Is Texas benefiting from Mexico’s drug violence?

A new analysis by Guadalupe Correa-Cabrera, chair of the Government Department at the University of Texas at Brownsville, makes the case that not only has the spillover of violence from Mexico’s drug wars into U.S. border cities been exaggerated, but some cities — particularly in Texas — are actually benefiting economically from the instability on ...

By , a former associate editor at Foreign Policy.
611691_border_112.jpg
611691_border_112.jpg

A new analysis by Guadalupe Correa-Cabrera, chair of the Government Department at the University of Texas at Brownsville, makes the case that not only has the spillover of violence from Mexico's drug wars into U.S. border cities been exaggerated, but some cities -- particularly in Texas -- are actually benefiting economically from the instability on the other side of the Rio Grande: 

A new analysis by Guadalupe Correa-Cabrera, chair of the Government Department at the University of Texas at Brownsville, makes the case that not only has the spillover of violence from Mexico’s drug wars into U.S. border cities been exaggerated, but some cities — particularly in Texas — are actually benefiting economically from the instability on the other side of the Rio Grande: 

Foreign direct investment in Tamaulipas has also felt the impact ofextreme drug violence, falling sharply to $121 million in 2010 from approximately $517 million in 2006. In fact, the creation of new businesses in northern Mexico has come to a dead stop. In northern Mexico — in the states of Chihuahua, Coahuila, Durango, Nuevo Leon,Tamaulipas, San Luis Potosi, and Zacatecas — only 23 businesses were created in 2010, according to the Mexican Institute of Social Security (InstitutoMexicano del Seguro Social). In 2007, more than 3,000 businesses were created (Gascón and Ortigoza 2011).

Mexico’s drug violence has dealt a harsh blow to Tamaulipas’ economyacross the board-even forcing the state oil company, Petróleos Mexicanos (Mexican Petroleum), or Pemex, to "abandon several gas fields" (Casey and deCórdoba 2010). Across the state, "gunmen run their own checkpoints on highways," causing, among other things, "many farmers (to give up) on tons of soybeans and sorghum in fields controlled by criminals." And "[l]eading families, fleeing extortion and threats of kidnapping, have escaped to Texas" (Casey and de Córdoba 2010).

Texas has been a beneficiary of this drain of talent and financial resources. The border region is "for the most part, one ofthe poorest in the United States, but is nonetheless growing at above thenational rate" (Ayón 2009, 5). The phenomenon was first evident in El Paso, the economy of which has received an unexpected boost as this city hasbecome home to a significant number of entrepreneurs fleeing drug violence in Ciudad Juarez, which lies right across the border formed by the Rio Grande. The El Paso Hispanic Chamber of Commerce reports a major increase inrequests from Juarez businesspeople wanting to settle in this U.S. city. At the same time, real estate agents report a bump in home sales to Juarez residents (Campoy 2009).

Partly as a result of extreme drug violence in Mexico, Texas border cities are recovering faster from the U.S. recession than the rest of the country (see DeVolet al. 2011). According to Roberto Coronado of El Paso Branch of the FederalReserve Bank of Dallas, "[t]he recent recession took a big toll on Texas border cities, but there is rebounding growth" (Grant County Beat 2012). He claims that "Texas border cities have now exceeded their pre-recession employment peaks."

This trend, combined with the fact that Mexican manufacturing has continued at a healthy clip — Correa-Cabrera notes that the maquiladoras in Tamaulipas are a rare industry that haven’t been greatly effected by the violence — the fact that illegal immigration from Mexico is down, and the relatively low crime rates on the U.S. side  suggest that unfortunately there doesn’t seem to be that much incentive for U.S. policymakers to upset the status quo of the drug war.  

Update: An L.A. Times feature on the "Mexodus" of  wealthy Mexicans settling in San Antonio.

Joshua Keating was an associate editor at Foreign Policy. Twitter: @joshuakeating

Tag: Mexico

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