Shannon K. O'Neil

Latin America's Moment

O'Neil analyzes developments in Latin America and U.S. relations in the region.

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Mexico’s Burgeoning Economy Amid Drug Violence

by Shannon K. O'Neil
February 21, 2012

I sat down last week with Bernie Gwertzman to talk about the top issues facing Mexico and U.S.-Mexican relations. In the interview we discussed Mexico’s economic prosperity (despite drug violence), immigration reform, and the importance of Mexico’s upcoming presidential election on both sides of the border. Here is an excerpt:

There have been reports about Mexico’s thriving economy amid continuing drug violence. Does this sort of ambivalence truly exist in Mexico right now?

It is true. Mexico is a place that’s seen a huge escalation in violence. Under President Felipe Calderon over the last five years, we’ve seen almost 50,000 people killed in drug-related murders. But at the same time, Mexico’s economy has actually been doing quite well since the end of the global recession. Mexico was the hardest hit in Latin America but it’s recovered quite quickly, and in part it’s been due to a huge boom in manufacturing along the border tied to U.S. companies and to U.S. consumers.

We’ve seen a boom in tourism. There have been record levels of tourists over the last year in Mexico–to its beaches, to its colonial cities, and to Mexico City. And we’ve also seen the benefit of high oil prices as Mexico still produces a good amount of oil and much of it for the United States.

The U.S. Congress can’t seem to get its hands on this issue. They tried in 2007 and failed to pass legislation. GOP candidate Mitt Romney has suggested “self-deportation.” Will it work?

What we saw in 2011 was many fewer people coming to the United States, and the number leaving was about the same. We didn’t see an increase in the people leaving the United States, the “self-deportation” that Romney talks about. But we saw many fewer people coming. And there are a few reasons for that.

One is the economic pull and push. In Mexico, the economy rebounded somewhat so there was less of a push from there, and the U.S. economy’s still quite weak, particularly in sectors that Mexicans would come to work in, so the pull of the U.S. economy is less. Another reason is U.S. border enforcement. There is some evidence that the increase in security and the hardening of the border has discouraged people from trying to come across. It’s much more expensive and it’s much more dangerous.

But third, one of the real reasons we’re seeing this decrease is a demographic shift. Given the falling birth rates in Mexico in the 1980s and 1990s, fewer Mexicans are turning eighteen and entering the labor force each year compared to, say, twenty years ago. There’s somewhere between 100,000 and 200,000 fewer Mexicans turning eighteen today than there was back in 1990, when we saw the start of the emigration boom.

I look forward to your feedback via twitter, facebook or in the comments section.

 

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  • Posted by Jose Angel Flores

    Great interview. What we are seeing is the end of the mexican migration to the US, this is not so evident because we still see more than half a million central and south americans crossing our territories each year and entering illegally into the US, many times when they are caught they claim to be Mexican, so they are just deported south of the border and can try again the next day, if they say they are from Honduras they will send them all the way back home.

    The Mexican economy has not grown at the same levels as those of Brazil, Peru or Colombia, but that’s because our profile as a nation is completely different now, where Brazil mostly exports commodities, more than 70% of their exports, and the same can be said of Argentina, Venezuela, Peru, Colombia and Chile, Mexico on the other hand exports mostly manufactured goods, which account for more than 80% percent of its exports to the world, that’s why we see China as a competition and China invests in manufacturing plants in Mexico, but in South America they invest in mining, farms, oil, and mostly primary goods.

    The violence will continue until the cartels are so damaged that they will finally understand they can’t win this war. Crime will always exists, but it has to be contained at tolerable levels, that is going to happen in Mexico soon.

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