The Border Industry Program and the impacts of expenditures by Mexican Border Industry employees on a U.S. Border Community: An empirical study of nogales

The Border Industries Program was initiated in 1965 as a series of agreements between Mexico and the United States to bring U.S. industries to the Mexican side of the border, and thereby provide employment and income opportunities in a region of relatively high unemployment. Since 1965, many U. S. industries have taken advantage of the Program, and located firms on the Mexican and U.S. side of the border. Supposedly this has fostered economic development of not only the Mexican border region, but also U.S. border communities. Part of this impact has resulted from the expenditures of Mexican Border Industry employees in the adjacent U.S. town. The objective of the research presented in the present article is to empirically estimate the impact of these expenditures on income, employment, and population in a specific U.S. border community. An input-output model of the Nogales, Arizona, area is used in a case study in making the analysis. The results indicate that the impact of the Mexican Border Industry wage payments on the Nogales, Arizona, economy have been significant. Policy implications for those interested in regional economic development are given.The authors wish to thank Dr. Sylvia Lane, Dr. George Learning, Dr. William Martin, and Mr. Harry Plumlee for comments and suggestions on an earlier draft. The research reported herein is a contribution to Western Regional Research Project W-113, sponsored by the U.S. Department of Agriculture and the Agricultural Experiment Station of the University of Arizona College of Agriculture. The article is Journal Paper No. 2057 of the Arizona Agricultural Experiment Station.