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October 1985, Vol. 108, No.
10
The 1982 Mexican peso devaluation
and border area employment
Regional economics are affected by business conditions in neighboring regions. Levels of disposable income and consumer preferences in external markets can influence which industries locate in a region, and economic circumstances in neighboring regions may affect local levels of personal income and employment. These conditions are illustrated by the recent economic trends along the U.S.-Mexican border. Increased manufacturing employment in Mexico expands the number of Mexican consumers able to purchase U.S. goods and services, which in turn creates conditions favorable for growth of retail and service jobs on the U.S. side.
In the U.S.-Mexico border region, a major influence on the local economies is the presence of two foreign countries at different stages of development. The 1,933-mile U.S.-Mexican border1 is the world's longest political boundary separating a developing nation from a more fully developed industrial nation. The border regions have had to cope with two sets of national aspirations and development strategies which often affect existing economic relationships. Economic expansions and contractions are influenced not only by swings in the business cycle, but also by decisions made by either Government.
This article is an analysis of events—specifically the 1982 peso devaluations—that resulted in depressed economic activity in the U.S. southern border areas. The article looks at two concentrated and rapidly growing industries—manufacturing and retail trade—to determine why dependencies between U.S. border regions and their Mexican neighbors eventually led to regional economic crisis. It does not directly examine the national implications of border area development, such as shifts of manufacturing operations from other parts of the United States to Mexico.
This excerpt is from an article published in the October 1985 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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1 The World Almanac, 1984 ed. (New York, Newspaper Enterprise Association, Inc.), p. 435.
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