Mexico’s Burgeoning Economy Amid Drug Violence

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.

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