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Towards the integration of Mexico and United States Border: The case of Ari-Son mega-region

 

Since NAFTA, the North American Trade Agreement, was implemented, twenty years ago, trade between Mexico and the United States has grown more than six times and went from 27.1% of GDP in 1883, to 63.1% in 2015. Today, Mexico is the third largest trading partner of the United States with 531 billion dollars annually, with 80% of it, more than a billion dollars each day, crossing the land border of Mexico-US. It is calculated that 6 million jobs in the United States and 10 million jobs in Mexico depend on international trade among both countries.

 

Mexican exports to the United States totaled 295 billion dollars in 2015, which is 73% higher than exports in 2005 and 638% higher than 1993 (before NAFTA). The main export categories are: vehicles (74 billion), electrical machinery (63 billion), machinery (49 billion), mineral fuels (14 billion) and medical and optical instruments (12 billion). Agricultural exports totaled $ 21 billion in 2015 with Mexico as the second largest exporter to the US, the main products exported are fresh vegetables (4.8 billion), fresh fruit (4.3 billion), wine and beer (2.7 billion), snack foods ( 1.7 billion), and processed fruits and vegetables (1.4 billion). Finally services exports in Mexico to the United States totaled $ 21 billion dollars.

 

 

 

Mexico, besides being the number 15 economy by the size of its market, is a country that is committed to free trade. As such, it has access to 1,200 million consumers around the world because it has signed a total of 46 free trade agreements, 6 economic complementary agreements and is about to be ratified its participation in the transpacific free trade partnership which would give it access to new markets such as Australia, Brunei, Malaysia, New Zealand, Singapore and Vietnam. The progress made in the field of foreign trade coupled with structural reforms undertaken, allows Mexico the advancement to the field of international economic integration and specifically on its border with the United States.

 

With the signing of the Free Trade Agreement between Mexico, the United States and Canada, Sonora has been one of the border states that has diversified its economy by exporting today just over 15 billion dollars in the industrial sector and nearly 2 billion dollars in agricultural products through its integration with Arizona with whom has shaped the Ari-Son mega-region.  

 

These have been possible due to the consolidation of the supply chains in three sectors, namely: aerospace, automotive and mining. In the case of the aerospace supply chain and aviation, the mega-region includes 1,860 companies employing 62,000 people; in the automotive sector, the mega-region produces 1,488 vehicles per day with 41 companies having Tier 1 & Tier 2 and with a market value of about 2 billion dollars; and the mega-region has 140 mines that produce a variety of products, especially molybdenum production for an amount of 8 billion dollars.

 

Besides the sectors that until now have been able to consolidate the international supply chain, there are other sectors with high potential that thru formal activities of strategic planning, industrial organization, logistic infrastructure, talent development and branding, can join the aerospace, automotive and mining sectors, such as: the food sector, given that Sonora exports to 20 different countries and contributes with more than 10% of the national trade value in this sector; the information and communication technology sector, given the strength of the academic programs from its universities, the quality of the infrastructure such as Sonorasoft Technological park and certified companies such as Novutek with the international recognition in CMMi level V and a technological entrepreneurial environment named Yaquivalley. Another sector with enormous potential is Tourism.

 

The fact that during the period of one year (2015) a trade of 31 billion dollars between the states of Sonora and Arizona occurs, crossing 17 million cars across the border and 48 million people, have been enough for the governor of Sonora Claudia Pavlovich Arellano and the governor of Arizona Doug Doucey to take the initiative of launching the Ari-Son mega-region as a single destination for international markets in order to attract investment and talent and to increase the wellbeing of its respective states. This would imply that both states will undertake joint efforts to improve their complementarities and work together to create products with high added value that makes possible to turn the region of North America in the most competitive region in the world and take full advantage of the opportunities that the transpacific partnership brings.

 

 

In order to achieve the vision that the governors of Sonora and Arizona propose, a great deal of public, private and social organizations of both sides of the border are making coordinated  efforts by the Sonora-Arizona and the Arizona-Mexico commissions, entities that are integrating the proposals that are being generated by 14 different working groups.

 

In this context, the work that has been done in the last 10 years by the Performance Improvement Institute (PII Mexico),  in Sonora related with incubating base technology enterprises and building clusters and value chains in areas such as: biotechnology and agribusiness, software and logistics, tourism and sustainable development and education and health are starting to generate important results.

 

 Given the importance of the initiative and the potential of the alliance, it can be expected that the conformation of the megarregion of Sonora and Arizona, will result on the appearance of the northwestern part of Mexico and the southwestern part of the United States as important actors in the new stage of globalization that the world is experiencing.

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