The Case For NAFTA

Policy Backgrounders | Trade

No. 130
Monday, November 15, 1993
by Edward L. Hudgins, Ph.D.

Illegal Immigration

Mexicans flee to the United States primarily to seek economic opportunity. Mexico's economic recession in the early and middle 1980s, caused by its debt crisis, left many of its citizens desperate for jobs. And that country's young population and high birth rate mean that the economy must grow by about 3 percent per year in real terms simply to absorb the new workers entering the labor market. NAFTA makes it more likely that the workers will be absorbed and less likely that they will come illegally to the United States. The more dynamic the Mexican economy, and the more jobs that are created in that country, the fewer Mexicans will have to seek work in the United States.

Critics' Contradictions. Some critics who claim that NAFTA will eliminate jobs in America also claim - without explaining their reasoning - that it will mean more illegal immigrants. But if jobs flee to Mexico, why would Mexicans flee to the U.S.? Both criticisms can't be true. In fact, both countries would gain jobs.

"NAFTA makes it more likely that Mexican workers will find jobs in Mexico, and less likely they will come illegally to the United States."

Less Border Development Means Fewer Illegals. NAFTA likely will result in greater economic activity in Mexico's interior - for example, around Mexico City and Monterey. Currently, much border area economic activity is based on maquiladora factories.12 In the past, Mexico generally allowed only 49 percent foreign ownership of businesses on its territory. But under the maquiladora system, a foreigner can own 100 percent of a plant and can import machinery and other inputs duty-free if the enterprise reexports its products. American producers naturally located close to the border.

In recent years Mexico has de facto abolished the limits on foreign ownership, giving American firms more or less open access to its markets. As NAFTA allows economic development to accelerate in Mexico's interior, there will be less reason for that country's citizens to work close to the border and thus less opportunity for them to slip illegally into the United States.

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