U.S. lawmakers have put off immigration reform for a decade because nobody could agree on how best to regulate the flow. They still can’t, as Washington’s recent scramble to craft a fix attests. But the stark disparity between job opportunities and living standards in America and many poor countries has resulted in such an influx of undocumented aliens (now between 10 million and 12 million, with more than half from Mexico) that Congress and the White House must act.

Helping Citizens at Home

Success in controlling this tide certainly requires better border security, stronger workplace enforcement, and a practical guest-worker process to match prospective laborers with legitimate employment. Yet there’s an equally important—but neglected—need. Developing countries must do more to provide employment opportunities and access to social mobility for citizens at home.

The Case of Mexico

For Mexico, sound fiscal policies including NAFTA and institutional reforms have kept lots of potential migrants from leaving. The bad news is that job growth south of the border hasn’t been fast enough to absorb all the new entrants into the labor force.

Mexican Interior Secretary Carlos Abascal Carranza came to Washington recently with an economic progress report. That is a welcome change from the rhetoric that President Vicente Fox has spouted for the past five years: constant reminders that Mexico should have the right to export its surplus workers to the U.S.

Fox’s first Foreign Secretary, Jorge Castañeda, pushed that absurd message without regard for America’s sovereignty or Americans’ sensitivities. No country exists to take on the problems of others. But internal conditions can have consequences that extend across borders. So it should come as no shock that the U.S. has an interest in Mexico’s economic policies and performance.

Mexico’s Economy Has Improved

Mexico’s economy has improved under Fox. From 2000 to 2005, annual inflation declined by two-thirds, foreign investment grew 74%, and the public deficit dropped to zero. Meanwhile, real wages rose 7%, the sum of Mexicans living under one poverty index fell 23%, 6 million scholarships now help keep more poor children in classrooms through high school, and nearly 577,000 jobs were created in 2005.

Still, almost a million youths enter the Mexican labor force each year; a half million new jobs are simply not enough. Mexico’s minimum wage is $4.50 per day, vs. the minimum $5.15 per hour stateside. And while more Mexican children are attending school, the system is still centralized under an inefficient national ministry and subject to periodic strikes.

Other Countries Are Worse Off

Other developing countries in our hemisphere are in even worse shape. Guatemala and Honduras report poverty rates of close to 75%. In South America’s Andean ridge, from Venezuela to Bolivia, the poor constitute more than half of the population. Except in Colombia, a developing trend is to consolidate power within populist presidencies, ignore the rule of law, and put business under government’s thumb.

The result? Blocked from social mobility at home, Peruvian entrepreneurs already are choosing the U.S. as a haven for business startups. Ecuadorians are stowing away in shipping containers to get to the U.S. or Europe, while one of Venezuela’s most popular Web sites continues to be www.mequieroir.com (“I Want to Leave”).

We Must Encourage Liberalization

Backsliding toward statist economies will only will make matters worse, forcing more workers to migrate. That’s why the U.S. must urge its hemispheric neighbors to liberalize economies, cut regulations and allow prosperity to spread more broadly across their citizenry. Mexico has gone partway. Fox’s four-year-old Rapid Business Start-Up System cut red tape for licensing some small firms from 50 days to just 24 hours. But inefficient state monopolies, high taxes, massive bureaucracy, and a rigid labor code still restrict job growth.

Policymakers Should Not Retreat from Free Market Principles.

U.S. officials should remind candidates for the Mexican presidency and congress this year that any retreat from free-market reforms will limit opportunities for Mexican workers at home and create friction between our nations. Beyond that, U.S. lawmakers should resist the temptation to adopt “silver bullet” reforms like building a border fence or embracing a guest-worker program. While these two tacks may be part of a solution, they alone are not enough. To reduce unauthorized immigration, U.S. policies also must seek reforms abroad.

Stephen Johnson is senior policy analyst for Latin America in the Davis Institute for International Studies at The Heritage Foundation. This article appeared in Impact Analysis, May-June 2006.

Stephen Johnson
About The Author Stephen Johnson
Stephen Johnson is senior policy analyst for Latin America in the Davis Institute for International Studies at The Heritage Foundation.

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