Economic Trends in the Desert Southwest

trong economic interaction exists between communities on both sides of the U.S.–Mexico border. Just count the number of Mexican license plates on autos parked in U.S. malls, or note the many service and goods suppliers in U.S. border cities that support manufacturing in Mexico. Casual observation reveals patterns of local specialization, where work is often divided between the two cities on a sector-by-sector basis. But how do these cities divide local production? Can we measure the nature and strength of this economic interaction and specialization and identify the sectors where it occurs, such as manufacturing or education? This article looks at how four Texas border city pairs—El Paso–Juárez, McAllen–Reynosa, Laredo–Nuevo Laredo and Brownsville–Matamoros—compete with or complement each other economically. We find significant economic complementarities among these adjacent cities. When one city is strong in specific industries, the other is often weak. Defining the economic base of the combined cities, manufacturing is the single most important factor that drives the economy of the Texas–Mexico border.