Economic Ties Between Texas and Mexico Luis Bernardo Torres Ruiz, Ph.D. February 6, 2015 Research Economist InternaEonal Forum TAR
Contents 1. Economic Integra0on 2. ResidenEal Impact 3. Concluding Remarks
Mexico is the largest export market for Texas Texas Exports by Des0na0on (Billion $) World Mexico Canada Brazil China Netherlands (%) of Total Exports Average 2000-2014Q3 Mexico 37.8 Canada 10.1 China 3.7 Netherlands 2.8 Brazil 2.7 300 250 200 150 100 50 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Q3 Source: Foreign Trade Division, U.S. Census Bureau
ExporEng manufactured goods to Mexico 30 25 20 15 Texas Exports to Mexico by Product (Billion $) 334 Computer & Electronic Products 324 Petroleum & Coal Products 336 TransportaEon Equipment 325 Chemicals 335 Electrical Equipment; Appliances & Components Manufacturing(right y- axis) 120 100 80 60 10 40 5 20 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Q3 Source: Foreign Trade Division, U.S. Census Bureau
Texas exporeng manufactured goods directly and indirectly support jobs in the state Other 35 States New Jersey Tennessee North Carolina Louisiana Indiana Pennsylvania Georgia Ohio Florida Michigan New York Washington Illinois California Texas Source: InternaEonal Trade AdministraEon, U. Department of Commerce Jobs Supported by Manufactured Exports by State (Thousands) 143 148 148 161 164 177 183 242 260 275 299 304 306 668 2013 1,073 1647 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800
Product Sharing: U.S. (Texas) and Mexican factories work together to manufacture a good Value of US Content in Imports from Selected Economies Country % Mexico 40 Canada 25 Malaysia 8 Korea 5 China 4 Brazil 3 European Union 2 Japan 2 India 2 Source: Robert Koopman, William Powers, Zhi Wang and Shang- Jin Wei, Give Credit Where Credit is Du: Tracking Value Added in Global ProducEon Chains, NaEonal Bureau of Economic Research, Working Paper No.16426, March 2011, page 38.
CreaEng jobs in the Texas border ciees when output increases in Mexican maquiladora industry 10% increase in maquiladora output leads to an increase in employment in the adjacent Texas city City % El Paso 3.0 Laredo 3.6 Brownsville 1.9 McAllen 5.9 Source: J. Cañas, R. Coronado, R. Gilmer, E. Saucedo. The Impact of Maquiladoras on U.S. Border CiEes,Federal Reserve Bank of Dallas, working paper, 2011.
Flow of goods and services create jobs in services, like transportaeon and warehousing U.S.- Mexico Trade by Top 10 Land Ports in 2013 City Rank Total Trade (Billions $) Share of Total(%) 1. Laredo, TX 168.8 43.1 2. El Paso, TX 66.9 17.1 3. Otay Mesa- San Ysidro, CA 34.8 8.9 4.Hidalgo, TX 26.8 6.9 5.Nogales, AZ 23.5 6.0 6.Eagle Pass, TX 21.7 5.5 7.Santa Teresa, NM 19.9 5.1 8.Bronsville- Cameron, TX 15.4 4.0 9. Calexico, CA 7.3 1.9 10.Del Rio, TX 4.1 1.1 11.Other 2.9 0.7 Source: Texas Center for Border Economic and Enterprise Development, Texas A&M InternaEonal University
Mexican investment supports U.S. (Texas) jobs, with an annual compensaeon to employees around $65,465 * Mexican Foreign Companies with OperaEons in Texas Company City Axis Pipe and Tube, Inc. (Prolamsa) Bimbo Bakeries USA Inc.(Grupo Bimbo) Bio- PAPPEL InternaEonal Borden Milk Products LLC(Grupo Industrial Lala) Cemex Cement(CEMEX) Elamex USA Corp(ACCEL Group) Metalsa Light Truck Inc.(Grupo Proeza) Mission Foods Inc.(Gruma) Bryan El Paso, Fort Worth, Rockwall El Paso, Rio Grande City AusEn, Dallas El Paso, Houston, New Braunfels, Odessa El Paso San Antonio Irving, San Antonio * Bureau of Economic Analysis Source: Office of the Governor The State of Texas
Contents 1.Economic IntegraEon 2. Residen0al Impact 3. Concluding Remarks
Approximately 65 percent of buyers from Mexico purchased properees in Texas Mexican Home Purchases by State (%) 65 70 60 50 40 30 18 20 5 5 4 4 Texas California Georgia Illinois South Carolina Other States 10 - Source: NaEonal AssociaEon of Realtors. 2014 Profile of InternaEonal Home Buying AcEvity
Sales price of Mexican purchases are below all other categories, while the peso/dollar exchange rate had a negaeve effect in 2014 Median Sales Price ($) Average Sales Price ($) Mexico 2014 2013 Mexico 2014 InternaEonal InternaEonal Texas Texas U.S. U.S. 0 50,000100,000150,000200,000250,000300,000 0 100,000 200,000 300,000 400,000 Source: NaEonal AssociaEon of Realtors, 2014 Profile of InternaEonal Home Buying AcEvity and Real Estate Center at Texas A&M University Source: NaEonal AssociaEon of Realtors, 2014 Profile of InternaEonal Home Buying AcEvity and Real Estate Center at Texas A&M University
Of the markets of greatest interest for Mexican buyers, four are in Texas: El Paso, Houston, Laredo and San Antonio Financing by Mexican Purchase (%) Type of Purchase (%) Cash 46% Mortgage 54% VacaEon home/ ResidenEal Rental 33% Commercial rental 4% Primary residence 63% Source: NaEonal AssociaEon of Realtors. 2014 Profile of InternaEonal Home Buying AcEvity Source: NaEonal AssociaEon of Realtors. 2014 Profile of InternaEonal Home Buying AcEvity
Contents 1.Economic IntegraEon 2. ResidenEal Impact 3. Concluding Remarks
Concluding Remarks q The Texas and Mexican economy are highly integrated q The state s relaeonship with Mexico is of complementary, not economic rivals q Texas and Mexico trade occurs in the context of produceon sharing (verecal integraeon) q Texas border is especially integrated with Mexico q In addieon to trade, Mexicans have significant important foreign investment in Texas q Mexican economic growth has a posieve impact for the Texas economy q Possible further long- run integraeon can be boosted by the recent energy reform in Mexico and immigraeon reform (aging labor force in the U.S.)
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