Watson Institute for International and Public Affairs

Alvarez Calls for New US-Mexico Relationship

November 28, 2010

When the United States enjoys economic expansion, the boom also profits Mexican industry, exports, and migrants.

But when the northern neighbor stumbles – as during the 2008 financial crisis – Mexico suffers devastating losses, according to Alejandro Alvarez, professor of economics at the National Autonomous University of Mexico (UNAM). 

“We have interconnected stories,” said Alvarez during a recent talk at the Institute. “If you take a picture of North America today, it’s a social disaster,” he said, attributing many of the region’s problems to unregulated globalization.

Illustrating the asymmetrical relationship between the two countries with examples ranging from NAFTA to the militarization of the border, Alvarez said Mexico should decrease its dependence on the United States.

The crisis has been a stark reminder of the cost of this dependence for the vulnerable Mexican economy. But while Alvarez was critical of Washington’s role in the global slump, he chiefly blamed the downturn on the financial sectors.

“The priorities are wrong today and we need to change that,” Alvarez said. “And if it’s not in the middle of this crisis, when?”

The recession has exacerbated many problems that had arisen since the implementation of NAFTA. However, he said, Mexico’s ills cannot all be blamed on the trade agreement, which did grant the country privileged access to the thriving American market in the 1990s.

Alvarez did, nevertheless, hold NAFTA responsible for an increase in regional disparity, the informal sector, and migration. And one of the agreement’s main original draws for Mexico – economic gain – has not been widespread.

“The reality is that the job growth in services and manufacturing were mainly concentrated in the maquiladora industry and were offset by job losses in Mexican agriculture,” he said.

During the crisis, workers at these same maquiladoras – manufacturing plants alongside the Mexican side of the border – severely suffered. American-owned factories were particularly hit, Alvarez said. Mexican employees of General Motors, for instance, endured decreases in pay, work, and labor conditions – much like their American counterparts.

Once drug violence, border militarization, and a spurt of anti-migrant legislation in the United States are factored in, Alvarez said the regional situation seems even bleaker.
“But even in the worse conditions, we can do something.”

In addition to advocating more financial regulation, Alvarez pressed Mexico to stop looking north. “We need to reorganize our economy in a different way,” he said. “We need to look at our domestic market.”

His talk on “Mexican and American Workers: Connected and Divided by the Crisis?” was part of the Center for Latin American and Caribbean Studies Lecture Series.

By Watson Institute Student Rapporteur Alexandra Ulmer ’11