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New regulations could stimulate economic development near Mexico-U.S. Border

Posted: 5:33 PM, Jan 08, 2019
Updated: 2019-01-08 23:29:00-05

 

Mexico’s new president recently introduced sweeping economic changes for 43 cities south of the U.S.border.

President Andres Manual Lopez Obrador’s plan includes doubling the minimum wage in the area, with a lesser increase away from the border.  Obrador hopes his plan keeps Mexicans at home.  Economic experts think it may work.

“Some people may decide to stay there,” said Ahmed Kamara, an Associate Economic Professor at Texas A&M Corpus Christi.

Kamara specializes in economic development.  He says the higher wages, combined with a ten percent income tax cut (from 30% to 20% at maximum levels), as well cutting Value Added Taxes on goods in the region in half from 16% to 8% will not only help the Mexican economy, but Americans will also benefit from cheaper prices on Mexican goods.

“Higher wages, people work more, production goes up, there’s more across the board so we get more goods,” said Kamara.  “With lower taxes, the cost of production goes down, so the flow of goods will be more.”

Most importantly, these changes may entice some Mexicans living in the United States illegally to return to Mexico for a shot at better opportunities.

“If I’m here and I’m finding it hard to find a job because I don’t have legal status, I don’t have a social security card, and I’m doing all these odd jobs, I may go back,” said Kamara.  “Over there I’d have legal status and I’ll get a decent job to do.”

The plan also calls for Mexico’s gas prices near the border to drop so they are more in line with American prices.

Kamara added that an ideal scenario would be for both governments to work together as the changes take effect.

The 43 municipalities included in the free zone and higher wage area are:

Baja California: Ensenada, Playas de Rosarito, Tijuana, Tecate, and Mexicali.

Sonora: San Luis Río Colorado, Puerto Peñasco, General Plutarco Elías Calles, Caborca, Altar, Sáric, Nogales, Santa Cruz Cananea, Naco and Agua Prieta.

Chihuahua: Janos, Ascensión, Juárez, Praxedis G. Guerrero, Guadalupe, Coyame del Sotol, Ojinagua and Manuel Benavides.

Coahuila: Ocampo, Acuña, Zaragoza, Jiménez, Piedras Negras, Nava, Guerrero and Hidalgo.

Nuevo León: Anáhuac.

Tamaulipas: Nuevo Laredo, Guerrero, Mier, Miguel Alemán, Camargo, Gustavo Díaz Ordaz, Reynosa, Río Bravo, Valle Hermoso and Matamoros.