S. and is exported to Mexico.
  • Border Enforcement
    • The reform bill also strengthens border enforcement and create a new temporary-worker program to allow immigrants to come to work in the United States in the future.
    • Some studies suggest the need for more border "security" enforcement in the United States. This likely means more money for border enforcement like the 2,000-mile wall still under construction along the U.S./Mexico border, with more support for the electronic surveillance and other militaristic tactics currently in use along the border.
  • Insecurity in the Border Region
    • It is widely recognized that there’s an increasing insecurity problem in the border region of Mexico with the United States. The biggest violators of human rights right now are the cartels that are killing people, kidnapping people, extorting people and encouraging corruption in the border region.
    • The U.S. alert not to travel to regions in the border of Mexico, including Tijuana, Baja California, until August 2010, will have economic impacts on the regional economies of Mexico.
    • The second US State Department alert has also authorized the families of diplomatic personnel based in northern Mexico to leave the country after the murder of two Americans connected with the U.S. consulate in the city of Ciudad Juarez.
  • Concentrated border enforcement era Spending on border enforcement has quadrupled since 1993.
    • A 2004 U.S. government report estimated that more than half of illegal immigrants come to the U.S. legally and overstay their visas. “Troops alone simply buy into the enforcement-only strategy that has failed for years.”
    • (Arizona Republic editorial, May 2006)
    • Increased border security would only increase the use and price of smugglers, push crossings into more remote and inhospitable areas, and result in more deaths. In 2005, 516 bodies were found in the desert. With those not found, the number is likely over 1000.
    • 60 Minutes , 6-4-06
  • National Guard in the Border
    • President Obama recently ordered 1,200 National Guard troops to the border to boost security and asked Congress for an additional $600 million to support personnel and improve technology there. More than 500 of those National Guard troops are headed for Arizona.
  • Border Enforcement Security Task Forces.
    • Today, we have more boots on the ground near the Southwest border than at any time in our history.
    • We doubled the personnel assigned to Border Enforcement Security Task Forces. We tripled the number of intelligence analysts along the border. For the first time, we’ve begun screening 100 percent of southbound rail shipments. And as a result, we’re seizing more illegal guns, cash and drugs than in years past. Contrary to some of the reports that you see, crime along the border is down.
    • And statistics collected by Customs and Border Protection reflect a significant reduction in the number of people trying to cross the border illegally.
    • So the bottom line is this: The southern border is more secure today than at any time in the past 20 years.
  • Immigration Reform
    • Create a broad-based registration program that requires all illegal immigrants living in the U.S. to come forward to register, be screened, and, if eligible, complete other requirements to earn legal status, including paying taxes.
  • The National ID Card with an identity verification biometric system
    • In addition to opening a path to legal status for an estimated 11 million illegal immigrants, the immigration bill should tighten enforcement against hiring illegal immigrant workers by creating a national biometric identification card for all workers, including American citizens and legal immigrants. The implementation of an "identity verification biometric system" would function like a national ID card, but with an added eyeprint or fancy fingerprint.
    • Biometrics as an identification device are very broad, but ultimately, it calls for very high-tech way of tracking people in the country.
  • Expanded Programs for Temporary Guest Workers
    • The argument against any expanded program to allow in temporary immigrant guest workers, is that those programs leave immigrants vulnerable to abuse and undercut American workers.
    • Business groups would like an approach that would allow the markets, rather than a government agency, to determine labor demand, with an expansion of the programs for temporary guest workers.
  • Immigrants with Deportation Orders
    • The 600,000 people with current deportation orders would get to stay and apply for legalization, unless they have a criminal record. This could include a broad range of people, from people who’ve overstayed their visas, to people who’ve been rounded up in raids. It’s looking like this bill will provide no protection for people with criminal deportation orders.
  • Official Registration System
    • The immigration reform should have an official registration system for people already in the country. There will likely be an open window for people to come forward and register and begin a legalization process. They would probably have to pay a “penalty” of $500 or more, including a background check that would be conducted.
    • The need of proof of employment would have to be provided, to prevent burdens on the american public. Employers would be able to register their workers who are undocumented with no penalty.
  • Future Immigration. Young Immigrants come out in the U.S.
    • Recently, young immigrants in several U.S. cities have been holding “coming out parties” where they disclose publicly that they do not have legal immigration status.
    • In 2000, of the estimated 11-12 million undocumented immigrants in the U.S., approximately 2.5 million were undocumented youth under age 18. U.S. Census Bureau, 2000.
  • Analysis of the Immigration reform in 2010
    • The economic and political analysis shows that we might not expect much action till after the midterm elections in 2010. Congress is unlikely to take a vote on immigration reform until after the midterm-elections in November. Competing bills might be introduced and debated during the first half of the year, but the Democratic leadership is not likely to schedule a vote on the issue until after the elections even though Latino turnout might be critical at the voting booth. Remember that the 1986 amnesty was also delivered after the midterm elections.
  • Conclusions
    • Continue the work of fixing our broken immigration system.
    • The immigration reform has to be in 2010, what health care reform has been to 2009 and part of 2010: the dominant issue, hotly debated, and that will have to culminate in some Congressionally-negotiated form of landmark legislation.
    • There won't be any so-called comprehensive immigration reform without some compromises by the most important political figures in the United States.
  • Conclusions
    • The analysis shows that in order to solve bilateral problems between Mexico and the United States, you have to take the same actions, in a coordinated manner, on both sides of the border.
    • Although the border line and fence exists between both countries, the analysis shows the large economic, security and social links between the two countries and the level of economic integration for both economies, especially in the border.
  • “ Immigration Reform, Labor Mobility and Regional Economic Growth in North America 2010” Alejandro Díaz-Bautista, Ph.D. Professor of Economics and Researcher at DEE, El Colegio de la Frontera Norte (COLEF) adiazbau@hotmail.com Prepared for the 14 th Annual U.S. - Mexico Congressional Border Issues Conference Immigration Reform and Security Cooperation, March 17-18, 2010, Rayburn House Office Building, Capitol Hill, Washington, D.C.
  • References
    • Díaz-Bautista, Alejandro (2003), “ El TLCAN y el Crecimiento Economico de la Frontera Norte de Mexico ”, en “10 años del TLCAN”, Revista Comercio Exterior de Bancomext, Diciembre.
    • Díaz-Bautista, Alejandro (2003), “The Determinants of Economic Growth: Convergence, Trade and Institutions” (“Los Determinantes del Crecimiento: Convergencia, Instituciones y Comercio Internacional”) 164 pages, june. El Colegio de la Frontera Norte, México y Editorial Plaza y Valdes.
    • Castillo, Ramon, Díaz-Bautista, Alejandro y Edna Fragoso (2004), "Sincronización entre las Economías de México y Estados Unidos: El Caso del Sector Manufacturero", en Revista Comercio Exterior de Bancomext, Vol. 54, paginas 620-627.
    • Díaz-Bautista, Alejandro (2006) “Foreign Direct Investment and Regional Economic Growth considering the Distance to the Northern Border of Mexico” in Analisis Economico, UAM, Number 46, Vol. XXI, 2006.
    • http://www.nafta-sec-alena.org
    • http://www.spp.gov/
    • http://www.whitehouse.gov/the-press-office/remarks-president-comprehensive-immigration-reform