Promote economic development in Mexico

Not much direct economic development, but big jump in law enforcement is a necessary precursor

Updated: Friday, August 12th, 2011 | By Louis Jacobson

During the presidential campaign, Barack Obama promised to do "more to promote economic development in Mexico to decrease illegal immigration."

Estimates suggest that illegal immigration has indeed fallen in the past few years, but most experts say the biggest factor is the United States' recent economic troubles, which have cut the number of jobs for which undocumented immigrants could theoretically compete.

But as we rate this promise, we'll focus on the first part of what Obama said -- which is the part he can help shape directly -- namely, whether the United States has done more to promote economic development in Mexico.

To cut straight to the point, federal funding directed to Mexico has risen only modestly in economic development accounts but dramatically in law enforcement and military accounts. The reason is a stepped-up effort to counter international crime syndicates based in Mexico -- a goal that aids economic development, but only indirectly.

Here are the past few years of outlays categorized as either "development assistance” or "economic stabilization” for Mexico: (We couldn't locate figures for fiscal 2010.)

Fiscal year 2007 (actual outlays): $23.6 million
Fiscal year 2008 (actual outlays): $22.9 million
Fiscal year 2009 (actual outlays): $26.2 million
Fiscal year 2010 (actual outlays): $25.0 million
Fiscal year 2012 (requested): $66.6 million

That's a big increase for fiscal year 2012, but remember that it's the administration's proposal, and with budget cutting already under way in Congress -- and more on tap from the "super committee" empowered by the recent debt-ceiling deal -- it's far from certain that a number that large will be adopted.

Compare these numbers to the annual figures categorized under "international narcotics control and law enforcement” and "foreign military financing”:

Fiscal year 2007 (actual outlays): $36.7 million
Fiscal year 2008 (actual outlays): $26.6 million
Fiscal year 2009 (actual outlays): $275 million
Fiscal year 2010 (actual outlays): $549 million
Fiscal year 2012 (requested): $256 million

Clearly, this is the growth area in U.S. aid to Mexico.

The reason is obvious: Violent criminal organizations engaging in narcotics trafficking, human smuggling and kidnapping have become an increasing problem on the Mexican side of the border.

In comments at a White House press event on July 25, 2011, Donald Steinberg, the deputy administrator of the U.S. Agency for International Development, acknowledged the importance of law-and-order efforts to economic development.

"Transnational organized crime affects nearly every country, but fragile, poor and conflict-affected states are most vulnerable and most victimized by organized crime, in particular as sites for trafficking in persons, drugs and weapons,” Steinberg said, adding that "organized crime is a cancer that eats from within at the credibility and legitimacy of national governments. It deprives nations of much needed investment. It squeezes out legitimate businesses from access to key markets, and it increases the cost of development to all of the citizens of those nations. Helping developing countries protect themselves from organized crime will make the world a safer place and it will protect Americans as well.”

Though Steinberg didn't single out Mexico in his comments, what he said underlines the administration's recent spending priorities in relation to its neighbor to the south.

There is one specific area in which the Obama Administration has acted to promote economic development in Mexico directly. In July 2011, the administration reached an agreement with Mexico on allowing Mexican trucks to deliver and pick up goods for cross-border trade outside an existing 25-mile barrier.

Transportation Secretary Ray LaHood said that by "opening the door to long-haul trucking between the U.S. and Mexico … we will create jobs and opportunity for our people and support economic development in both nations.”

The Mexican truck provision had been a part of the 1995 North American Free Trade Agreement, but opposition by the U.S. trucking industry and others -- who argued that Mexican trucks could pose safety problems on U.S. roads -- stalled progress on implementation. In 2009, the Democratic-led Congress blocked efforts by George W. Bush's administration to enact the provision. (Congress could still throw up roadblocks to the new deal.)

Still, the big changes in the relationship have been on law-and-order issues.

"The administration could well argue that their focus on security in Mexico is helping to restore order and democratic institutions and thus improving the business climate, which is good for economic development. I would agree with that,” said Eric Farnsworth, vice president of the Council of the Americas, which studies U.S. relations with Latin America. "They would also argue that improvement of the border, in security and infrastructure, is beneficial for cross-border trade, and therefore development.”

But besides the trucking deal, the U.S. has done "little in terms of direct promotion of economic development in Mexico,” Farnsworth said.

Of course, the biggest thing the U.S. could do is to "revive its own moribund economy, which is a driver of everything from remittances to Mexican exports,” said Timothy A. Wise, director of the research and policy program at Tufts University's Global Development and Environment Institute. "And the U.S. hasn't done much good on that front.”

In judging this promise, we'll note that the administration hasn't done much in the way of traditional economic-development efforts, whether that's direct spending or negotiating broad trade deals. Most of its spending has been of the law-and-order variety, which is not primarily an economic development program, but which does serve as a necessary precursor for economic stability. Because the primary U.S. efforts advance the promise, but only in an indirect way, we"re rating this promise a Compromise.

Sources:

State Department, "Congressional Budget Justification -- Foreign Assistance -- Summary Tables," fiscal year 2012

State Department, "Congressional Budget Justification -- Foreign Assistance -- Summary Tables," fiscal year 2011

State Department, "Congressional Budget Justification -- Foreign Assistance -- Summary Tables," fiscal year 2010

State Department, Summary Table - Country/Account Summary [Spigots] FY 2007 Actual

White House, remarks at the White House Release of Strategy to Combat Transnational Organized Crime, July 25, 2011

Christian Science Monitor, "Landmark US-Mexico trucking agreement resolves 15-year conflict,” July 6, 2011

E-mail interview with William F. Arrocha, assistant professor of international policy at the Monterey Institute of International Studies, Aug. 11, 2011

E-mail interview with Carol Wise, associate professor of international relations at the University of Southern California, Aug. 11, 2011

E-mail interview with Eric Farnsworth, vice president of the Council of the Americas, which studies U.S. relations with Latin America, Aug. 8, 2011

E-mail interview with Timothy A. Wise, director of the research and policy program at Tufts University"s Global Development and Environment Institute, Aug. 11, 2011

Lots of talk so far

Updated: Monday, January 11th, 2010 | By Hadas Gold

As part of his immigration plan, Barack Obama promised to "do more to promote economic development in Mexico to decrease illegal immigration."

Obama's logic is that an increase in economic development in Mexico would reduce the need for its residents to come to the United States in search of work.

Obama has gone to Mexico twice so far - in April and August of 2009. Both times he held joint press conferences with Mexico's President Felipe Calderón, and both times he reiterated his support toward economic development in Mexico.

"[President Calderón and I] worked hard, hand in hand at the G20 summit. And that's what we will continue to do at the Summit of the Americas and beyond, so that we can jumpstart job creation, promote free and fair trade, and develop a coordinated response to this economic crisis," Obama said during his April 2009 visit.

And in August, Obama repeated his goals and said he and Calderón had discussed them during the G8 and G20 summits.

"We recommitted ourselves to the infrastructure investments, the common-sense regulations and intellectual property protections upon which trade thrives. We are among each other's largest trading partners. As we work together towards lasting prosperity, we need to expand that trade, not restrict it," he said.

So, there has been a lot of verbal promotion, but nothing tangible yet. Still, it's enough for us to rate it In the Works.

Sources:

The White House - Office of the Press Secretary, Joint Press Conference with President Barack Obama and President Felipe Calderón of Mexico,Apr. 16, 2009.

The White House - Office of the Press Secretary, Press Conference by President Obama, President Calderón of Mexico and Prime Minister Harper of Canada, Aug. 10, 2009.