March 20, 2005

GET OUT OF OUR COUNTRY...BUT LEAVE YOUR MONEY:

An Economy That Knows No Borders: Financially challenged Imperial County hopes to keep the spending flowing from Mexico even as the U.S. tightens security. (Marla Dickerson and Evelyn Iritani, March 20, 2005, LA Times)

Tucked into a hot, dry corner of California, Imperial County has long been an economic laggard. It has the state's highest unemployment rate and lowest median income and a population so thin that it would fold neatly into a few square miles of Los Angeles.

Yet Wal-Mart Stores Inc. is building three Supercenters in the county. A gleaming new regional mall just opened. Home builders are on a tear. What's more, two Indian tribes want to construct a $175-million casino in Calexico — a city where nearly 1 in 4 families lives in poverty.

This economic paradox is explained by the license plates on many of the cars: Along with a good chunk of the spending power in the Imperial Valley, they hail from Mexicali, Mexico, the fast-growing industrial hub of nearly 1 million just across the border.

Day trippers such as Maria Fuentes pump nearly $1 billion annually into the local economy buying groceries, clothing, autos, even gasoline, according to local economists who have studied retail and trade figures.

"I come over to this side a lot," Fuentes said as she filled up her car at a Calexico service station.

Mexicali residents also are snatching up property on the U.S. side, helping drive up values in a real estate market that has seen prices appreciate more than 25% in the last year.

"The more expensive the house, the more likely my buyer is a Mexican national," said Barry Garman, director of planning with Calexico-based Victoria Homes.

Economic ties between Mexico and Southern California have always been strong, but the integration has speeded up significantly in recent years, as measured by the growth in cross-border sales, trade and investment.

Since the launch of the North American Free Trade Agreement in 1995, two-way trade has boomed. In 2002, California exported $14.9 billion of goods to Mexico, the state's most important foreign customer. Exports from Mexico to California more than doubled from 1995 to 2002. Mexican-owned companies, which have invested more than $1 billion in California, employ at least 10,000 Californians, according to the Public Policy Institute of California.

Now, after all the recent gains, border communities are growing increasingly worried that the Bush administration's efforts to prevent terrorists or their weapons from crossing the border could slow the wheels of commerce.


Exquisite.

Posted by Orrin Judd at March 20, 2005 9:00 AM
Comments

Mexico is likely to elect a standard-issue leftist demagogue once Fox is out of office. This looks like 'smart money' hedging its bets.

Posted by: bart at March 20, 2005 11:21 AM

You can usually tell how good the Mexican economy is going if you're in a U.S. border city by checking to see how many cars with Mexican license plates are in the big shopping center parking lots, and how new the cars are compared to the ones Americans are driving. A bad economy across the border means fewer legal crossings to shop, and older cars of the ones who do. And in places like El Paso, with a downtown shopping district that caters mainly to Juarez, the area becomes a ghost town when Mexico's economy is in the tank.

Compared to most of the 1980s and the early part of the 1990s, that hasn't been the case for the last 6-8 years, while the U.S. lots have been filled and the "foreign" Fords and Chevys have been pretty new, so it's no wonder southern Imperial County is courting their business.

Posted by: John at March 20, 2005 11:32 AM

--Mexicali residents also are snatching up property on the U.S. side, helping drive up values in a real estate market that has seen prices appreciate more than 25% in the last year.--

If we can't own property w/in 50 miles of their shore, they shouldn't be allowed to own property w/in 50 miles of our border.

Posted by: Sandy P at March 20, 2005 9:23 PM

John,

The purchase of American property by Mexican nationals is significant, and not a good indicator of Mexico's future. One would think those folks would be reinvesting their profits in Mexico, because after all that is where they made them. What it would indicate is that successful Mexicans feel a need to pursue a strong hedging strategy, putting lots of assets into the US(it is difficult for a non-resident alien to get a mortgage).

Perhaps they are anticipating a Lopez Obrador victory and a return to caudillismo, which seems to be the cutting edge of Latin American politics today.

Posted by: bart at March 21, 2005 9:06 AM
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