NCPA - National Center for Policy Analysis

U.S. and Mexico Would Benefit from Economic Integration

March 5, 2004

Since the adoption of the North American Free Trade Agreement (NAFTA), Mexico's trade with the United States has more than doubled, reaching $232 billion in 2002. While expanding trade with Mexico will lead to greater prosperity for both countries, researchers for the Heritage Foundation suggest that certain economic and national security issues must first be addressed.

The Heritage Foundation cautions that, because each unskilled Mexican migrant creates an estimated lifetime fiscal burden of $89,000 on U.S. welfare services, the tide of immigration must be slowed. In addition, more must be done to assuage American security concerns. Currently, Mexico's nascent democracy lacks accountability, its defense and law enforcement agencies remain suspect, and its customs and immigration services are still weak and plagued by corruption. As a result, the researchers say a number of reforms must precede further economic integration:

  • Mexico must end its state-run monopolies, collectivist land tenure system, and corrupt practices in order to unleash economic prosperity and attract foreign investment.
  • The country's workforce must become better educated -- its centralized education system has left 75 percent of its population without a high school diploma.
  • Mexican political authority must be devolved from national ministries to local governments in order to simplify communication with U.S. authorities.
  • Mexico must continue to work toward common procedures and competencies in immigration, law enforcement and defense, such as ensuring the completion of the Smart Border program.

For its part, the United States should streamline existing procedures for granting non-immigrant temporary worker visas. In addition, migrant labor should be prohibited from receiving federal, means-tested entitlements -- welfare should not be an incentive to migration and U.S. taxpayers should not have to bear the costs of subsidizing cheap labor.

Source: Stephen Johnson and Sara J. Fitzgerald, "The United States and Mexico: Partners in Reform," Backgrounder No. 1715, Heritage Foundation, December 2003.


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