HARLINGEN , RGV - Elected officials who signed the BiNED agreement says their focus on bringing advanced manufacturing to the region is a better bet than pumping more and more money into border security.
“The use of traditional command and control strategies to protect our southern border has reached a point of diminishing returns. The marginal benefits from reduced illegal immigration and insecurity produced by constructing more border fencing and adding more ‘boots on the ground’ far exceed the cost,” a 2,300-word BiNED document states.
“Although command and control measures are an important first step in controlling our borders, continuing their expansion is now a wasteful use of scarce resources.”
BiNED members say there are numerous reasons why continued expansion of traditional command and control measures is an inefficient approach to controlling the southern border. The fundamental one, they say, is that “traditional command and control measures do not address the principal root cause of illegal immigration and insecurity - poverty, insecurity and lack of opportunity.”
Instead, the members of BiNED say, a more cost effective strategy for reducing the flow of undocumented immigrants and insecurity on the Southern Border, is to “promote a safe and prosperous border through targeted economic development and specifically through a binational advanced manufacturing strategy that encompasses the entire southwestern border with the U.S. and Mexico.”
BiNED stands for Bi-National Economic Development. Members of the group say the concept involves the creation of “an integrated, innovative and competitive bi-national U.S./Mexico border economic mega-region whose economic focus is advanced manufacturing. The key word, members of BiNED say, is integrated. “The U.S./Mexico Border economies need to work together as a single mega-region in order to fully realize the region’s economic potential.”
The group has yet to come up with a new name accurately encompasses the region. The document calls it the Rio South Texas Mega Region but this does not account for the inclusion of northeastern Tamaulipas.
BiNED used to encompass the cities of Brownsville, Matamoros and Harlingen. However, at a ceremony held at the Regional Academic Health Center in Harlingen last Friday, the region was expanded to include Cameron and Hidalgo counties and the cities of McAllen, Edinburg and Reynosa. Signing on to the agreement were Brownsville Mayor Tony Martinez, Matamoros Mayor Leticia Salazar, Harlingen Mayor Chris Boswell, McAllen Mayor Jim Darling, Edinburg Mayor Richard Garcia, Reynosa Mayor Jose Elias Leal, Cameron County Commissioner Dan Sanchez and Hidalgo County Judge Ramon Garcia. Congressman Filemon Vela, who is credited with developing the BiNED project, gave the keynote speech at the event.
Discussing border security, Mayor Garcia of Edinburg said: “We are throwing money at the problem and not finding a solution. This is the solution. People come from the south. Why? Not because they want to leave their families. That is not a natural thing. It is because they have a need. They want to support their family. They come and risk their lives, swimming the Rio Bravo, trying to pass deserts, living in the shadows so that they can support their families. Today we found the solution. Let's have jobs right here so that our children, when they graduate high school, do not have to find a manufacturing job in the east or the west. Let's find a job where they live, in their cities, where they want to be, bringing manufacturing to our area. People are starting to listen to us. Now that we are gathering with our friends to the south, somebody is going to say, the people in Washington, the people who invest money, the people who build plants, are going to look at us. That is what this is all about today.”
Here, in full, is the new BiNED document:
Bi-National Economic Development Mega Region:
A sustainable and cost-effective approach for controlling illegal immigration and insecurity on our southern border.
Introduction:
The use of traditional command and control strategies to protect our southern border has reached a point of diminishing returns. The marginal benefits from reduced illegal immigration and insecurity produced by constructing more border fencing and adding more "boots on the ground" far exceed their cost. Although command and control measures are an important first step in controlling our borders, continuing their expansion is now a wasteful use of our scarce resources.
There are numerous reasons why continued expansion of traditional command and control measures is an inefficient approach to controlling our southern border; but the fundamental one is that traditional command and control measures do not address the principal root cause of illegal immigration and insecurity: poverty, insecurity and lack of opportunity.
A much more cost effective strategy for reducing illegal immigration and insecurity on our Southern Border is to promote a safe and prosperous border through targeted economic development; and specifically through a binational advanced manufacturing strategy that encompasses the entire southwestern border with the U.S. and Mexico.
A strategy to create and promote secure economic development zones, coordinated with a parallel effort by Mexico on its southern border, will significantly reduce illegal immigration and insecurity on our Southern Border in a sustainable, and cost effective way.
Even in war zones like Iraq, U.S. military thinking acknowledges the importance of community and economic development to supplement traditional command and control strategies.
We need to stop throwing resources at ineffective measures that do not address community and economic development. It is time to work with our southern neighbors, and vital trade partners, to invest in building secure economic development zones in both of our corresponding Mexican and U.S. southern borders.
A strategic binational border economic development program (BiNED) implemented jointly by Mexico and the U.S. will help control illegal immigration and insecurity on our Southern Border in a more cost effective way, while creating increased economic prosperity and jobs for both the U.S. and Mexico.
The rest of this paper lays out the BiNED strategy and is organized as follows. The next section outlines the BiNED concept, its premise, and the features of a proposed pilot BiNED mega region located in South Texas and the northeastern section of the State of Tamaulipas in Mexico. This is followed by a justification of why manufacturing, and in particular, advanced intelligent manufacturing, is the best path forward for creating a prosperous border region. Finally, a path forward for implementing a pilot BiNED zone in the Rio South Texas Mega Region is presented.
What is BiNED?
BiNED is an acronym for BiNational Border Economic Development. BiNED involves the creation of an integrated, innovative and competitive bi-national U.S./Mexico border mega-region whose economic focus is advanced manufacturing. The key word is "integrated." The U.S./Mexico Border economies need to work together as a single mega-region in order to fully realize the region's economic potential.
The Rio South Texas Mega region, in particular, which encompasses the area consisting of Hidalgo and Cameron Counties in South Texas and the municipalities of Matamoros and Reynosa in the Mexican State of Tamaulipas would provide an ideal case for the development of a pilot BiNED Mega Region focused on advanced manufacturing.
BiNED Premise:
* If the declining trends in the socioeconomic conditions on the U.S.-Mexico border remain unabated, they will lead to regionally disruptive social and economic displacements. These will undermine the long term interests of both countries leading to increased insecurity, social instability and illegal immigration.
* The path to reversing the declining trends and avoiding serious dislocations is not by building more border walls; or by adding more boots on the ground. Nor should we continue to unilaterally focus on developing down the traditional pass-through path of our border economies, regardless of how much more efficient we can make our international crossings.
* The path to a more secure and prosperous border region lies instead in creating the conditions necessary to foster an innovative, competitive, integrated and collaborative bi-national border economic development (BiNED) Mega Region. The BiNED Mega Region can be positioned to capture a greater share of the economic development resurgence of re-shoring/near-shoring of manufacturing that is occurring in the U.S. and even more so in the interior of Mexico; a Mexico that is forecast to become a major competitive driver for North America into the future especially as NAFTA 2.0 becomes a reality.
* The best economic development path forward for creating a more secure and prosperous border region is to focus on a "rapid response" advanced manufacturing strategy that builds on the border's natural competitive advantage; its proximity to U.S. markets which makes it ideally positioned to take advantage of prevalent mass customization preferences and market trends.
Implementation of the BiNED strategy provides a sound alternative to the reality that our neighbors south of the border face every day: low job creation, fear, ever-growing violence and little hope for a better life. It will create jobs in both Mexico and the United States; give Mexicans and Central Americans an opportunity to live in their own countries; and will, in turn, lessen the number of those who come across the border looking for a better alternative for their families.
BiNED Zone Features:
* The BiNED zone will encompass both sides of the border and initially be positioned in the Rio South Texas Mega Region. Once the initial BiNED zone is established and its positive impacts are verified, it can then be expanded to span a corridor from Brownsville to San Diego and Tijuana to Matamoros. It would gain competitive advantage by eliminating the physical and policy barriers associated with the demarcated border area so that to the greatest practical and effective extent, border economies can behave single, integrated markets. An initial BiNED pilot zone encompassing the Rio South Texas Region would be the short-term target.
* The frictionless BiNED zone would allow the strongest competitive advantages of each respective country to emerge (e.g., lower energy costs, research/engineering, management, greater financial lending and infrastructure/logistics capacity on the U.S.; and competitive labor markets and existing advanced manufacturing capacity on the Mexican side) and create a more competitive, secure and prosperous region than the one that currently exists under separate non-integrated entities.
* It's a truism that innovation is the key to economic growth and that the research/engineering functions need to be collocated with manufacturing facilities in order for optimal innovation to occur. At the same time, mass customization consumer trends have placed a premium on the ability to deliver products quickly to a demanding consumer market with quickly changing preferences. The reality is that there is no other place where you can better collocate the competitive labor markets and existing advanced manufacturing capacities of Mexico with the advanced research/engineering, financial/management and infrastructure/logistics capacities of the U.S., and to deliver them more quickly, than on the U.S.-Mexico border.
Why advanced manufacturing:
Although the Mexican side of our border region has one of the highest concentrations of manufacturing jobs in North America, the overall region's economy, especially on the U.S. side, can be largely characterized as a "pass-through" economy focused on non-traded (non-exported) products and services. Products, engineered and manufactured elsewhere, pass through our region and are consumed elsewhere; and the major source of trade is internal (e.g., public sector jobs).
This reality has spawned the idea internally and externally that the key to our regional economic development is through increased border crossing infrastructure that reduces wait times and transaction costs. While this is a necessary condition for the growth of the overall North American economy, it is not sufficient to promote economic development and prosperity along the U.S.-Mexico border region. And in a pass-through economy, since the value added is marginal by definition, the resulting job increment and wealth creation is very low.
If in fact a pass through economic strategy were the solution to our region's low per capita income and high unemployment, then the City of Laredo in Texas, which is among the largest inland ports in the U.S., would be a prosperous community. The reality is that Laredo continues to be amongst the poorest communities in the U.S.
Other border communities have focused on retail and commercial sectors. However, these are secondary, not primary economic drivers and do not in themselves create significant regional wealth.
An economy based on an investment driven, traded (exporting) manufacturing sector provides the wages and the wealth to increase per capita income, sustain and attract retail and residential growth, and create real, rather than self-traded, regional wealth.
The Positive Economic Impact of Manufacturing on a Region:
The importance of Manufacturing to the economy of any country or region, particularly the U.S., is well documented. The Interagency Working Group on Manufacturing R&D of the National Science and
Technology Council defined manufacturing as "the transformation of materials into goods. The transformation may use people, capital, processes, systems, and enterprises, to deliver products of value to society. The value may be wealth, strategic capability or defense or security, or the resources for art, literature, and other domains of culture. Manufacturing is both a key economic sector by itself and, in the context of manufacturing research and development, a critical enabler of other economic sectors." Manufacturing is commonly known as the engine that drives economic prosperity and is essential to the wellbeing of any region, state, and nation. Whether this importance is measured in terms of contribution to GDP, monetary return for investment made, generation of jobs both direct and indirect, and/or as a driver of innovation and generation of wealth, the manufacturing sector is paramount to sustainable economic prosperity for any region. Some great quick facts about the prowess of American Manufacturing are as follows:
• In 2013, manufacturers contributed $2.08 trillion (USD) to the economy, up from $2.03 trillion (USD) in 2012. This was 12.5 percent of GDP. For every $1.00 spent in manufacturing, another $1.34 (USD) is added to the economy, the highest multiplier effect for any economic sector.
• Manufacturing accounts for over 80 percent of our exports and 90 percent of our patents and R&D spending according to the U.S. International Trade Commission and the Department of Commerce.
• Manufacturing supports an estimated 17.4 million jobs in the United States – about one in six private-sector jobs. More than 12 million Americans (or nine percent of the workforce) are employed directly in manufacturing.
• In 2013, the average manufacturing worker in the United States earned $77,506 (USD) annually, including pay and benefits. The average worked in all industries earned $62,546 (USD).
• Manufacturers in the United States are the most productive in the world, far surpassing the worker productivity of any major manufacturing economy, leading to higher wages and living standards.
• Manufacturers in the United States perform two-thirds of all private-sector R&D in the nation, driving more innovation than any other sector.
• Every new manufacturing job creates an additional 4.6 jobs to support it. For high-tech manufacturing jobs, the multiplier effect rises to 16 additional jobs. All these jobs further stimulate economic growth and per capita income in any region, state or nation.
Clearly, manufacturing can produce significant benefits to the economy of any region. In the case of a region such as the Rio Grande Valley, manufacturing has had and is having a transformative effect on both the economy and the culture of the region. It is no secret that in order for the Rio South Texas region to establish an ecosystem for sustainable economic prosperity, a stronger manufacturing sector based on a bi-national collaborative regional plan must be devised and implemented.
Such a plan is the primary objective of the proposed activities of the initiative. Creating an environment where there are opportunities for the young population of the region is fundamental to establishing a regional prosperous economy that will support and sustain not only the region but also help deter the need for migration of people to other population centers north of the Rio South Texas Region.
Why Advanced Manufacturing on the Border?
Our region is ideally poised to capture a significant share of the re-shoring and near-shoring of manufacturing back to North America for a number of reasons.
First, Chinese competitive wage advantages have been eroding. Due to increasing rate pressures in China, Mexican manufacturing wages are now on par or lower than corresponding Chinese wages.
Second, increased overseas transportation costs have placed an additional cost disadvantage on Chinese products.
Third, the advent and increasing prevalence of mass customization. This consumer trend puts a premium on rapid response manufacturing and provides a competitive advantage to manufacturers that are located near their target consumer markets. No other region is closer to the world’s largest U.S. markets than the U.S.-Mexico Border.
Fourth, large energy reserves, and the recent expansion of power generation and transmission capacity have led to significantly lower utility costs in the region.
Finally, the Rio South Texas Mega region is already amongst the areas with the largest concentrations of facilities and employees engaged in the manufacturing sector. Reynosa and Matamoros alone have over 261 manufacturing facilities. And there are over 209,000 manufacturing jobs in the Rio South Texas Mega Region.
But we can only take advantage of these opportunities if we work together to plan and leverage our resources as an integrated mega region.
There are a number of initiatives that will be needed for our region to capture these opportunities, but the most critical of these will be the development and implementation of intelligent manufacturing technologies that allow production lines to quickly adapt to market trends; the integration of supply chains to the region; development and implementation of an integrated bi-national workforce development strategy; and creating an infrastructure/utility infrastructure that is dictated by the mega region’s economic development strategy, not the other way around.
