Control the Border: Invest in Mexico

If you believe that undocumented Mexican migration is a problem, and you believe that the reason most undocumented migrants come to the United States is to work, then it really does not take a brain surgeon to understand that the way to address the challenge is to help Mexico with its economy and its own unemployment problem. This is especially so if you realize that Mexico has lost countless jobs since NAFTA went into effect in 1994.

The effect that bailing out the Mexican economy would have was illustrated in a long-term survey of emigration patterns done by Douglas Massey of Princeton showing that interest in heading to the United States had fallen to its lowest level since at least the 1950s. "No one wants to hear it, but the flow has already stopped," Massey told the New York Times. "For the first time in 60 years, the net traffic has gone to zero and is probably a little bit negative." The primary reasons: The Mexican birth rate has fallen to about two children per woman from nearly seven in 1970; Mexico's education system and economy have improved to a point more young people choose to stay (per family income is up 45 percent this decade); and drug violence along Mexico's border is likely deterring those who do think of crossing. It seems that stepped-up border enforcement and Arizona SB1070-type laws have little to do with the decline.

Whether or not you believe that "net traffic has gone to zero," for those who advocate control of the borders there is everything to gain by pushing for greater investment in Mexico. On a recent visit to Vietnam, I was struck by the serious efforts that the United States has engaged in over the past decade to help Vietnam with its economy, by entering into a bilateral trade agreement, pushing for its entry into the WTO, and encouraging investment in Vietnam. Likewise, the United States needs to consider an investment model -- with close monitoring of that investment -- in Mexico as part of comprehensive immigration reform. Reducing undocumented migration is in Mexico's interest as well; the persistent loss of able-bodied workers needed to build its infrastructure and economy cannot be good for Mexico.

Before the international financial crisis, the European Union -- through its European Social Fund -- invested huge sums in roads and education in roads and education in new, poorer member states and narrowed their income gap with the rest of Europe, and workers stayed home because jobs were created. Similarly, the three NAFTA countries should establish a fund to invest in roads, telecommunications, and postsecondary education in Mexico. Mexico lacks the capital to build the infrastructure that is necessary to narrow the gap with Canada and the United States. If its northern neighbors contributed 10 percent of what the EU spends on aid, with wise investments in infrastructure and education, Mexico could experience growth at a rate twice that of Canada and the United States. Building up the central part of the country could relieve congestion at the border, and the whole system could be better managed. Former Mexican President Vicente Fox has urged the United States to invest 2 percent of its GDP in Mexico to narrow the wage gap while helping the economies of both countries to compete with China.

Focusing on the educational system in Mexico is also key. Mexican students fall near the bottom in cross-country comparisons on basic literacy, math, and science. While the education level of adults in the U.S. is almost thirteen years, in Mexico, the level is about seven. This low level has severe implications for competitiveness and the standard of living of Mexicans.

Investments in Mexico also have to be targeted. Mexico's domestic industries need help, for example, by using domestic parts and supplies in production imports. Businesses need financing; many are facing international competition from places like China. The rural areas of Mexico really suffered under NAFTA. Subsistence farmers in Mexico were not given assistance or time to make adjustments under NAFTA. Nothing was done to help protect their income as trade conditions changed. The development of fruit and vegetable production can absorb some of the rural workers who have been displaced. Serious investment in new technologies in small and medium-size industries also is necessary. Some of this can be achieved through tax incentives to spur economic growth in the country's interior.

If we are to solve the challenge of undocumented Mexican immigration, heavy investment in Mexico's infrastructure and economy must be made. The EU did this successfully in bringing in poor nations, avoiding huge migration from poor to wealthy member nations and creating more jobs at home. All three NAFTA countries have much to gain from this approach.