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updated 6:05 PM UTC, Oct 7, 2015

Perspectivas económicas de Baja California y San Diego para el 2013

  • Escrito por Dr. Alejandro Díaz Bautista
  • Mexico is doing well in economic terms: low debt, low deficit and moderate economic growth.
  • Emerging markets are in much better shape, with higher levels of economic growth, compared to most advanced economies .
  • Unemployment is a major problem for emerging and advanced economies during 2012 and 2013.

United States and Mexico border states

  • 10 border states
  • Nearly 3,169 km or 1,696 miles of international border
  • Population: more than 83 millions

United States-Mexico border region

The ten Border States represent the largest binational regional economy in the world, with over 83 million people and a combined economy ranked estimated at number four in the world in economic terms.

This region has 51 border crossings, 32 bridges and seven federal railway routes, placing it as the busiest border in the world, with over 350 million people cross the border each year.

The economic slowdown and unemployment are among the issues that currently affect the people on both sides of the border.

The state of Arizona had an unemployment rate of 9.4 percent, Texas, 8.4 percent; New Mexico, 6.7 percent, and California, 12 percent (the highest), according to the figures from July 2011, compared to an unemployment rate of 9.1 percent in the United States during July 2011.

In July 2011, the northern border states of Mexico were also showing high unemployment rates. The state of Baja California had an unemployment rate of 5.05 percent, Sonora, 5.65 percent; Chihuahua, 6.81 percent; Coahuila, 6.27 percent; Nuevo Leon, 6.49 percent; and Tamaulipas, 8.81 percent (the highest).

United States-Mexico border unemployment in 2012

Official figures from the National Institute of Statistics and Geography (INEGI) show that during the second quarter of 2012, the northern border states in Mexico continue to show high unemployment rates. Chihuahua had a 7% unemployment rate, Tamaulipas with 6%; Sonora with 5.4%, Coahuila with 5.5%, Nuevo Leon with 6.4% , and Baja California with a 6.1% unemployment rate. On average, the unemployment rate of the northern border states of Mexico is estimated close to 6.06% during the second quarter of 2012.

Furthermore, at the end of July 2012, the southern U.S. border states also suffered with high unemployment rates: California with 10.7%, Arizona with 8.3%, 6.6% for New Mexico, and Texas with an unemployment rate of 7.2 percent. On average, the unemployment rate of the southern border states of the United States is estimated at 6.06% during the month of July 2012.

VAT

Possible increase in the VAT rate in 2013 in Mexico.

Mexico has a VAT of 11% in the border region and 16% for the rest of the country.

The United States-Mexico border

People cross the United States Mexico border every day to do business, go shopping, visit family members, or simply to enjoy each other's tourism.

This results in around 350 million crossings and almost $400 billion in trade each year, making it the most important border region in the world.

Baja California and California economic integration

Economic Integration can also be seen at the regional level.

During 2010, the official data shows that the number of northbound crossers from Baja California to California reached 61,105,484 people, the majority of whom, crossed in personal vehicles. Baja California residents constitute an important component in the economy of communities and counties on the U.S. side of the border, like San Diego County.

These visitors from Baja California enter the U.S. regularly for shopping, tourism, work, and socialization with family and friends. It's a well known fact that cross border visitors from Mexico have a significant economic impact on U.S. communities and counties.

The Border Economic Zone (BEZ) in Baja California

A major challenge for the commercial sector of Baja California is without a doubt, the increase consumer spending of Baja California residents into the U.S. market, which has been estimated at around 6 billion dollars a year.

With the implementation of the BEZ in 2012, Baja California wants to recover part of the consumer spending by Baja residents in California.

The BEZ is intended to promote the consumption of regionally made goods in the Baja California region. The economic impact of the implementation of the BEZ could be as high as an 8% reduction of spending by Baja California residents in California.

A considerable amount of money is spent on a multitude of retail items including groceries, clothing, appliances, tourism and services.

As a measure to increase consumer spending in the state of Baja California, the government and business sectors of Baja California in conjunction with the State Government and the Federal Government proposed the new Border Economic Zone (BEZ) in 2012.

"El buen fin" program in Mexico

The idea of "El buen fin" program in Mexico was created as a private initiative to enforce the economic activity in Mexico during November of 2011. The initiative was presented through a program created by the federal government and some of the most important media networks of Mexico.

The program is similar, in some way, to the famous "Black Friday" of the United States, while this day represents the day with highest consumer spending, and when the commercial sector shows their best offers and the biggest discounts throughout the year.

The economic impact of the implementation of the "El buen fin" program was estimated as high as a 2% reduction of spending by Baja California residents in California during 2011.

Economic impacts and expenditures

Shopping is the primary reason to cross into the U.S. for Baja California residents. Depending on the study, 42 to 68% of border crossers identify shopping as the primary reason for the visit into Southern California. Other reasons are social in nature, like visiting family and friends, or are work related.

During 2010, around 74 percent of crossers entered California in their private vehicles, since a car allows them freedom of movement between different shopping locations in the U.S. as well as enough room to handle the volume of their purchases.

The estimated average daily expenditures reported by Baja California visitors into San Diego County and California in various studies ranges from US $140 per trip to $300 per trip. The current estimation uses an average amount of expenditures per trip of $240 per trip as the base case scenario.

California economic impacts

The California and Baja California border region remains an example of social and economic integration in North America, where cross-border shopping is only one aspect of that economic reality in the border region.

Mexican citizens cross frequently into the U.S. to shop, work, dine, vacation, and visit friends and family. What they spend on those visits results in a key contribution to local border economies in California.

The results reveal annual retail sales by Baja California Cross Border Visitors in the range of 5.9 to 6.8 billion dollars along the U.S.-Mexico border, depending on the complete implementation of the Border Economic Zone (BEZ) in Baja California and the "El Buen Fin Program".

The base case scenario shows that Baja California consumer and economic drain into the U.S. market is estimated at around 5.9 billion dollars in 2012 and 6.2 billion dollars in 2014, with the implementation of the Border Economic Zone (BEZ).

San Diego county economic impacts

The results reveal a substantial overall San Diego county cross border retail sales in the order of 4 billion dollars during 2012 along the Baja California-San Diego county border

Expenditures by cross border residents of Baja California are estimated at 4.2 billion dollars in San Diego county during 2014 using the base case spending scenario and with the implementation of the BEZ.

The San Diego-Carlsbad-San Marcos metropolitan area's GDP in 2009 was estimated at around $171.4 billion, ranking 16th in the United States, according to the federal bureau of Economic Analysis.

In San Diego county, the Hispanic population increased from 27% in 2000 to 32% in 2010, with the resulting significant contribution to the regional economy.

.From 1995 to 2010, the official estimates indicate more than 450 million personal vehicle crossings with 966 million passengers, and more than 260 million pedestrian crossings, from Baja California to California.

Expenditures by cross border residents of Baja California in San Diego county represents around 2.4% of the annual gross domestic product in San Diego county.

A new economic and competitive binational Mega-region is evolving. The Baja California-Southern California Mega Region includes Los Angeles County, Orange County, Riverside, Imperial and San Diego counties on the California side, and Tijuana, Rosarito, Tecate and the port of Ensenada on the Baja California side.

Global FDI flows from 2011 to 2012

Global FDI inflows are likely to be around $1.6 trillion.

Foreign direct investments worldwide are projected to return to pre-crisis 2008 levels this year, with inflows expected to be up to USD 1.6 trillion.

Recovery of FDI inflows would continue this year while pegging the amount at around USD 1.4 trillion to USD 1.6 trillion.

Brought down by the 2008 financial meltdown and its ripple effects, FDI worldwide tumbled to just USD 1.19 trillion in 2009. Last year, the inflows were slightly better at USD 1.24 trillion.

FDI in the NAFTA region

The NAFTA region has created new opportunities of investment and trade for the companies of all 3 countries, and 50 % of FDI in NAFTA is between trade partners. For Mexico, the United States is the main source of FDI.

FDI is of great importance the Northern Border Mexican Region, and by the year 2004, FDI in the Northern Border States of Mexico represented 18.7% of total FDI at the national level. The Northern Border States that are considered in this study are Baja California, Sonora, Chihuahua, Coahuila, Nuevo Leon and Tamaulipas.

Surface trade between U.S. and NAFTA countres (1995 - 2011)

Surface transportation trade between the United States and its North American Free Trade Agreement (NAFTA) partners Canada and Mexico increased by 14.3 percent in 2011 compared to 2010, valued at $904 billion in 2011, according to official data by the Bureau of Transportation Statistics (BTS) of the U.S. Department of Transportation.

The 14.3 percent increase in trade was the third largest year-to-year increase for the years covered by these data.

The $904 billion in U.S.-NAFTA trade was the highest amount since NAFTA went into effect in 1994.

Top 5 commodities transported between the U.S. and Mexico by all surface modes of transportation (2011)

CommoditiesExportsImportsTotal
Electrical machinery, equipments & parts 29,672 50,799 80,471
Computer-related machinery & parts 29,703 37,864 67,567
Vehicles other than railway 17,726 43,446 61,172
Plastics 12,570 3,369 15,939
Measuring & testing equipment 4,083 9,348 13,431

United States-Mexico trade

The U.S. is Mexico's largest trading partner, buying more than 80% of Mexican exports during 2010. Mexico is the third largest U.S. trading partner after China (1st) and Canada (2nd). Bilateral goods trade reached $362 billion in 2010 and in 2009 they totaled $278 billion.

Mexico and the U.S. do as much business in goods and services in just over a month as Mexico does with all 27 countries of the European Union combined in a year.

United States-Mexico trade in 2012

Total bilateral trade between the U.S. and Mexico has returned to the levels before the economic downturn and crisis.

In 2011, Mexico and the United States had almost 461 billion dollars in trade in goods, which represents more than 1,250 million dollars or 1.25 billion in trade crossing the border in both directions every day.

The economic relationship also adds 39 billion dollars in service trade.

Mexico continues to export more of their products and services to the United States than any other country in the world. The United States remains the main destination of Mexican goods and services.

The trade relationship between Mexico and the United States not only is 'back' but it is getting stronger between Mexico and the United States in 2012.

Migration and border issues

Mexico has seen a significant drop in migration recently. For the first time in 60 years the movement of Mexicans to the United States is at a net zero.

A mixture of tougher anti-immigration legislation in the southern United States, combined with fewer job prospects in the US may have forced many Mexicans to come back home.

The net zero migration rate between Mexico and the United States does not mean that Mexican migrants have not crossed to the United States between 2011 and 2012.

The decrease in net Mexican migration is the difference between those who go to the United States and those who leave the country and go back to Mexico, a social phenomenon that began five years ago and already has led to the first decline in two decades of the undocumented Mexican population in the United States.

The reduction of Mexican migration to the United States is a social phenomenon that is explained by the slow evolution of the U.S. economy during the worst economic crisis in decades, the labor market situation in the United States, the deportations of migrants and the increase in border enforcement and security. Also the growing dangers associated with illegal border crossings, the long-term decline in Mexico's birth rates and broader economic conditions in Mexico.

Remittances

The increase in remittances were one of the key factors of macroeconomic stability in Mexico, before the economic crisis of 2008 and 2009.

Remittances to Baja California, increased 8.75 percent in the first quarter of 2012, compared to the first quarter of 2011.

Remittances sent to Baja California were close to 96.9 million dollars, representing approximately 17.9 percent of total remittances sent to the border states of Mexico.

Remittances come almost entirely from the U.S., and remain one of the most important sources of foreign income in Mexico.

Flows to the Mexican economy come from three main areas: oil, tourism and remittances from Mexican nationals living abroad.

During 2011, Mexico managed to stay as the third recipient of remittances in the world after India and China.

Inflation in 2012

Inflation in Mexico is above the inflation target set by the Bank of Mexico of 3% plus 1%.

Inflation has increased in Mexico due to the increase in the price of eggs and other food products and also because of the increase in energy prices.

Mexico's energy and the economy in 2012

Moreover, a decline in crude production due to under investment by the Mexican state oil firm Petroleos Mexicanos (Pemex) and a weak non-oil tax base are expected to draw funds away from public investment.

New oil fields in the Gulf of Mexico

The discovery of a new oil field in the Gulf of Mexico during 2012, may lead to an increase in crude production in Mexico in the medium and long term.

International reserves

Mexico's international reserves rose to 161.2 billion in the week that ended August 24, 2012, according to official data by the central bank.

Mexico's International Reserves are at historic levels in 2012.

Mexico's reserves have climbed 13 percent this year, giving the central bank greater leeway to intervene in the foreign exchange markets to buy pesos when needed.

On June 1, the mexican peso reached its weakest level against the dollar since March 2009 on concerns that Europe's sovereign debt crisis would affect global economic growth.

Mexico uses dollar auctions to limit daily declines in the peso after it tumbled 11 percent against the dollar in 2011, the most among major Latin American currencies.

Since November 2011, the central bank has been offering $400 million daily at an exchange rate that's at least 2 percent weaker than the previous day.

This year, the peso has strengthened 5.7 percent against the dollar.

Global market volatility

Unfortunately, all of the world's economies, including the emerging markets, will be affected to a greater or lesser degree by the events in europe, and therefore the challenge is to mitigate the degree of economic and financial impact.

From late 2009, fears of a sovereign debt crisis developed among fiscally conservative investors concerning some European states, with the situation becoming particularly tense in early 2010.

This included euro zone members Greece, Ireland and Portugal and also some EU countries outside the area.

European sovereign debt crisis

In 2010 the debt crisis was mostly centered on events in Greece, where the cost of financing government debt was rising. On 2 May 2010, the eurozone countries and the International Monetary Fund agreed to a €110 billion loan for Greece, conditional on the implementation of harsh austerity measures. The Greek bail-out was followed by a €85 billion rescue package for Ireland in November, and a €78 billion bail-out for Portugal in May 2011.

This was the first eurozone crisis since its creation in 1999.

The sovereign debt crisis that is unfolding is a fiscal crisis of the western world.

Mexico's economic growth in 2013

Mexico should approve the structural reforms to boost the country's economic growth and development.

A new labor reform is underway. Mexico has the need for a second generation energy reform, a fiscal reform and a competitiveness reform.

President signals willingness to push forward structural reform agenda

President Enrique Pena Nieto enacted a constitutional amendment on education after it was sanctioned by both federal and state legislatures. The education reform, which came on top of the labour reform passed in late 2012 by former president Felipe Calderon, is the first approved under the "Pact for Mexico", a non-binding political accord between the country's three major political parties -PRI, PAN and PRD- to jointly push ahead an ambitious structural reform agenda.

The education bill had met strong resistance from the powerful national teacher's union (SNTE), the largest union in Latin America. Against this backdrop, on 27 February, Elba Esther Gordillo, leader of the SNTE, was arrested on embezzlement and organised crime charges.

Telecommunications reform

On March 11, President Pena Nieto and parliamentary leaders of the three major parties presented a joint outline reform to deregulate the telecommunications sector. The reform envisages restructuring the regulatory body, the creation of two new private national television networks as well as allowing foreign companies to have a greater participation in the sector.

The bill, which requires support of two-thirds of Congress and a majority of state legislatures, is expected to be approved before the end of April.

Structural reforms 2013

Moreover, in the second half of the year the government is expected to submit to Congress the long-awaited fiscal and energy reforms bills. The most controversial points in these reforms will likely be extending the general value added tax of 16% to food and medicines and permitting a larger participation of private investment in the protected energy sector.

On March 12, credit rating agency Standard & Poor's raised the country's BBB credit rating outlook to positive from stable, citing improving prospects that the government will "successfully advance policies to further strengthen Mexico's fiscal room for maneuver and medium-term growth prospects".

 

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Dr. Alejandro Díaz-Bautista

Resúmen Curricular

El Dr. Alejandro Díaz-Bautista es Doctor en economía por la Universidad de California, Irvine, Maestría en economía por la Universidad de California y Licenciado en economía por el Instituto Tecnológico Autónomo de México (ITAM). El Dr. Díaz-Bautista cuenta con 18 años de desempeño profesional en el sector académico, al igual que en el sector público y privado.

El Dr. Díaz-Bautista es profesor investigador de economía en el Departamento de Estudios Económicos del Colegio de la Frontera Norte (COLEF) y también fue Coordinador de la Maestría en Economía Aplicada. Ha sido Guest Scholar, investigador y Research Fellow del Centro de Estudios México-Estados Unidos de la Universidad de California, San Diego (UCSD). De igual manera, es catedrático en economía y ha impartido cursos y seminarios en la Universidad de California San Diego (UCSD), en la Universidad Iberoamericana Noroeste, en la Universidad de California Irvine, en el Centro de Investigaciones Socioeconómicas (CISE) y en el COLEF.

En el sector privado ha sido consultor en temas energéticos, para 2 de las 5 empresas más importantes del mundo petrolero y de la energía, al igual que ha sido consultor económico para gobiernos estatales y empresas económicas y financieras.

En el sector público ha sido Director General de Planeación Energética de la Secretaría de Energía (SENER), al igual que ha laborado en la Comisión Reguladora de Energía (CRE) y en la Secretaria de Energía, Minas e Industria Paraestatal.

Es autor de diversos libros, estudios y publicaciones arbitradas y es un distinguido miembro del Sistema Nacional de Investigadores del Consejo Nacional de Ciencia y Tecnología (CONACYT). Entre sus libros destaca "Los determinantes del crecimiento económico: comercio internacional, convergencia y las instituciones" que fue distinguido por el Foro de Editores de la Unión Europea. De igual manera, es autor del libro "Experiencias Internacionales en la Desregulación Eléctrica y el Sector Eléctrico en México", que se centra en uno de los temas económicos de nuestra época, los cambios estructurales y regulatorios ocurridos durante las últimas décadas a nivel internacional en el sector eléctrico. Mientras que su nuevo libro publicado en los Estados Unidos se titula "Regional Economic Growth and North American Economic Integration".

El Dr. Alejandro Díaz-Bautista ha impartido conferencias en la Reserva Federal y en el Congreso de los Estados Unidos, además de más de 100 conferencias a nivel internacional en los Estados Unidos, Canadá, Europa, Australia, Asia y a lo largo de todo México.

Ha aparecido frecuentemente en programas de televisión y de radio en México y los Estados Unidos, al igual que ha sido entrevistado en los periódicos de más reconocido prestigio a nivel nacional e internacional.

El Dr. Alejandro Díaz-Bautista se encuentra entre los 10 economistas académicos más productivos en México durante la ultima década (2000-2010) según el índice EconLit del "American Economic Association electronic bibliography".

Es miembro del comité editorial y dictaminador de varias revistas y ha sido evaluador del Instituto Federal Electoral (IFE) y del Consejo Nacional de Ciencia y Tecnología (CONACYT). El Dr. Alejandro Díaz-Bautista también ha sido Miembro del Consejo de Asesores Económicos en la Conferencia de Gobernadores Fronterizos México-Estados Unidos.



Alejandro Díaz-Bautista, Ph.D. in Economics
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