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October 1997, Volume 4, Number 10

Mexico: Migrants and the Economy

Migrants. Mexico's Foreign Minister Jose Angel Gurria condemned stepped-up US border controls at the United Nations General Assembly on September 24, 1997. According to Gurria, US operations such as "Gatekeeper" and "Rio Grande" hurt border relations, and often result in abusive treatment toward the migrants." Gurria suggested a universal code of conduct for all countries that deal with immigrants.

Gurria asserted that migrants headed to the US "are going to work. They are people who go in search of opportunities. There are many industries and many activities in the United States which surely would not survive without the work of our undocumented workers from Mexico, such as agriculture in California." In many cases, Gurria believes that the benefits of Mexican migrants are not fully appreciated: "Everybody benefits from cheaper construction, or a cheaper service in a restaurant, or cheaper attention in a service station, or from cheaper agricultural products."

Mexico's foreign minister announced that Mexico would add 70 consular officers in US border areas to protect Mexicans attempting to illegally enter the US.

The OECD released its second economic survey of Mexico in December 1996, updating the survey issued in September 1995. It includes a discussion of recent economic trends, an appraisal of economic and monetary policies and an overview of changes in the Mexican labor market.

The survey briefly discusses the origins of Mexico-US migration, the rising share of urban residents among migrants and the volume and use of remittances (page 78). There is also a section on the Mexican education system that notes that Mexico recently raised compulsory schooling from six to nine years; about 42 percent of 15- to 19-year olds are in school. About 20 million children are expected to be enrolled in K-12 Mexican schools in fall 1997, compared with 52 million in the US.

Provisional rules for Mexicans living in the US who wish to vote in the 2000 Mexican election would require them to first report to their home towns to register. They would then make a second trip to Mexico to vote; Mexico does not have absentee voting. Some Mexicans in the US note that US citizens living in Mexico can vote in US elections with absentee ballots and complain that they cannot do likewise.

Economy. Mexico's economy grew by almost nine percent in the second quarter of 1997, as the economic recovery from the December 1994 peso devaluation began to spread from the export sector to domestic sectors such as retailing. Mexico created 430,000 additional jobs in the first six months of 1997, including 23,902 in maquiladoras; however, unemployment rose 0.7 percent to 4.1 percent in July 1997. Mexico considers employed persons to be those 12 or older who work for pay at least one hour during the survey week; data are collected in 41 cities.

Mexico's economy shrank by 6.2 percent in 1995, real wages fell 20 percent, and inflation was 52 percent. Mexico's GDP rose 5.1 percent in 1996, and is projected to grow 4.5 percent in 1997; 4.8 percent in 1998; 5.2 percent in 1999; and, 5.6 percent in the year 2000. Mexico's GDP was about $350 billion in 1995.

Real wages in Mexico have fallen 40 percent since 1975, but in 1997, most wage increases were reported to be 19 or 20 percent, while inflation is expected to be 15 percent, providing a small real-wage increase. An average Mexican worker in mid-1997 earned the minimum wage of 26 pesos, or $3 a day, down in dollar terms from the $4 daily minimum wage in 1990. A study of manufacturing wages concluded that hourly wages were $1.50 per hour in Mexico, compared with $5.14 in Hong Kong, and $17.70 in the US.

On June 3, 1997, Mexican President Zedillo announced a three-year economic program, the National Program of Financing for Development 1997-2000 or Pronafide, that promises to speed up economic growth on the basis of Mexican savings rather than foreign direct investment (FDI). Under the plan, Mexico's pension system will be privatized and the higher returns expected to accrue to workers are projected to increase private savings from 16 percent of GDP in 1996 to 18 percent by 2000, thus reducing Mexico's need for foreign investment. FDI is nonetheless expected to increase from $9 billion in 1996 to $11 billion in 2000.

Latin Trade magazine in August 1997 estimated that profits from drugs in Mexico are $15 billion, or equivalent to almost five percent of Mexico's GDP.