President Donald Trump has come out forcefully against international trade and integration. Although Trump’s opposition to trade is targeted at many countries, the subject of much of Trump’s anti-trade ire has been Mexico. With Trump’s threats to tear up, or at least renegotiate, the North American Free Trade Agreement (NAFTA), institute a “border adjustment” tax, and, of course, build a wall along the U.S.-Mexico border, Mexican officials are concerned about their economic and political future with the United States. This is not, however, the first time that Mexico’s proximity to the United States has posed a challenge for Mexican development prospects. In fact, Mexican President Porfirio Diaz is credited with once saying, “Poor Mexico, so far from god, so close to the United States.”
Although scholars and practitioners prefer to believe that any country has the potential to become a robust and economically thriving nation, there are always factors outside of a nation’s control. Some countries seem cursed to be underdeveloped due to a number of reasons, such as their factor endowments and unique histories. However, perhaps one of the most important factors in determining a country’s developmental trajectory is its geography.
Geography has direct implications on a nation’s history, available resources, and options for economic growth. Jared Diamond’s seminal book, “Guns, Germs, and Steel,” highlights how the geographic location of European nations, particularly their proximity to the Fertile Crescent, coupled with their small nation size, led these countries to develop along a particular trajectory–becoming more resistant to disease, developing better agricultural techniques, and inventing newer technologies. Unfortunately, geography can also stifle national development. The history of Mexico from the 19th century to today highlights how its geographic proximity to the United States has stymied Mexico’s growth and created numerous challenges for it.
The vast difference in economic and military power between the United States and Mexico limited Mexico’s growth opportunities. For example, during the 19th century, the United States sought to expand its territory and Mexico controlled much, if not all, of the territory west of the Louisiana Purchase. In 1846, the Mexican-American War resulted in the United States annexation of much of Mexico’s national territory. This loss of resources and territory undoubtedly had major impacts on Mexico’s development potential. The future vast mineral finds in California and Colorado buoyed the U.S. economy through the end of the 19th century, rather than helping its southern neighbor.
More recently, the United States has used its economic superiority to encourage Mexico to adopt policies that are in the interests of the United States. Although in some cases, such as with NAFTA, Mexico was in favor of these policies, the United States has frequently been able to ensure that deals favor U.S. interests over Mexico’s. In the case of NAFTA, this has clearly been the case with the United States’ continued economic support to American corn farmers over Mexico’s objections. While many argue NAFTA and other forms of economic integration benefited both countries, the United States has been able to encourage Mexico to address a number of issues that hinder Mexico’s development prospects, including the expansion of the war on drugs.
Neighboring nations with large differences in economic opportunities, such as Mexico and the United States, can face another challenge as well: immigration. Immigration to the United States not only provides employment opportunities for Mexican immigrants that may be unavailable in Mexico, but also limits the availability of labor within the Mexican economy. This is particularly important because it is not only the poorest segments of Mexican society that are immigrating to the United States, but also many of Mexico’s most educated individuals, leading to a “brain drain” from Mexico. Given their counter-cyclical nature, remittances serve as a stimulus to the Mexican economy. However, the resulting “brain drain” further limits economic opportunities in Mexico.
We cannot change the geographic proximity of Mexico and the United States. However, there are policies that the two nations can implement to improve opportunities for Mexican development. Given Trump’s intense anti-immigrant and trade stance, it may be possible for Mexico to leverage NAFTA renegotiations to seek an end to U.S. agricultural subsidies, which are a drag on Mexico’s agricultural sector as well as a driver of immigration to the United States. The United States and Mexico are not only neighbors, but also strong economic and security partners. It is in the interest of both countries to see Mexico become more economically and politically stable. By working together, the United States and Mexico may be able to generate opportunities for safer immigration practices, better relations, and fresh economic potential on both sides of the Rio Grande.