Crossing the Line, Blurring the Border
California, Mexican economies are gradually integrating, study says
SAN FRANCISCO - 08/16/04 - For many businesses and workers, the California-Mexico border is the place to be, according to a report released recently by the private, non-profit Public Policy Institute of California (PPIC).
According to the report - The Emerging Integration of the California and Mexico Economies - the network of trade, investment, and other economic relationships that exists between California and Mexico has grown dramatically since the late 1980s - and the border is where a great portion of joint activity is concentrated.
Mexico, it said, is California's largest destination for exports - taking the top spot from Japan in 1999.
In 2002, Mexico received over 17% of all California exports, totaling $16 billion worth of goods. Between 1988 and 2002, exports to Mexico grew by nearly 13% per year - faster than the growth in California exports to the rest of the world.
How much of a role does the border play?
"More than 75 percent of all California's exports to Mexico are shipped to border areas, and the vast majority go straight to Baja California. There's an intense geographic concentration in the state's exports to Mexico," said PPIC research fellow Howard Shatz, who co-authored the study with Luis Felipe L�pez-Calva, a professor of economics at Universidad de las Am�ricas - Puebla.
In addition to trade, investment in California by Mexican companies has increased considerably in recent years, the report said.
"Once again, the border is the epicenter as nearly three-fourths [72%] of Mexican-owned subsidiaries in California are located in the border counties of San Diego and Imperial, and nearly half [47%] of California subsidiaries in Mexico are in border states such as Baja California, Chihuahua, and Nuevo Le�n," it stated.
These location-specific economic ties have had significant regional effects with Mexican manufacturing activity leading to a growth in employment in San Diego, while expanded export activity in Mexican border communities has increased employment in US border cities.
Economic activity at the border has both costs and benefits, according to the report's authors.
Both Shatz and L�pez-Calva suggest that whether or not the state chooses to promote integration - or to let private businesses develop relationships on their own - "it should consider focusing more attention" on border areas.
"At the border, we have to deal jointly with commuting, traffic, infrastructure, environmental stresses, homeland security, and immigration. The policy goal should be to ensure that both California and Mexico ultimately benefit," they said.
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