An Economy That Knows No Borders
CALEXICO, Calif. — Tucked into a hot, dry corner of California, Imperial County has long been an economic laggard. It has the state's highest unemployment rate and lowest median income and a population so thin that it would fold neatly into a few square miles of Los Angeles.
Yet Wal-Mart Stores Inc. is building three Supercenters in the county. A gleaming new regional mall just opened. Home builders are on a tear. What's more, two Indian tribes want to construct a $175-million casino in Calexico -- a city where nearly 1 in 4 families lives in poverty.
This economic paradox is explained by the license plates on many of the cars: Along with a good chunk of the spending power in the Imperial Valley, they hail from Mexicali, Mexico, the fast-growing industrial hub of nearly 1 million just across the border.
Day trippers such as Maria Fuentes pump nearly $1 billion annually into the local economy buying groceries, clothing, autos, even gasoline, according to local economists who have studied retail and trade figures.
"I come over to this side a lot," Fuentes said as she filled up her car at a Calexico service station.
Mexicali residents also are snatching up property on the U.S. side, helping drive up values in a real estate market that has seen prices appreciate more than 25% in the last year.
"The more expensive the house, the more likely my buyer is a Mexican national," said Barry Garman, director of planning with Calexico-based Victoria Homes.
Economic ties between Mexico and Southern California have always been strong, but the integration has speeded up significantly in recent years, as measured by the growth in cross-border sales, trade and investment.
Since the launch of the North American Free Trade Agreement in 1995, two-way trade has boomed. In 2002, California exported $14.9 billion of goods to Mexico, the state's most important foreign customer. Exports from Mexico to California more than doubled from 1995 to 2002. Mexican-owned companies, which have invested more than $1 billion in California, employ at least 10,000 Californians, according to the Public Policy Institute of California.
Now, after all the recent gains, border communities are growing increasingly worried that the Bush administration's efforts to prevent terrorists or their weapons from crossing the border could slow the wheels of commerce. At a summit Wednesday in Texas, President Bush and the leaders of Mexico and Canada are expected to discuss ways to increase security without impeding the growth of the cross-border economy.
