Mexican Immigrants Boost Trade, Investment And Prosperity

Mexican immigration to the United States encourages increased trade and investment, enhancing prosperity in both countries, according to new research. Most political discourse over immigration from Mexico to the U.S. has been emotional, with U.S. elected officials using heated political rhetoric and focusing on illegal entry. The research suggests Americans should look beyond the rhetoric and focus on economic facts.

“We find a generally positive and significant relationship between Mexico-U.S. migration and Mexico-U.S. imports, exports, and inward FDI [foreign direct investment] from the U.S. to Mexico,” concluded economists Michael Gove and Liliana Meza González. Gove is an economics professor at the University of North Georgia, and González is a professor and researcher in the international studies department at Universidad Iberoamericana in Mexico City.

In their research, the two economists examined 10 years of data, from 2008 to 2017, to estimate the “potential contribution of migration to international trade and foreign direct investment.” Gove and González concluded: “Migration complements trade and inward foreign direct investment, and point to transnationalism as a central factor that leads to migration’s positive contribution.”

Ronald Reagan proposed a North American free trade agreement. “The original idea was from Ronald Reagan,” said Agustín Barrios Gómez, a former federal congressman and diplomat from Mexico. “He proposed it to José López Portillo, our president at the time . . . The reason he (Reagan) proposed a free trade agreement with Mexico was he knew that American prosperity and national security directly depend on a stable and cooperative Mexico. Without a stable and cooperative Mexico there is no American superpower.”

The original North American Free Trade Agreement (NAFTA) contained some measures to encourage the free movement of foreign professionals between the United States and Mexico and Canada. However, Reagan, George Bush and Bill Clinton knew it would not be possible to gain Congressional approval if the pact also included broader immigration provisions to allow more Mexicans to work legally in the United States.

Illegal immigration from Mexico is primarily caused by the limitations on legal avenues for Mexicans to work in the United States. President George W. Bush attempted to rectify that through a proposed U.S.-Mexico migration agreement that included expanded work visas and broader immigration enforcement cooperation between the two countries. An agreement neared completion, but after the terrorist attacks on September 11, 2001, it would have been impossible to gain Congressional approval, and the effort was largely abandoned before becoming a formal pact.

Donald Trump’s vision of Mexican immigrants differed from earlier presidents. In his first speech as a presidential candidate, Trump said many Mexicans were rapists who would commit crimes against Americans. That became part of a central message of his campaign. In contrast, in a book published in 2021, George W. Bush, who served as president from January 2001 to January 2009, wrote about the family values and work ethic of Mexican immigrants.

Trump threatened to end NAFTA, though ultimately it was renamed and updated, with parts becoming more “managed trade” rather than “free trade.” Trump gained leverage over Mexico on immigration enforcement not by an agreement to admit more Mexican workers legally but by threatening to harm Mexico’s economy with punitive tariffs.

“The transnational networks that link migrants to their country of origin generally promote economic activities that benefit both the U.S. and Mexico, a result that has policy implications both in Mexico and in the U.S.,” according to Gove and González.

The economists make several policy recommendations. First, the United States should “increase the avenues for more regular migration from Mexico.” Gove and González favor increasing visas for skilled and unskilled temporary workers from Mexico.

“Expanded temporary worker programs, properly constructed, will aid economic growth and enhance border control efforts and national security,” according to Senate testimony delivered in March 2015 by Randel K. Johnson on behalf of the U.S. Chamber of Commerce. Johnson, now a distinguished immigration fellow at Cornell Law School, said, “The current existing temporary worker programs are extremely difficult to use and are capped at unrealistically low levels.”

According to Gove and González, providing more opportunities for Mexican workers to become permanent residents in the U.S. would promote more trade and investment and raise living standards in both countries. Additional investment in the human capital of those who come to the United States also would help both nations. “To promote beneficial economic dynamics in the country tied to the migration flows to the U.S., the Mexican government could emphasize the quality of education and the use of remittances in the human capital of the potential migrants,” they write.

Gove and González conclude that U.S. and Mexican societies are closely connected. Their research finds that Mexican immigration to the United States benefits both countries.