Texas Border Employment and Maquiladora Growth Jesus Cañas, Roberto Coronado and Robert W. Gilmer magazine

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In the 1990s, the economy increased retail sales in U.S. border cities; the industry lose 290,000 jobs between exceeded even the remarkable perform- and rapid expansion of the maquiladora October 2000 and July 2003, many ance of its U.S. counterpart. State job industry. observers are questioning the industry’s Igrowth averaged 2.9 percent per year from Maquiladora expansion came on the future. Recession, rising wages in Mexico, 1990 to 2000, well ahead of the 1.8 percent heels of NAFTA implementation and the low-wage competition from countries annual increases in the . 1994–95 peso devaluation. In recent such as and Mexico’s inability to Three engines drove the Texas economy years, however, this part of the border deal with growing problems in its compet- forward in the 1990s: the oil sector, high boom has turned to bust. After watching itive environment have all contributed to tech (especially in Austin and Dallas) and a boom in border-city employment. Table 1 Percent Job Growth Along the Texas–Mexico Border Employment growth in the four largest Texas border cities topped that of the Texas El Paso Laredo Brownsville McAllen nation, and the three south Texas cities 1991 .7 2.3 4.3 2.0 1.5 outperformed the state by a wide margin 1992 1.9 3.6 8.7 4.8 5.3 1993 3.3 2.2 3.6 4.4 4.5 (Table 1).1 1994 4.3 3.9 7.2 6.0 7.3 The accelerated job growth along the 1995 2.9 0 –5.5 .4 2.7 Texas–Mexico border was the result of 1996 3.2 2.0 5.1 2.8 3.3 several factors: a quick Mexican recovery 1997 4.4 2.7 7.6 3.0 3.8 after the 1994–95 financial crisis; tight 1998 3.6 1.1 2.7 2.3 5.6 labor markets in the United States that 1999 2.2 2.0 5.3 5.8 6.5 attracted employers to the border in 2000 2.8 1.5 3.0 5.1 5.1 1990–2000 2.9 2.1 4.1 3.7 4.6 search of the ’s surplus labor; a strong peso for much of the period, which SOURCE: Federal Reserve Bank of Dallas, El Paso Branch, with data from the Texas Workforce Commission.

OCTOBER 2005 | FEDERAL RESERVE BANK OF DALLAS 27 Chart 1 2). Throughout the latest recession and Maquiladora Employment Growth slow recovery, manufacturing was the Thousands, seasonally adjusted data hardest hit part of the U.S. economy, and 1,400 maquiladora output and employment 1,300 1,200 generally followed the lead of U.S. indus- 1,100 trial production. In mid-2003, however, 1,000 strong U.S. industrial growth finally 900 800 returned, and as Table 2 shows, maqui- 700 ladora employment has returned to re- 600 covery as well. Job growth remains 500 400 uneven among the Mexican border cities, 300 however, with Ciudad Acuña, Matamoros 200 and Piedras Negras recovering more 100 0 slowly. ’80 ’81 ’82 ’83 ’84 ’85 ’86 ’87 ’88 ’89 ’90 ’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05

SOURCES: Federal Reserve Bank of Dallas, El Paso Branch, with data from INEGI. How Do Maquladoras Affect the Texas Border Economy? The original vision for maquiladoras the recent downturn. Tyco, General Electric and ITT. was the “twin plant,” with capital-inten- This article looks at the maquiladora’s The maquiladora industry has been sive operations located a few miles inside role in today’s Texas economy, especially highly cyclical since its inception, falling the U.S. border and low-wage, labor- how it affects Texas border cities. We also into its first recession in 1974 with an 11.5 intensive operations close by on the Mex- assess the industry’s future and the percent decline in employment. Table 2 ican side. However, the bulk of U.S. man- prospects for the maquiladora to again be shows the uneven effects of the latest ufacturing was already established in the a significant factor in job growth in Texas maquiladora downturn on Mexican bor- Midwest, and trucking deregulation and Mexico. der cities. Maquiladora employment in would make transportation links between Ciudad Juárez was higher than in all the the border and the Midwest both easier Growth and Decline other cities combined when the recession and cheaper in the 1970s and ’80s. The The maquiladora industry began in began, and it has sustained the largest twin-plant vision was never realized along 1965 and experienced slow but steady percentage losses from peak to trough the border. Instead, the maquiladora sup- growth under the Border Industrialization (27.7 percent). Piedras Negras, Nuevo ply chain remained concentrated in states Program. The canceled Laredo and Matamoros also suffered large such as Illinois, Michigan and Ohio. had used Mexican labor in agriculture, percentage losses, all in excess of 24 per- What economic impact would a new and the replacement maquiladora was cent. Ciudad Acuña and Reynosa were maquiladora in Mexico have on a neigh- designed to relieve the resulting high exceptions to the deep recession, with boring U.S. city? The list might run as fol- unemployment rates in northern Mexico. Ciudad Acuña declining only 10.6 percent lows. To select and develop a site, U.S. The new program used low-wage Mexican and Reynosa continuing to grow through- legal, engineering and financial assistance labor as a lure to draw U.S. manufacturing out the downturn. Newer plants, a better would be used. Once established, the new to the region, allowing companies to industry mix and a business-friendly plant would rely on U.S.-based businesses move production machinery and environment account for their better per- for customs, brokerage, warehousing and unassembled parts into Mexico without formance. transportation services. The plant would tariff consequences, as long as the assem- The cyclical nature of the maquila- also purchase a variety of office, packag- bled product was returned to the United dora industry is not surprising, given ing and industrial supplies. Corporate States for final sale. its close ties to U.S. manufacturing (Chart management, engineers and quality spe- Chart 1 shows the elevenfold increase in maquiladora employment between Table 2 1980 and its peak in 2000, from 120,000 Texas–Mexico Maquiladora Border Employment workers to 1.3 million. In 1980, about 94 Peak Trough percent of maquiladora employment was Jobs Date Jobs Date April 2005 in the border states of northern Mexico.2 Ciudad Juárez 262,550 October 2000 189,930 June 2003 213,389 Today, the share has slipped to 76 percent, Ciudad Acuña 37,512 November 2002 33,541 February 2005 33,674 but the northern states still dominate. In Piedras Negras 15,222 February 2000 10,939 December 2004 11,187 2004, 2,810 operating plants accounted Nuevo Laredo 22,915 February 2000 17,171 April 2003 22,233 for about 9 percent of formal employment Reynosa 86,925 April 2005 N/A N/A N/A in Mexico, or 3 percent of the total labor Matamoros 68,413 October 2000 51,900 August 2003 53,002 force. The companies operating under the NOTES: Seasonally adjusted data; border twin cities are as follows: Ciudad Juárez–El Paso, Ciudad Acuña–Del Rio, Piedras Negras–Eagle maquiladora program are a who’s who of Pass, Nuevo Laredo–Laredo, Reynosa–McAllen and Matamoros–Brownsville. U.S. industry, including Delphi, Mattel, SOURCE: Federal Reserve Bank of Dallas, El Paso Branch, with data from INEGI.

28 FEDERAL RESERVE BANK OF DALLAS | OCTOBER 2005 Chart 2 research suggests that U.S. border warehousing employment accelerated Maquiladora Ties to states—with the exception of Arizona, quickly. Business service employment, U.S. Industrial Sector where job losses ranged from negligible to especially personnel supply services, Index, January 2000 = 100, seasonally adjusted small—gained jobs as a result of growth in computer programming and data pro- 110 the maquiladora industry.8 cessing, grew 45 percent from 1990 to U.S. industrial 105 A more recent development has been 2004. El Paso’s maquiladora-related busi- production the arrival of component parts and mate- nesses rely heavily on temporary staffing 100 rial suppliers in U.S. border cities. Specific agencies to hire additional personnel to 95 examples can be found in El Paso, neigh- meet rising demand. Computer program- 90 Maquiladora bor to Ciudad Juárez, which is home to the ming and data service workers help mini- employment largest number of maquiladora employ- mize the burden of paperwork required by 85 ees along the U.S. border. Over the past customs agencies to export or import 80 2000 2001 2002 2003 2004 2005 decade, an increasing number of rubber components. Legal employment grew 20 SOURCES: Federal Reserve Bank of Dallas, El Paso Branch, with data and plastics, electronics and electrical percent over the same period. Similar from INEGI; Federal Reserve Board. equipment, and metal fabricating plants results can be found up and down the U.S. have begun to operate in El Paso to serve border. cialists would be drawn to the border to as suppliers to the maquiladora industry The definitive study on the linkages visit this plant, and they would spend (Chart 3). between maquiladoras and the border money on food and lodging.3 Maquiladora Components supplied include com- economy, by Gordon Hanson, takes all employees draw their salary in Mexico but puter housings, electrical wiring har- these factors into account.9 Hanson esti- do a significant share of their shopping in nesses, special dies and tools, and electri- mates that a 10 percent increase in the United States, stimulating employ- cal switches. About 26 plastic-injection maquiladora output in a Mexican border ment in local retail and service sectors. molding plants can be identified, 31 metal city will increase employment in its U.S. These impacts on the U.S. border stamping companies, and 12 electric- and city pair by 1.1 to 2 percent. He provides have been recognized for some time, and electronic-related companies. Together, more specifics by estimating that this a number of studies were conducted in these companies employed 4,000 workers same 10 percent increase in output would the 1970s and ’80s to quantify them. For in 2004. The manufacturing sectors that increase wholesale trade employment in instance, in 1972, Ladman and Poulsen supply the maquiladoras paid about 40 the U.S. city by 2.1 to 2.7 percent, trans- found that , , maquila- percent more in hourly wages than the portation services by 1.7 to 2.7 percent, dora workers spent 40 percent of their low-wage apparel, textile and leather in- manufacturing by 1.2 to 2.1 percent and wages in Arizona.4 Ayer and Layton esti- dustries that traditionally operated in retail trade by 1 to 1.8 percent. mated the maquiladoras’ impact on value El Paso. added and population, using an input– Maquila manufacturing in Mexico The Role of Recession output model for the Arizona–Mexico also positively influences El Paso’s The recent recession has played an border economy. They concluded that employment in transportation, real important role in the latest downturn of ’ expenditures due to the growing estate, and legal and accounting services the highly cyclical maquiladora industry. presence of twin plants increased value (Chart 4). Given the rapid increase in At the same time, maquiladoras have long added by 14 percent and population by 11 trade flows after 1993, transportation and served as a low-wage platform for U.S. percent on the U.S. side of the border.5 In a 1984 study of the Texas border, Holden estimated that maquiladora Chart 3 Maquiladora Suppliers in El Paso employment had a large impact on employment in the border communities Index, 1990 = 100 of El Paso, Laredo, McAllen and Browns- 350 ville. For instance, a 10 percent increase in 300 maquiladora payroll results in a 2 to 3 per- Apparel cent increase in employment in El Paso 250 and McAllen as well as a 3 to 4 percent Plastics 200 increase in Laredo and Brownsville.6 In another study, Sprinkle found that 150 Metalworking during the early 1980s Ciudad Juárez maquiladoras accounted for one of five 100 jobs created in El Paso, and these new jobs 50 Electrical equipment were concentrated in the service sector.7 0 Silvers and Pavlakovich assessed the rela- 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 tive magnitude of employment gains and NOTE: North American Industry Classification System (NAICS) codes used in the chart were 3327, 3329, 3328, 3332, 3335, 3159, losses across U.S. border due to 3261 and 3344. maquiladora industry activity. Their SOURCE: Federal Reserve Bank of Dallas, El Paso Branch, with data from Bureau of Labor Statistics.

OCTOBER 2005 | FEDERAL RESERVE BANK OF DALLAS 29 Chart 4 detailed results are reported elsewhere.11 Service Employment in El Paso To examine the future of the industry Index, 1990 = 100 under various assumptions, we simulated 350 maquiladora employment following its second quarter 2000 peak. The base case 300 was the actual outcome through 2002, a 250 Transportation and decline of 14.5 percent for the industry as transportation services a whole. Scenario 1 (S1) assumed no 200 recession and that the U.S. unemploy- Real estate 150 ment rate held firm at a historically low 4 percent through the end of the period. 100 Legal and accounting services Real relative wages rose in this scenario, 50 just as in the base case. Scenario 2 (S2)

0 assumed the recession occurred but that 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 real relative maquiladora wages fell 6.1 NOTE: North American Industry Classification System (NAICS) codes used in the chart were 4889, 5311, 5312, 5313, 5411 and 5412. percent after second quarter 2000 instead SOURCE: Federal Reserve Bank of Dallas, El Paso Branch, with data from Bureau of Labor Statistics. of rising 16.8 percent. And scenario 3 (S3) assumed the best of both worlds for maquiladora managers, falling real rela- manufacturing, and the rise of new low- tion and Development and World Trade tive wages and no recession. wage alternatives such as China, Organization rules. Chart 5 shows the results for all and Vietnam has broadened U.S. options To focus on the question of how maquiladoras combined. This can be for manufacturing. These very low-wage maquiladoras will respond to economic computed two ways: as the result of a sin- competitors, plus rising real Mexican recovery and which sectors would gle estimate based on the sum of all wages, have become a factor in pushing benefit, we developed some econometric maquiladora employment or as the sum some maquiladora activity abroad. Mex- estimates. As in other models, our of the simulation results for 10 maqui- ico generally has looked at the loss of the methodology confirmed that past maqui- ladora sectors. Fortunately, they agree lowest wage jobs as an inevitable price of ladora employment has primarily been quite closely. Eliminating the U.S. reces- progress, because increasing domestic driven by the business cycle and relative sion in S1 would provide an increase of wage levels must be seen as a positive real wages.10 Trends and dummy shift approximately 20 percent in employment aspect of economic development. The variables were included to account for in the simulation period, replacing a government has expressed reluctance to structural change, particularly testing for decline of about 14.5 percent in the base enter into subsidy programs to retain or breaks with the 1994 implementation of case. The percentage turnaround for S2 is attract these industries, considering such NAFTA and the 1994–95 financial crisis in similar, and the combined effect in S3 is a action as poor fiscal policy and a violation Mexico. The general methodology follows 31 percent increase. of Organization for Economic Coopera- several papers by Branson and Love, and Four individual sectors do not

Chart 5 Simulation Results

Total Maquiladoras Sum of Maquiladora Sectors

Scenario 3 31.3 Scenario 3 31

Scenario 2 21.3 Scenario 2 17.7

Scenario 1 21.3 Scenario 1 20.1

–14.5 Base -14.6 Base

–20 –16 –12 –8 –4 0 4 8 12 16 20 24 28 32 36 –20 –16 –12 –8 –4 0 4 8 12 16 20 24 28 32 36 Percent change in jobs Percent change in jobs

NOTE: The base cases in the two calculations are slightly different because the chemicals sector was excluded from the sum of regression results. There was a break in the data for this sector. SOURCE: Authors’ calculations.

30 FEDERAL RESERVE BANK OF DALLAS | OCTOBER 2005 Table 3 the rise of foreign competition means Throughout the 1990s, the United Maquiladora Sectors That Are Unresponsive even sectors returning to positive growth States supplied the vast majority of to a U.S. Economic Rebound with economic recovery may experience maquiladora industry inputs. In 2000, 90 (Percent change in jobs) slower job growth than in the recent past, percent of maquiladora inputs were from Not as some products within the sector are the United States and 9 percent were from Leather Toys Furniture classified commoditized. , with China contributing only 1 per- Base –25.6 –31.5 –8.7 –4.9 S1 –7.8 –21.0 –8.9 –2.1 In assessing Mexico’s competitive cent (Chart 6). By 2004, 59 percent came S2 –6.8 –34.7 17.3 –22.1 prospects, the nation retains crucial from the United States and 35.7 percent S3 –7.4 –5.1 4.4 5.8 advantages over the rest of the world, from Asia, including 11.1 percent from even as domestic wages rise. The most China. The United States remains the SOURCE: Authors’ calculations. important factor is proximity to the U.S. majority supplier, but this rapidly moving market. For example, bulky items that trend continued to run in favor of Asia respond to an upturn in the U.S. econ- have a high ratio of weight to value, such into 2005. omy: leather, toys, furniture and a group as large-screen televisions or major appli- The vehicle for entry of foreign inputs of other, unclassified maquiladoras. Their ances, will remain competitive. Proximity to Mexico is 20 sectoral promotion pro- simulation results are summarized in also matters if the inventory cycle is short, grams, or PROSECs, created by the Mexi- Table 3. Combined, these maquiladoras if there are constant design changes or if can government in December 2000. They accounted for 226,782 jobs at the second there must be frequent retooling. Mexico were created in response to implementa- quarter 2000 peak, or 18.1 percent of the will also be competitive when quality is tion of NAFTA Article 303, which in Janu- total. These sectors are unlikely to return more important than price, such as with ary 2001 eliminated duty-free imports of to growth with U.S. economic recovery. medical equipment or when intellectual maquiladora inputs from non-NAFTA The three largest maquiladora sec- property rights are critical.12 countries. The PROSECs protect the entry tors, together accounting for 76.1 percent to Mexico of non-NAFTA components of the peak employment, all respond pos- Texas-Based Suppliers that are not readily available in the itively to economic recovery in the simu- The maquiladoras’ contribution to domestic market, allowing them to enter lations. In S1, electrical machinery U.S. border city growth in the 1990s under reduced tariffs of zero to 5 percent. records an 18.2 percent increase, in place stemmed from (1) the spillovers from Despite the paperwork and the need to of a 26.1 percent decline. Textiles turn rapid maquiladora expansion in neigh- track the origin of thousands of parts to around to record a 63.2 percent gain in S1, boring Mexican cities and (2) the shift of comply with PROSECs, maquiladoras and transportation equipment (which did many maquiladora suppliers to border have apparently fully embraced the pro- not decline after second quarter 2000) cities from their base in the Midwest. We grams. grows by another 4.5 percent in this sce- have already shown how foreign competi- Data are not available on exactly nario. tion and rising real wages in Mexico have which inputs are being displaced, making In conclusion, less than 20 percent of reduced the prospects for maquiladora it difficult to assess the impact on Texas maquiladora employment is in sectors growth, but foreign competition is also border communities. For example, if the that are unresponsive to economic recov- making significant inroads into the 1990s shift of suppliers to the border from ery in the United States, and overall maquiladora supply chain. This raises the the Midwest was based on just-in-time growth seems likely to continue. However, possibility of slowing, or even reversing, inventory needs, it may be difficult for even those sectors that continue to grow the increase of U.S. border-city suppliers Asian suppliers to take their place. How- in simulations are going to be influenced to the maquiladora industry. ever, given the extent and pace at which by foreign competition. The effect of for- eign competition is often couched in Chart 6 terms of a product cycle, in which product Mexican Maquiladora Imports by Country of Origin development and testing occur in the Percent United States, initial long production runs 100 take place in Mexico and ultimately prod- 90 2000 uct commoditization happens in China or 80 2001 another low-wage competitor. The more 2002 quickly and easily a product is commodi- 70 2003 60 2004 tized, the quicker it will move to China. 2005:Q1 Leather, toy and furniture sectors are 50 often cited as no longer competitive in 40 Mexico. But even within the most 30 advanced sectors, we may find individual 20 products susceptible to being lost to lower 10 wage countries in exactly the same way— 0 United States Asia without China China Other computers, cell phones, modems, print- ers and disk drives, for example. Hence, SOURCE: Federal Reserve Bank of Dallas, El Paso Branch, with data from Banco de México.

OCTOBER 2005 | FEDERAL RESERVE BANK OF DALLAS 31 ernment has argued that this must be 5 “The Border Industry Program and the Impact of seen as a highly desirable result of suc- Expenditures on a U.S. Border Community,” by Mexico retains cessful economic development and Mex- Harry Ayer and Ross Layton, Annals of Regional Science, vol. 8, 1974, pp. 105–17. ico’s move up the product cycle. The next 6 important generation of maquiladoras should not be “Maquiladoras Along the Texas–Mexico Border: An Econometric Evaluation of Employment and judged by the ability to generate low-wage competitive Retail Sales Effect on Four Texas Border jobs, but by productivity, value added or SMSAs,” by Richard J. Holden, Texas Depart- advantages over rising wages. Critics, at the same time, ment of Community Affairs, Regional Economic claim Mexico simply has not done an ade- Development Division, February 1984. many of its low-wage quate job of preparing the way for more 7 “Project Link: An Investigation of Employment sophisticated manufacturing. To illustrate Linkages Between Cd. Juárez and El Paso,” by rivals, based on this point, many observers cite the failure Richard Sprinkle, University of Texas at El Paso, (so far) of proposed reforms in energy, December 1986. proximity to the 8 labor law, taxes and telecommunications. “Maquila Industry Impacts on the Spatial Redis- United States, These and other reforms are badly needed tribution of Employment,” by Arthur L. Silvers to prepare Mexico for a fine market econ- and Vera K. Pavlakovich, Journal of Borderlands Studies, vol. 9, December 1994, pp. 47–64. political and omy. 9 Finally, it is not just the maquiladora “U.S.–Mexico Integration and Regional Economies: Evidence from Border-City Pairs,” financial stability, industry that is affected by foreign com- by Gordon Hanson, Journal of Urban Econom- and the rule of law. petition, but the U.S.-based supply chain ics, vol. 50, September 2001, pp. 259–87. as well. In 2000, 90 percent of inputs to the 10 For more information, see the papers from the maquiladoras came from the United Dallas Fed conference “Maquiladora Downturn: States, and four years later that number Structural Change or Cyclical Factors?” available at was only 59 percent. Texas border cities in www.dallasfed.org/news/research/2003/ the 1990s developed rapidly as a critical, 03maquiladora.html. In particular, see the pre- Asian suppliers have taken market share, new part of this supply chain, with suppli- sentations by Everardo Elizondo Almaguer, it would be hard to argue that the ers shifting from the Midwest to the Banco de México; William C. Gruben, Federal Reserve Bank of Dallas; James Gerber, San maquiladora market share of Texas-based U.S.–Mexico border. We lack industry Diego State University; and Ernesto Acevedo suppliers has not been reduced. Future detail to know exactly how the recent suc- Fernández, Ministry of Finance and Public expansion of Texas-based suppliers is cess of foreign suppliers is affecting Texas Credit. likely to slow as well. border cities, but again, declining eco- 11 “Maquiladora Downturn: Structural Change or nomic stimulus from maquiladora expan- Cyclical Factors?” by Jesus Cañas, Roberto Conclusion sion would seem to be the rule. Coronado and Robert W. Gilmer, International Mexico’s maquiladora jobs are grow- Business and Economics Research Journal, vol. ing once more, beginning with the Cañas and Coronado are assistant 3, August 2004; “Dollar Appreciation and Manu- resumption of U.S. industrial expansion economists at the El Paso Branch of the facturing Employment and Output,” by William H. Branson and James P. Love, National Bureau in mid-2003. Mexico retains important Federal Reserve Bank of Dallas. Gilmer is a of Economic Research, Working Paper No. competitive advantages over many of its vice president at the Federal Reserve Bank 1972, July 1986; “The Real Exchange Rate and low-wage rivals, based on proximity to the of Dallas. Employment in U.S. Manufacturing: State and United States, political and financial sta- Regional Results,” by William H. Branson and bility, and the rule of law. The maqui- James P. Love, National Bureau of Economic Notes Research, Working Paper No. 2435, November ladora industry is stable, competitive and 1 The four border cities contributed 6.8 percent of growing again. 1987; “The Real Exchange Rate, Employment the 2.3 million jobs generated in Texas from and Output in Manufacturing in the U.S. and It is unlikely, however, to repeat the 1990 to 2000, while making up 6.1 percent of Japan,” by William H. Branson and James P. banner performance of the 1990s, at least Texas employment in 1990. Love, National Bureau of Economic Research, not in the near future. There were ele- 2 Mexican border states include Baja , Working Paper No. 2491, February 1988. ments of unique, one-time stimulus in the Sonora, , and , 12 See “Maquiladora Downturn: Structural Change 1990s, with the collapse of the peso in excluding Nuevo León. or Cyclical Factors?” by Jesus Cañas, Roberto 1994–95 and the implementation of 3 “The Employment Impact of Maquiladoras Coronado and Robert W. Gilmer, Federal NAFTA in 1994. Further, foreign competi- Along the U.S. Border,” by J. Michael Patrick, in Reserve Bank of Dallas Business Frontier, Issue tion appears to have taken away the The Maquiladora Industry: Economic Solution or 2, 2004. Problem?, ed. Khosrow Fatemi, : potential for any growth in several low- Praeger Publishers, 1990, pp. 31–35. wage sectors and probably has reduced 4 “Economic Impact of the Mexican Border Indus- the growth potential of a number of other trialization Program: Agua Prieta, Sonora,” by sectors as well. Jerry R. Ladman and Mark O. Poulsen, Arizona Rising real wages in Mexico have State University, Center for Latin American Stud- accelerated the transfer of low-wage jobs ies, May 1972. to other countries, and the Mexican gov-

32 FEDERAL RESERVE BANK OF DALLAS | OCTOBER 2005