Professor Alejandro Diaz-Bautista Conference University of San Diego, September 2012

"The United States-Mexico Border
Economy in 2012”

Alejandro Díaz-Bautista, Ph.D.

Professor of International Economics at Colef
and
Distinguished Researcher
National Council of Science and Technology

adiazbau@gmail.com

Tuesday, September 18, 2012, from 9:00 am to 12:00 pm,
at the Trans-Border Institute and the Center for Peace
and Commerce, University of San Diego.

Introduction

 The presentation will focus on economic issues
that impact the economic relationship between our
two countries and that have a high priority in
upcoming years. The conference will address some
of the critical economic issues on both sides of the
United States - Mexico border. Topics will include
economic growth, economic integration, trade,
unemployment, migration, foreign direct
investment, exchange rates, cross border retail
sales, energy prices, inflation and bi-national
projects.

Introduction
 Mexico is doing well in economic terms:
low debt, low deficit and moderate
economic growth.
 Emerging markets are in much better
shape, with higher levels of economic
growth, compared to most advanced
economies .
 Unemployment is a major problem for
emerging and advanced economies during
2012.

Mexico and the United States
 The two countries share a maritime and land border in
North America. Several treaties have been concluded
between the two nations bilaterally, such as the North
American Free Trade Agreement (NAFTA). Both are
members of various international organizations, including
the Organization of American States and the United
Nations.

 The two countries have close economic ties, being each
other's first and third largest trading partners.
 They are also closely connected demographically, with over
one million U.S. citizens living in Mexico and Mexico being
the largest source of immigrants to the United Sates.

Mexico and the United States
United States Mexico

Population
311.1 million in 2010 112.3 million in 2010

Population Growth
0.9% per year 1% per year

Nominal GDP 2006 (USD)
$14,204,322 million $1,085,951 million

GDP per Capita 2006
$46,970 $14,270
(USD)
Area
3,717,792 mi 758,445.2 mi

Capital Washington, D.C. Mexico City

Largest City New York Mexico City

The United States- Mexico border region

United States - Mexico Border States

Description:
• 10 border states.
• Nearly 2,000-mile (3,169 km or 1,969 miles) of international
border.
• Population: more than 83 million.

The United States- Mexico border region
 The ten Border States represent the largest binational regional economy in
the world, with over 83 million people and a combined economy ranked
estimated at number four in the world in economic terms.
 This region has 51 border crossings, 32 bridges and seven federal railway
routes, placing it as the busiest border in the world, with over 350 million
people cross the border each year.
 The economic slowdown and unemployment are among the issues that
currently affect the people on both sides of the border.
 The state of Arizona had an unemployment rate of 9.4 percent, Texas, 8.4
percent; New Mexico, 6.7 percent, and California, 12 percent (the
highest), according to the figures from July 2011, compared to an
unemployment rate of 9.1 percent in the United States during July 2011.
 In July 2011, the northern border states of Mexico were also showing high
unemployment rates. The state of Baja California had an unemployment
rate of 5.05 percent, Sonora, 5.65 percent; Chihuahua, 6.81 percent;
Coahuila, 6.27 percent; Nuevo Leon, 6.49 percent; and Tamaulipas, 8.81
percent (the highest).

United States Unemployment Rate

The United States Mexico
Border Unemployment (2012)
 Official figures from the National Institute of Statistics and
Geography (INEGI) show that during the second quarter of 2012,
the northern border states in Mexico continue to show high
unemployment rates. Chihuahua had a 7% unemployment rate,
Tamaulipas with 6%; Sonora with 5.4%, Coahuila with 5.5%,
Nuevo Leon with 6.4% , and Baja California with a 6.1%
unemployment rate. On average, the unemployment rate of the
northern border states of Mexico is estimated close to 6.06%
during the second quarter of 2012.

 Furthermore, at the end of July 2012, the southern U.S. border
states also suffered with high unemployment rates: California with
10.7%, Arizona with 8.3%, 6.6% for New Mexico, and Texas with
an unemployment rate of 7.2 percent. On average, the
unemployment rate of the southern border states of the United
States is estimated at 6.06% during the month of July 2012.

The United States Mexico
Border
 People cross the United States
Mexico border every day to do
business, go shopping, visit family
members, or simply to enjoy each
other’s tourism.
 This results in around 350 million
crossings and almost $400 billion in
trade each year, making it the most
important border region in the world.

Economic Integration in North America

 The U.S. and Mexican economies have integrated
since the passage of the North American Free
Trade Agreement (NAFTA) in 1994.
 In 2009, the U.S. provided up to 80% of all
inputs for Mexico’s maquiladora manufacturing
and assembly firms, and nearly 90% of all
exports from Mexico’s maquiladora industry went
to the U.S., with an estimated $114 billion in
bilateral U.S. and Mexico trade.
 By 2010, the United States was Mexico’s largest
trading partner and largest foreign investor.

California and Mexico Economic Integration

 Trade links and economic integration between
Mexico and California are deep in terms of the
total value of traded goods. Mexico continues to
be California's number one export market.
California exports to Mexico were close to $21
billion in 2010.
 More than three-quarters of all California origin
exports are shipped to Mexico’s northern border
states.
 Baja California residents contribute billions of
dollars annually to the California economy.

Baja California and California Economic Integration

 Economic Integration can also be seen at the regional level.
 During 2010, the official data shows that the number of
northbound crossers from Baja California to California
reached 61,105,484 people, the majority of whom, crossed
in personal vehicles. Baja California residents constitute an
important component in the economy of communities and
counties on the U.S. side of the border, like San Diego
County.
 These visitors from Baja California enter the U.S. regularly
for shopping, tourism, work, and socialization with family
and friends. It’s a well known fact that cross border visitors
from Mexico have a significant economic impact on U.S.
communities and counties.

The Border Economic Zone (BEZ) in Baja California

 A major challenge for the commercial
sector of Baja California is without a
doubt, the increase consumer spending of
Baja California residents into the U.S.
market, which has been estimated at
around 6 billion dollars a year.

 With the implementation of the BEZ in
2012, Baja California wants to recover
part of the consumer spending by Baja
residents in California.

 The BEZ is intended to promote the
consumption of regionally made goods in
the Baja California region. The economic
impact of the implementation of the BEZ
could be as high as an 8% reduction of
spending by Baja California residents in
California.

The Border Economic Zone (BEZ)

 A considerable amount of money is spent on
a multitude of retail items including
groceries, clothing, appliances, tourism and
services.
 As a measure to increase consumer spending
in the state of Baja California, the
government and business sectors of Baja
California in conjunction with the State
Government and the Federal Government
proposed the new Border Economic Zone
(BEZ) in 2012.

“El Buen Fin” Program in Mexico
 The idea of “El Buen Fin” program in Mexico was
created as a private initiative to enforce the economic
activity in Mexico during November of 2011. The
initiative was presented through a program created by
the federal government and some of the most
important media networks of Mexico.
 The program is similar, in some way, to the famous
“Black Friday” of the United States, while this day
represents the day with highest consumer spending,
and when the commercial sector shows their best
offers and the biggest discounts throughout the year.
 The economic impact of the implementation of the “El
Buen Fin Program” was estimated as high as a 2%
reduction of spending by Baja California residents in
California during 2011.

Economic Impacts and Expenditures
 Shopping is the primary reason to cross into the U.S. for
Baja California residents. Depending on the study, 42 to
68% of border crossers identify shopping as the primary
reason for the visit into Southern California. Other reasons
are social in nature, like visiting family and friends, or are
work related.

 During 2010, around 74 percent of crossers entered
California in their private vehicles, since a car allows them
freedom of movement between different shopping locations
in the U.S. as well as enough room to handle the volume of
their purchases.

 The estimated average daily expenditures reported by Baja
California visitors into San Diego County and California in
various studies ranges from US $140 per trip to $300 per
trip. The current estimation uses an average amount of
expenditures per trip of $240 per trip as the base case
scenario.

Economic Impacts
 The annual retail sales to Baja California Cross Border
Visitors are estimated considering an annual rate of
economic growth in Baja California of 2.3%, with a base
case spending of $178 per trip, a high case spending of
$300 per trip and a low case spending of $140 per trip.

 The estimation considers that 42% of border crossers
identify shopping as the primary reason for the visit into
Southern California.

 The implementation of el “Buen Fin” program is estimated
to have a reduction of 2% on annual retail sales to Baja
California Cross Border Visitors. While the Border Economic
Zone (BEZ) is expected to reduce annual retail sales by
Baja California CrossBorder visitors by al least 8% during
the first few years of the program.

Annual Retail Sales in California by Baja California Border Crossers
(Economic Growth Scenario)

9000000000
8000000000
7000000000
Low Spend. Case
6000000000
High Spend. Case
5000000000
Dollars

Base Spend. Case
4000000000
El Buen Fin Program
3000000000
BEZ
2000000000
1000000000
0
2010 2011 2012 2013 2014
year

California Economic Impacts
 The California and Baja California border region remains an
example of social and economic integration in North
America, where cross-border shopping is only one aspect of
that economic reality in the border region.
 Mexican citizens cross frequently into the U.S. to shop,
work, dine, vacation, and visit friends and family. What
they spend on those visits results in a key contribution to
local border economies in California.
 The results reveal annual retail sales by Baja California
Cross Border Visitors in the range of 5.9 to 6.8 billion
dollars along the U.S.-Mexico border, depending on the
complete implementation of the Border Economic Zone
(BEZ) in Baja California and the “El Buen Fin Program”.
 The base case scenario shows that Baja California
consumer and economic drain into the U.S. market is
estimated at around 5.9 billion dollars in 2012 and 6.2
billion dollars in 2014, with the implementation of the
Border Economic Zone (BEZ).

San Diego County Economic Impacts
 Each day thousands of people travel between the United
States and Mexico via the San Ysidro, Otay Mesa, and
Tecate border crossings making the San Diego-Baja
California points of entry one of the busiest in the
Americas. The number of northbound crossers from Baja
California to San Diego County during 2010 reached
42,091,703 people, the majority of whom, crossed in
personal vehicles.
 It is estimated that 92% of Mexico-residing border crossers
at the San Diego-Tijuana points of entry come from the
Tijuana Metro Region which consists of the cities of Tijuana,
Rosarito, and Tecate.
 The 2010 census data from Mexico estimates
approximately 475,000 households in the Tijuana Metro
Region. It is estimated that 30 to 55% of households
reported at least one family member with a border crossing
card or visa to enter the United States.

San Diego County Cross Border Retail Sales 2010-2014

7000000000
6000000000
Low Spend. Case
5000000000
High Spend. Case
4000000000
Dollars

Base Spend. Case
3000000000
El Buen Fin Program
2000000000
BEZ
1000000000
0
2010 2011 2012 2013 2014
Year

San Diego County Economic Impacts
 The results reveal a substantial overall San Diego
County cross border retail sales in the order of 4
billion dollars during 2012 along the Baja California
– San Diego County border.
 Expenditures by cross border residents of Baja
California are estimated at 4.2 billion dollars in San
Diego County during 2014 using the base case
spending scenario and with the implementation of
the BEZ.
 The San Diego-Carlsbad-San Marcos metropolitan
area’s GDP in 2009 was estimated at around
$171.4 billion, ranking 16th in the United States,
according to the federal bureau of Economic
Analysis.
 In San Diego County, the Hispanic population
increased from 27% in 2000 to 32% in 2010, with
the resulting significant contribution to the regional
economy.

 From 1995 to 2010, the official estimates indicate
more than 450 million personal vehicle crossings
with 966 million passengers, and more than 260
million pedestrian crossings, from Baja California to
California.

 Expenditures by cross border residents of Baja
California in San Diego County represents around
2.4% of the annual gross domestic product in San
Diego County.

 A new economic and competitive binational Mega-
region is evolving. The Baja California – Southern
California Mega Region includes Los Angeles
County, Orange County, Riverside, Imperial and
San Diego Counties on the California side, and
Tijuana, Rosarito, Tecate and the port of Ensenada
on the Baja California side.

Introduction to
NAFTA

 The North American Free Trade Agreement
(NAFTA) was signed 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.
 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.

Economic Integration:
Classical Theory
 Old trade theory and trade creation
• Improved allocation of resources through exploitation
of comparative advantage (Ricardo, Heckscher-Ohlin-
Samuelson).

• Economic Integration arguments center on:
• Trade creation;
• The effects of integration on import prices,
competition, economies of scale, and factor
productivity.

HOS Model: Gains from Trade
Y
B

A
C

X

CGE Models: Gains from Trade
 Many single-country and global CGE
trade models.
• Faithful representations of HOS model.
• Widely used to evaluate trade reform.
 Results
• HOS efficiency gains from trade
liberalization.
• Magnitudes are small, much smaller
than gains indicated from historical
analysis.

Introduction to Economic
Integration
• Theory of customs unions (Viner –
Meade - Balassa).
• Economic integration is best viewed as a
spectrum with the various integrative
agreements in effect today lying in the
middle of this spectrum.
• The level of integration defines the
nature and degree of economic links
among countries.

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.

Integration of Industrial Production
between Mexico and the United States
(Var. % anual)
MEXICO USA
10.0
8.0 Fox
6.0 Calderón

4.0
2.0
0.0
-2.0
-4.0
-6.0
-8.0
-10.0
-12.0
/1
1

/1
1
/0
1
/0
3
/0
5

/0
9

/0
1
/0
3

/0
5
/0
7
/0
9

/0
1

/0
5

/0
9

/0
1
1
4
0
2

1
5
0
2

6
0
2

7
0
2

1
8
0
2
4
0
2
4
0
2
4
0
2
7
4
0
2
4
0
2

5
0
2
5
0
2
5
0
2
7
5
0
2
9
5
0
2

1
6
0
2
3
6
0
2
6
0
2
6
0
2
6
0
2

7
0
2
3
7
0
2
7
0
2
7
0
2
7
0
2

1
8
0
2
3
8
0
2
5
8
0
2
7
8
0
2
9
8
0
2

9
0
2
/

/

/
/

/
/
/

/
/

/

/

/
/
/
/
/
Fuente: INEGI y Us Federal Reserve.

North American Economic
Integration and Industry Location
 Hanson (1998) discussed the recent academic literature on
whether the movement towards free trade in North America
has influenced the spatial organization of production in
Canada, Mexico, or the United States.
 In Mexico, closer economic ties with the United States
appear to have contributed to a contraction of employment
in the Mexico City manufacturing belt, a rapid expansion of
manufacturing employment in northern Mexico, and an
increase in the wage premia paid to skilled workers. The
effects of economic integration on industry location in
Canada and the United States seem to have been much
weaker.
 Krugman and Livas (1996) examined Mexico through the
lenses of the new economic geography, attempting to
explain why so much industry was concentrated in Mexico
City. Used the Dixit and Stiglitz monopolistically competitive
market structure.

FDI and Regional Economic Growth
considering the Distance to the Northern
Border of Mexico

 Diaz-Bautista (2006) reviewed different
studies to explain the effects of the NAFTA
agreement in regional FDI and regional
economic growth. An empirical
econometric model was used to analyze
the relation between the FDI and
economic growth at the regional level in
Mexico, with an approach of the new
economic geography and endogenous
economic growth.

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.

FDI and Economic Growth
 By the year 2000, the companies that exported more
than 80% of their production, paid 62% higher wages
than other types of companies. In that same year, the
maquiladora sector had wages 5 times greater than the
average national minimum wage. Similarly, Mexico has
diversified its export base.
 In the year 2000, companies producing manufactured
goods accounted for 87 % of Mexico’s export sales.
 In one decade, the liberalization of trade and the
macroeconomic policies in Mexico increased exports
from 41 trillion USD, in 1990, to 166 trillion USD in 2000.
Mexico increased its imports by 310% between 1990
and 2000.

Foreign Direct Investment
(FDI)
Despite the global uncertainties and the deepening crisis in
Europe, Foreign Direct Investment ( FDI) increased in Latin
America and Caribbean by 31% in 2011 from 2010,
reaching a record 153 billion dollars.
Mexico was the second recipient of foreign direct investment
(FDI) in Latin America, with 19.44 billion in 2011. While
Brazil was ranked first place in attracting FDI, reaching more
than 66 billion dollars.
In 2007, FDI attraction in Mexico reached 29.714 billion
dollars, the highest figure in the last ten years, but
thereafter began to decline.
In 2008, the amount of foreign direct investment (FDI)
dropped to 25.864 billion dollars.
In 2009, FDI in Mexico bottomed to only 15.206 billion, due
to the international economic crisis, and in 2010 recovered to
register 17.726 billion dollars.

Global FDI Flows 2011- 2012
 Global FDI inflows are likely to be around $1.6
trillion.

 Foreign direct investments worldwide are
projected to return to pre-crisis 2008 levels this
year, with inflows expected to be up to USD 1.6
trillion.

 Recovery of FDI inflows would continue this year
while pegging the amount at around USD 1.4
trillion to USD 1.6 trillion.

 Brought down by the 2008 financial meltdown
and its ripple effects, FDI worldwide tumbled to
just USD 1.19 trillion in 2009. Last year, the
inflows were slightly better at USD 1.24 trillion.

FDI and Growth Literature
 The literature on foreign direct investment (FDI)
and economic growth generally points to a
positive FDI-growth relationship.
 We can offer direct tests of causality between the
two variables using time series analysis.
 We can use Granger causality tests to analyze the
variation of the FDI-growth relationship across
countries.
 We can also see that the FDI - growth causality is
strengthened by the presence of greater trade
openness.

Positive and Negative Effects of
FDI on Economic Growth
 Empirically, the positive effect of host country economic
growth on FDI inflow has been confirmed by various studies
(Veugelers, 1991; Barrell and Pain, 1996; Grosse and
Trevino, 1996; Taylor and Sarno, 1999; Trevino et al.,
2002).
 The effects of FDI on subsequent economic growth has
been shown to be both positive (Dunning, 1993;
Borensztein et al., 1998; De Mello, 1999; Ericsson and
Irandoust, 2000; Trevino and Upadhyaya, 2003) and also
negative (Moran, 1998).

 The positive growth effects of FDI have been more likely
when FDI is drawn into competitive markets, whereas
negative effects on growth have been more likely when FDI
is drawn from countries with heavily protected industries.

GRANGER CAUSALITY
 In order to test for direct causality
between FDI and economic growth, we
perform a Granger causality test.
 Since macroeconomic time-series data
are usually non-stationary (Nelson and
Plosser, 1982) and thus conducive to
spurious regression, we test for
stationarity of the data series before
proceeding with the Granger causality
test.

Stationarity Tests
 The unit root tests on the levels of each
variable reveal the corresponding
quarterly series from 1994 to 2009 to be
non-stationary for Mexico, Canada and the
U.S. Analogous tests on the first-
difference measures of the variables,
however, reveal both series to be
integrated in the first order and, hence,
stationary at the first-difference level.
 We therefore proceed with the Granger
causality tests using first-differences of
the respective series.

FDI and Economic Growth
in the NAFTA region
 Time series analysis was used to observe the causal
relationship between economic growth and increased FDI in
the NAFTA region.
 The variation in the FDI-growth relationship indicates that
causality between the two variables cannot be generalized
for all NAFTA countries region and must be considered
more carefully.
 The implication here is that policy makers should pay
increased attention to the overall role and quality of the
countries economic growth as a vital determinant of FDI
along with other variables like openness and institutions.

 The provision of enabling a positive economic environment
provides better incentives to attract FDI inflows than the
usual approaches such as petitioning via investment tours,
organization of trade-expos and special initiatives aimed at
attracting specific investments into the country.

FDI in the NAFTA Region
 The NAFTA region has created new opportunities
of investment and trade for the companies of all
3 countries, and 50 % of FDI in NAFTA is
between trade partners. For Mexico, the United
States is the main source of FDI.
 FDI is of great importance the Northern Border
Mexican Region, and by the year 2004, FDI in the
Northern Border States of Mexico represented
18.7% of total FDI at the national level. The
Northern Border States that are considered in this
study are Baja California, Sonora, Chihuahua,
Coahuila, Nuevo Leon and Tamaulipas.

Economic Growth
 The economics of growth in Mexico has come a
long way since it regained center stage for
economists in the last few years. The early focus
of economic growth in Mexico was based upon
theoretical models that generated self-sustaining
growth, but newer models of economic growth
have been applied to Mexico, which have
increasingly replaced older models, with an
attempt to shed light on the factors affecting
economic growth in Mexico. On the empirical
front, the search for determinants of growth has
gone from basic economic growth variables (such
as physical and human capital) to newer
determinants of economic performance such as
trade and institutions.

Economic Growth in Mexico and the
United States

Economic Growth Models
 A Major weakness of the neoclassical growth
model has been detected by economists around
the world and has not been overlooked in Mexico.
Long-run growth in that model is exogenous.
 Recent empirical studies have found a correlation
between the rate of growth of FDI and economic
growth. The direction of causality between the
rate of growth of investment and the rate of
economic growth has been analyzed by Carrol
and Weil (1994), Blomström, Lipsey and Zedjan
(1996) and Barro (1997), and found that the
causality was from FDI to economic growth.

New Growth Theory
 In the endogenous growth models the increases
in investment during a period of time, increases
the rate of economic growth in the long run. In
the endogenous growth models, FDI can affect
growth endogenously if it generates increasing
returns in production via externalities and
productivity spillovers. Moreover, policy changes
might induce permanent increases in output
growth by providing incentives to host FDI.
Specifically, FDI is thought to be an important
source of human capital accumulation and
technological change.
 Helpman (1984) and Helpman and Krugman
(1985) are also an important part of the analysis
of FDI in the new growth theory. In those
models, distance to the export market is an
important determinant of economic growth and
FDI.

Center Periphery and distance
 Krugman (1997) uses the model developed by
Dixit and Stiglitz (1977) to have a unified spatial
economic structure which is described by the new
economic geography.
 Fujita, Krugman and Venables (1999) assume
that factors of production are less mobile
between countries than between different regions
of the same country,and analyzed the spatial
order resulting from differing transport costs.

Derivation of the Model with FDI and
Regional Economic Growth
 We assume a regional production function in the following
form:Y = F(K, L, F, X) (1) where Y is the product, K is
capital, L is human capital, F is FDI and X denotes the
vector of observable variables that can affect the regional
economic growth and the FDI.
 A Cobb Douglas function is used to obtain the logarithms in
time that gives us the following expression:
 gy= ζgk+ ψgf+ γgL+ θgx (2)
 The relation shows the empirical relationship between
regional economic growth (gy) and the presence of FDI
(gf), with other explicative factors (gx). From the
conventional model of growth, the empirical model is
developed using the economic growth ∆yjt in region j for
time t, with the FDI represented by F, human capital
represented by L, and other variables (X) like distance and
urban agglomerations.
 The empirical model has the following form:
 ∆Yjt = β0+ β1Ljt+ β2Fjt+ β3Xjt+ ujt (3)

Sources of Information
 The sources of information for the study are varied.
 Distance is measured by the number of kilometers on the road
from the capital of a state to the nearest border crossing with the
United States. Another distance variable is included and
constructed by the number of kilometers on the road from the
capital of a state to Mexico City.
 The density per kilometer squared in each state of Mexico
measures the level of cluster agglomeration in the economy.
 Another variable is constructed by the number of businesses in
the commercial, services or manufacturing sector per state.
 The migration variable is measured by the net balance migration
per state in Mexico provided by INEGI. The human capital variable
is an indicator of the educational characteristics of the population
in each state. It includes the percentage of the population 15
years of age or older that have more than elementary studies in
each state of Mexico.
 The regional economic growth is measured by the percentage
annual increase in income per capita in the period 1994-2000. The
initial level of income used in the study is the one provided by
INEGI in 1994. Foreign direct investment is constructed from the
data provided by the Ministry of Economy in Mexico from1994 to
2000. The econometric technique must take into account the
endogeneity argument.

Table 4. FDI and Regional Economic Regression per State of Mexico during the
period 1994-2000
Dependent Variable: Growth of regional Income per capita 1994 2000
Method of Estimation: TSLS with instrumental variables
Variable Coefficient t-stat. Prob.
C 42.993 2.821* 0.010
Distance from the Border -0.0079 2.716* 0.012
Migration 1.9752 3.097* 0.005
R-Squared 0.654 Mean dependent var 25.30
R-Squared Adj. 0.490 S.D. dependent var 9.830
Prob(F-statistic) 0.003
Note: * Statistically Significant.

Econometric Results
 The results of the econometric analysis of the regional
economic growth with the new economic geography
perspective shows that the agglomeration variables are non
significant, while the distance from the border is
statistically significant, which is evidence in favor of the
agglomeration models and the NEG models.
 The distance from the border shows the importance of
transport costs and trade to the United States in explaining
regional economic growth in Mexico.
 The migration variable is also important, showing the
importance of migration in determining regional economic
growth, due to repulsion and attraction forces that affect
regions and agglomerations in Mexico.
 On the other hand, the human capital variable, which is
one of the most important variables is the endogenous
growth models is non significant in the regression.

Econometric Results
 In the empirical study, the importance of the distance to
the Northern Border of Mexico as a determinant of regional
economic growth in Mexico is shown.

 The commercial trends in the agglomeration of industry in
the Mexican Northern Border and the transportation
technology costs to the border region (which are proxied by
the distance to the border) are an important factor driving
Mexico first to regional concentration and then to regional
dispersion of economic activity.

 The production of manufactures is subject to increasing
returns to scale if the production activities take place in a
single site close to the border and the selling market.

 The recent advances in the field of NEG have increased our
understanding of spreading and agglomerating forces in the
Mexican economy.

Griswold (2004) “After 10 Years, NAFTA
Continues to Pay Dividends”, Cato Institute

 The 10th anniversary of the controversial NAFTA
was viewed as a great international public-policy
success.

 For one thing, it has delivered on its principal
promise of increasing trade. Since 1993, the year
before the agreement took effect, two-way
commerce between the United States and Mexico
roughly tripled, from $81 billion to $232 billion.
For another, NAFTA has helped speed Mexico's
dramatic economic and political transformation.
The trade agreement marks a major milestone in
Mexico's turn away from a closed, centrally
directed economic system, to an open and
dynamic market democracy.

10 AÑOS DEL TLCAN

 Economists in the Northern Border of
Mexico at Colef also examined the NAFTA
agreement in its 10th anniversary. Diaz-
Bautista (2003) examined the positive
effects of NAFTA in the Northern Border
States of Mexico using an economic
growth model based on the Methodology
developed by Mankiw (1992) and Barro
and Sala i Martin (1995).
 While Mendoza and Diaz(2003) analyzed
the case of the transportation sector
during the NAFTA era.

NAFTA’s Impact on Mexico
 From 1994 to 2008, Mexico’s GDP has increased
at an average annual rate of 2.7 %, below the
average growth rates of 3.3 % and 3.6 % in the
United States and Canada, respectively. Mexican
exports to the United States have quadrupled
since NAFTA’s implementation, from $60 billion to
$280 billion per year.
 U.S. exports to Mexico have also increased
sharply, more than tripling as Mexico’s economy
has grown.
 Some critics single out Mexico’s farm industry,
saying NAFTA has crippled Mexican farming
prospects by opening competition to the heavily-
subsidized U.S. farm industry.

NAFTA at 14
 The SPP complements the success of the North
American Free Trade Agreement (NAFTA), which
has helped to triple trade since 1993 among our
three countries to a projected $1 trillion in 2008.
NAFTA has offered our consumers a greater
variety of better and less expensive goods and
services, encouraged our businesses to increase
investment throughout North America, and
helped to create millions of new jobs in all three
countries.
 NAFTA is key to maintaining North America's
competitive edge in an increasingly complex,
fast-paced and connected global marketplace.

Nafta’s Economic Impact at 14
 In contrast to the advanced economies of
Canada and the U.S., Mexico is an
 emerging market.
 Mexico's GDP per capita is 27.86 percent
that of the U.S. and 33.23 % Canada's
using the IMF 2007 estimated of the 2008
world economic outlook. On the other
hand, with a population of about 106,000
million in 2007, with new economic
reforms (like the proposed energy
reforms), there is a new economic
dynamism in Mexico.

NAFTA’s Trade Impact
 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.

Mexico’s Total Exports (billion Dollars)
The leading exporter in Latin America and the third
largest exporter to the US

Billon Dollars

250.3

+311%

60.9

1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005
Oil Exports Non Oil Exports

Source: BANXICO

Aspe et al. (2005),
“Building a North
American Community”
 Sponsored by the Council on Foreign Relations in
association with the Canadian Council of Chief Executives
and the Consejo Mexicano de Asuntos Internacionales.

 North America is vulnerable on several fronts: the region
faces terrorist and criminal security threats, increased
economic competition from abroad, and uneven economic
development at home. In response to these challenges, a
trinational, Independent Task Force on the Future of North
America has developed a roadmap to promote North
American security and advance the well-being of citizens of
all three countries.
 The Council-sponsored Task Force applauds the announced
“Security and Prosperity Partnership of North America,” but
proposes a more ambitious vision of a new community by
2010 and specific recommendations on how to achieve it.

Security and
Prosperity Partnership
 The Security and Prosperity Partnership of North America
(SPP) was launched in March of 2005 as a trilateral effort to
increase security and enhance prosperity among the United
States, Canada and Mexico through greater cooperation
and information sharing.

 This trilateral initiative is premised on our security and our
economic prosperity being mutually reinforcing. The SPP
recognizes that our three great nations are bound by a
shared belief in freedom, economic opportunity, and strong
democratic institutions.

 The SPP provides the framework to ensure that North
America is the safest and best place to live and do
business. It includes ambitious security and prosperity
programs to keep our borders closed to terrorism yet open
to trade.

Surface Trade between U.S. and NAFTA
Countries : 1995 – 2011.

Surface Trade between U.S. and NAFTA
Countries : 1995 – 2011.
 Surface transportation trade between the United States and
its North American Free Trade Agreement (NAFTA) partners
Canada and Mexico increased by 14.3 percent in 2011
compared to 2010, valued at $904 billion in 2011,
according to official data by the Bureau of Transportation
Statistics (BTS) of the U.S. Department of Transportation.

 The 14.3 percent increase in trade was the third largest
year-to-year increase for the years covered by these data.
 The $904 billion in U.S.-NAFTA trade was the highest
amount since NAFTA went into effect in 1994.

Top Five Commodities Transported between the
U.S. and Mexico by All Surface Modes of
Transportation, 2011. (In millions).

Commodities Exports Imports Total

Electrical
Machinery;
29,672 50,799 80,471
Equipment and
Parts
Computer-
Related
29,703 37,864 67,567
Machinery and
Parts

Vehicles Other
17,726 43,446 61,172
than Railway

Plastics 12,570 3,369 15,939
Measuring and
Testing 4,083 9,348 13,431
Equipment

Top 10 States Exporting to
Mexico, 2009 to 2011.

United States Mexico Trade
 The U.S. is Mexico’s largest trading partner,
buying more than 80% of Mexican exports during
2010. Mexico is the third largest U.S. trading
partner after China (1st) and Canada (2nd).
Bilateral goods trade reached $362 billion in 2010
and in 2009 they totaled $278 billion.

 Mexico and the U.S. do as much business in
goods and services in just over a month as
Mexico does with all 27 countries of the European
Union combined in a year.

U.S. Mexico Trade in 2012
 Total bilateral trade between the U.S. and Mexico has returned to
the levels before the economic downturn and crisis.
 In 2011, Mexico and the United States had almost 461 billion dollars
in trade in goods, which represents more than 1,250 million dollars
or 1.25 billion in trade crossing the border in both directions every
day.
 The economic relationship also adds 39 billion dollars in service
trade.
 Mexico continues to export more of their products and services to
the United States than any other country in the world. The United
States remains the main destination of Mexican goods and services.

 The trade relationship between Mexico and the United States not
only is 'back' but it is getting stronger between Mexico and the
United States in 2012.

Migration and border issues
 Mexico has seen a significant drop in
migration recently. For the first time in 60
years the movement of Mexicans to the
United States is at a net zero.
 A mixture of tougher anti-immigration
legislation in the southern United States,
combined with fewer job prospects in the
US may have forced many Mexicans to
come back home.


 The net zero migration rate between Mexico and the United
States does not mean that Mexican migrants have not
crossed to the United States between 2011 and 2012.
 The decrease in net Mexican migration is the difference
between those who go to the United States and those who
leave the country and go back to Mexico, a social
phenomenon that began five years ago and already has led
to the first decline in two decades of the undocumented
Mexican population in the United States.

 The reduction of Mexican migration to the
United States is a social phenomenon that
is explained by the slow evolution of the
U.S. economy during the worst economic
crisis in decades, the labor market
situation in the United States, the
deportations of migrants and the increase
in border enforcement and security. Also
the growing dangers associated with illegal
border crossings, the long-term decline in
Mexico’s birth rates and broader economic
conditions in Mexico.

Economic Contribution of
Mexicans to the U.S. Economy

Remittances
 The increase in remittances were one
of the key factors of macroeconomic
stability in Mexico, before the
economic crisis of 2008 and 2009.

Remittances
 Remittances to Baja California,
increased 8.75 percent in the first
quarter of 2012, compared to the
first quarter of 2011.
 Remittances sent to Baja California
were close to 96.9 million dollars,
representing approximately 17.9
percent of total remittances sent to
the border states of Mexico.

Remittances
 Remittances sent by migrants to their families in several regions
such as Baja California, contribute to increase the incomes of the
regional economy, as well as other types of flows such as
development aid and foreign direct investment (FDI).

 With an increase of 8.75% in remittances sent to Baja California
during the first quarter of 2012, it is clear that remittances have
acquired a dimension that gives them a first-magnitude potential
to generate economic growth and development in the state.
Therefore, the remittances sent mainly from the United States are
a particularly attractive area for co-development projects in Baja
California during 2012.

 During the first quarter of 2012, remittances from abroad showed
an increase nationally of 5.3 percent compared to the same period
last year, according to official figures from the Bank of Mexico.
 Data from the central bank showed that in the January-March
period of this year 2012, remittances of Mexicans abroad to their
families in Mexico totaled $ 372 million.

Remittances
 Remittances come almost entirely from the U.S.,
and remain one of the most important sources of
foreign income in Mexico.

 Flows to the Mexican economy come from three
main areas: oil, tourism and remittances from
Mexican nationals living abroad.

 During 2011, Mexico managed to stay as the
third recipient of remittances in the world after
India and China.

Inflation in July 2012
 During 2012, inflation in Mexico
reached its highest level for a month
of July since 2002.

Inflation in 2012
 Inflation in Mexico is
above the inflation target
set by the Bank of Mexico
of 3% plus 1%.
 Inflation has increased in
Mexico due to the increase
in the price of eggs and
other food products and
also because of the
increase in energy prices.

Gas Prices in Mexico and the United States

Mexico’s Energy and the
Economy in 2012
 Moreover, a decline in
crude production due to
under investment by the
Mexican state oil firm
Petroleos Mexicanos
(Pemex) and a weak
non-oil tax base are
expected to draw funds
away from public
investment.

New oil fields in the Gulf of
Mexico
 The discovery of a new
oil field in the Gulf of
Mexico during 2012,
may lead to an increase
in crude production in
Mexico in the medium
and long term.

International Reserves
 Mexico’s international reserves rose to 161.2 billion in the
week that ended August 24, 2012, according to official data
by the central bank.

 Mexico’s International Reserves are at historic levels in
2012.

 Mexico’s reserves have climbed 13 percent this year, giving
the central bank greater leeway to intervene in the foreign
exchange markets to buy pesos when needed.

International Reserves
 On June 1, the mexican peso reached its weakest
level against the dollar since March 2009 on
concerns that Europe’s sovereign debt crisis
would affect global economic growth.
 Mexico uses dollar auctions to limit daily declines
in the peso after it tumbled 11 percent against
the dollar in 2011, the most among major Latin
American currencies.
 Since November 2011, the central bank has been
offering $400 million daily at an exchange rate
that’s at least 2 percent weaker than the previous
day.
 This year, the peso has strengthened 5.7 percent
against the dollar.

Global Market Volatility

 Unfortunately, all of the world’s
economies, including the emerging
markets, will be affected to a greater
or lesser degree by the events in
europe, and therefore the challenge
is to mitigate the degree of economic
and financial impact.

European sovereign debt crisis
 From late 2009, fears of a
sovereign debt crisis
developed among fiscally
conservative investors
concerning some European
states, with the situation
becoming particularly tense
in early 2010.
 This included euro zone
members Greece, Ireland
and Portugal and also some
EU countries outside the
area.

European sovereign debt crisis
 In 2010 the debt crisis was mostly
centered on events in Greece, where the
cost of financing government debt was
rising. On 2 May 2010, the eurozone
countries and the International Monetary
Fund agreed to a €110 billion loan for
Greece, conditional on the implementation
of harsh austerity measures. The Greek
bail-out was followed by a €85 billion
rescue package for Ireland in November,
and a €78 billion bail-out for Portugal in
May 2011.

 This was the first eurozone crisis since its
creation in 1999.

 The sovereign debt crisis that is unfolding
is a fiscal crisis of the western world.

Debt to GDP ratios for EU countries

Total Public Debt vs. Fiscal Balance as
a Percentage of GDP

The US debt
 The national debt rose $238 billion (or about 60% of the
new debt ceiling) on August 3, 2011. It was the largest one
day increase in the history of the United States.
 The US debt surpassed 100 percent of gross domestic
product for the first time since World War II.
 According to the International Monetary Fund, US joined a
group of countries whose public debt exceeds GDP,
including Japan (229 percent), Greece (152 percent),
Jamaica (137 percent), Lebanon (134 percent), Italy (120
percent), Ireland (114 percent) and Iceland (103 percent).

 The NASDAQ, ASX and S&P 100 lost up to four percent in
value, the largest drop after that which occurred in July
2009, during the global financial crisis.
 The commodities market also took losses with average spot
crude oil market prices falling below $US86 a barrel.

Unemployment in the Euro Zone and
the United States

Recessions in the United States
 According to economists, since 1854, the U.S. has encountered 32
cycles of expansions and contractions, with an average of 17
months of contraction and 38 months of expansion.
 However, since 1980 there have been only eight periods of
negative economic growth over one fiscal quarter or more, and
four periods considered recessions:

 July 1981 – November 1982: 14 months
 July 1990 – March 1991: 8 months
 March 2001 – November 2001: 8 months
 December 2007 – June 2009: 18 months


 For the past three recessions, the NBER decision has
approximately conformed with the definition involving two
consecutive quarters of decline. While the 2001 recession did not
involve two consecutive quarters of decline, it was preceded by
two quarters of alternating decline and weak growth.

Opportunities in Emerging Markets

Shifting GDP Growth in Emerging Markets
vs. Developed Economies

Mexico’s Economic Growth in 2011 - 2012
 Mexico tried to reassure investors that a global markets rout
would not spark an economic crisis even as recession fears in the
United States, its key trading partner, pounded Mexico's currency
and stocks during 2011.

 The debt crises in the United States and Europe have given
Mexican debt the allure of a safe haven as Mexico's public finances
are in comparatively better shape.

 A new U.S. recession would undermine Mexican exports of
everything from cars and refrigerators to electronics and could
force Mexican policy makers to relax monetary policy.

 A confirmation that there could be a sharp deceleration or
recession in America, would cause interest rates in Mexico to go
down and we should expect the peso to depreciate more.

Mexico’s Economic Growth
 Mexico is Latin America's second biggest
economy. After lagging way behind other
Latin American economies, it has in recent
months seen a combination of solid growth
and low inflation, but it is dependent on
the United States, which buys around 80
percent of its exports.

 Mexico’s outlook is for an economic
expansion of around 3.5 to 4 percent this
year in 2012.

Mexico’s countercyclical stimulus’ measures
 Mexico has $160 billion in foreign-exchange
reserves, as well as a more than $70 billion line
of credit with the International Montetary Fund.

 That means that Mexico has more than $230
billion to ensure it can respond in an orderly
fashion to any external financial markets shock.

 Mexico will remain committed to responsible
policies and a long-term vision and will apply
‘countercyclical stimulus’ measures consistent
with an approved budget deficit equal to 0.5
percent of GDP and public-sector spending
growth of 6.1 percent.

Mexico’s Economic Growth in
2011-2012

Mexico should approve the structural
reforms to boost the country’s
economic growth and development.

Mexico has the need for a second
generation energy reform, a fiscal
reform, labor reform, education
reform and competitiveness reform.

Real GDP Growth: Emerging and Developing Economies
vs. Advanced economies

Average Real GDP Growth during 2010 - 2011

Conclusions
 Mexico continues to export more products and services to the
United States than any other country in the world. The United
States remains the main destination of Mexican goods and
services.
 Growth economists are in favor of economic policies and initiatives
designed to improve border affairs and trade relations between
Mexico and the United States in the coming years.
 The US-Mexico relationship is moving in the right direction and
will continue to generate opportunities on both sides of the
border, strengthening economies and contributing to the quality of
life in both sides of the border.
 The United States and Mexico enjoy over 1,250 million in bilateral
trade of goods daily.
 The United States is the largest investor in Mexico, while Mexico
has become an increasingly important investor in the United
States.
 The United States and the eight other countries negotiating the
Trans-Pacific Partnership (TPP) Agreement have extended an
invitation to Mexico to join the TPP negotiations, pending
successful conclusion of their domestic procedures.

Conclusions
 Increased cooperation and collaboration between both countries is
not only necessary, but essential for economic growth in North
America.
 U.S. economic relations with Mexico are important and complex.
U.S. economic relations with Mexico have a direct impact on the
lives and livelihoods of millions of Americans.
 The scope of U.S.-Mexican relations is broad and goes beyond
diplomatic and official contacts. It entails extensive commercial,
cultural, and educational ties, with over 1.25 billion dollars worth
of two-way trade and approximately one million legal border
crossings each day.
 In addition, a million American citizens live in Mexico and
approximately 10 million Americans visit Mexico every year.
 More than 18,000 companies with U.S. investment have
operations in Mexico, and U.S. companies have invested $145
billion in Mexico since 2000.

Conclusions
 The probability of a recession in the United
States at the end of 2012 is low.
 An economic recession in the United
States in early 2013, would have almost
an immediate impact to the economy of
the Northern Border of Mexico and for the
country as a whole in 2012, due to
economic dependence and synchronization
of Mexico with the United States economy.

References
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 (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.

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.

Díaz-Bautista, Alejandro (2012), Regional Economic Growth and North American
Economic Integration.

 NAFTA Website http://www.nafta-sec-alena.org
 SPP Website http://www.spp.gov/

Presidential Elections in 2012

The 12-year Cycle of Coinciding
U.S.-Mexico Presidential Elections.
 The presidential election in Mexico,
which coincides with the U.S.
presidential election every 12 years,
will depend on generating change in
two crucial areas: security and the
economy.

Enrique Peña Nieto
 Enrique Peña Nieto was born at Atlacomulco in
Mexico State.
 Peña Nieto has a Bachelor's degree in law from
the Universidad Panamericana and a Master's in
Business at ITESM.
 Between 1993 and 1998, during Emilio
Chuayfett’s term as governor, he was chief of
staff for the Secretary of economic development
of the State of Mexico. At the end of this period
he worked as deputy secretary of government for
the State of Mexico (1999–2000).[
 His work as a state functionary and within his
party helped Peña Nieto build his political career
and his subsequent move into electoral positions.
 On September 15, 2005, Peña Nieto was sworn in

Andrés Manuel López Obrador
 Andrés Manuel López Obrador,
also known as AMLO or El Peje,
is a Mexican politician who held
the position of Head of
Government of the Federal
District.
 AMLO studied at UNAM.
 López Obrador was president of
the PRD from 2 August 1996 to
10 April 1999.
 AMLO is the leader of the
"MORENA" (National
Regeneration Movement) in
Mexico.

Lopez Obrador, PRD Candidate
 Former Mexico City mayor Andres Manuel
Lopez Obrador says he will make another
run for the presidency in 2012, six years
after he narrowly lost the last election.

 The 58-year-old leftist made the comment
after winning an opinion poll released by
his party, Democratic Revolution, or PRD.
The poll asked 6,000 supporters of left-
wing candidates whether they preferred
him or Mexico City Mayor Marcelo Ebrard.

 In 2006, Lopez Obrador was defeated by
current President Felipe Calderon.

Josefina Vázquez
Mota
 Mexican economist, businesswoman and
politician, member of the National Action
Party (PAN).
 BA in Economics from the Universidad
Iberoamericana.
 Appointed to President Vicente Fox's
cabinet, as Secretary of Social
Development.
 In 2006, President Calderon announced
her appointment as Secretary of Public
Education.
 Coordinator of the Parliamentary Group of
the PAN as Federal Representative.

Santiago Creel Miranda

 Creel received a bachelor's degree in Law from the National
Autonomous University of Mexico (UNAM) and subsequently
did graduate work at Georgetown University and earned a
master's degree at the University of Michigan.
 His career include running for Head of Government of the
Federal District in 2000 (a race he narrowly lost to Andrés
Manuel López Obrador). He was later appointed to the
cabinet by President Vicente Fox to serve as Secretary of
the Interior, a position he held from December 2000 to
June 2005.
 In 2006 Santiago Creel won a proportional representation
seat in the Senate to serve during the 60th and 61st
Legislatures (2006–2012) and led the PAN Senate
delegation until June 2008.

Ernesto Cordero Arroyo

 Ernesto Javier Cordero Arroyo is a Mexican economist and
politician belonging to the National Action Party. He graduated
from ITAM where he obtained a BA in Actuary and an MA in
Economics. He holds an MA in Economics from the University of
Pennsylvania, he completed the Ph.D. courses in the same
university.
 Ernesto Cordero was appointed Director General of the Miguel
Estrada Iturbide Foundation.
 He was Integral Risk Management Director at Banco Nacional de
Obras y Servicios Públicos.
 At the Energy Secretariat, he served as Undersecretary of Energy
Planning and Technological Development.
 He served as Under-Secretary of the Secretariat of Finance and
Public Credit from December 2006 to January 2008.
 In 2008 President Calderón designated him as Secretary of Social
Development.
 Cordero was named Secretary of Finance and Public Credit
(Finance Minister) for Mexico in January 2010.

If the Presidential Elections in
Mexico were today.

If the Presidential Elections in
Mexico were today.

Encuesta El Universal, noviembre 2011.

LATEST MATCH-UP RESULTS

 The latest polls give 23 points of advantage to Enrique Peña
Nieto from the PRI (with 49% of electoral preferences); and
Andres Manuel Lopez Obrador from the PRD reached (26%)
if the PAN presidential candidate is Josefina Vazquez Mota
(25%).

 In contrast, if Ernesto Cordero or Santiago Creel become
the PAN candidate, the advantage of Peña Nieto over Lopez
Obrador is extended to 25 points, while the PAN electoral
preferences collapses.

 Encuesta Reforma: Peña Nieto líder, pero AMLO a la alza, 4 de diciembre de 2011.

The 12-year Cycle of Coinciding
U.S.-Mexico Presidential Elections.
 Fundamental changes are needed to lift the
institutional capability of Mexico so as to
strengthen the fight against violence, spur job
growth, and increase economic growth.

 Peña Nieto has a proposal to reform the country’s
energy sector and allow private-sector
participation in this process, using Brazil and
Colombia, and their respective state energy
companies Petrobras and Ecopetrol, as models.

 An “encouraging” proposal from the PRI
presidential hopeful and a “hopeful sign” for the
possibility of a prosperous future in Mexico.

Time/CNN Polls:
Newt Gingrich Leads
In Three Of Four
Early Primary States
 New polls released by Time magazine and CNN
confirm that Newt Gingrich has shot into the lead
in three of the four states with January primaries
or caucuses and has crept to within 10
percentage points of Mitt Romney in the Romney
stronghold of New Hampshire.

 In the first in the nation caucus state of Iowa,
Time and CNN find Gingrich with a 33 to 20
percent lead over Romney, confirming the
findings of numerous other polls that Gingrich has
taken a solid lead in that state.

2012 US Presidential Matchups
Election 2012:
Obama 45%, Gingrich 40%
 Although support for former House Speaker Newt Gingrich
among Republican primary voters has soared in both
national and state polls, he now trails President Obama in a
hypothetical 2012 general election matchup.

 The Rasmussen Reports national telephone survey of Likely
Voters finds Obama earning 45% of the vote to Gingrich’s
40%. Nine percent (9%) prefer some other candidate,
while six percent (6%) are undecided.

 Thursday, December 08, 2011

MATCH-UP RESULTS 2011
 Obama 45% Gingrich 40% Dec 6-7, 2011


 Obama 46% Perry 34% Dec 4-5, 2011


 Obama 42% Romney 40% Nov 30-Dec 1, 2011


 Obama 46% Cain 36% Nov 27, 2011


 Obama 45% Bachmann 33% Nov 15-16, 2011


 The national survey of 1,000 Likely Voters was
conducted by Rasmussen Reports. The margin of
sampling error is +/- 3 percentage points with a
95% level of confidence.

Combinations of Mexico and US
Presidents and Bilateral Relations
 U.S. Mexico Bilateral Relations
 Democrat PRI Good
 Republican PRI Good
 Democrat PRD Normal
 Republican PRD Less than normal
 Democrat PAN Good
 Republican PAN Good

Conclusions

 The year 2012 promises to be an interesting year
for Mexico, particularly if the PRI consolidates the
accumulated positive momentum, by
implementing new structural reforms.
 To do this, the PRI will have to prove that it is is
ready to allow more comprehensive economic
reforms and, through these, allow Mexico to
progress and grow during the second decade of
the 21st century.
 Enrique Peña Nieto will be the new president of
Mexico and his administration will start on
December 1, 2012.

Professor Alejandro Diaz-Bautista Conference University of San Diego, September 2012

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Professor Alejandro Diaz-Bautista Conference University of San Diego, September 2012

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