Our Two Pesos: Reflecting on the Opportunity for Stronger North American Competitiveness
While most elected (and wanting-to-be-elected) officials in Washington D.C. and some US States continue to portray illegal immigration as virtually the only topic of interest we potentially share when it comes to talking about Mexico and our border region (we’re thinking of you, Arizona, and California gubernatorial candidate Steve Poizner’s Prop 187-style ads), the new 2010 World Competitiveness Yearbook was released today by the Switzerland-based IMD School of Business. The most striking news from this annual study: the US has dropped from the leading to the third-ranking position (behind Singapore and Hong Kong). While not necessarily surprising to many, certainly the news was big enough for BusinessWeek to headline their story: “Asia Gains, U.S. Drops in Competitiveness” (in case you didn’t get the point).
This news comes on the same day that Presidents Obama and Calderon are meeting in Washington D.C., talking about some of the very issues that are critical to increasing North American competitiveness, and growing jobs (and wealth) in our region: facilitating legal border crossings, enhancing our border infrastructure to reduce inefficiencies for commerce and communities, promoting trade and stronger supply chain partnerships, and, yes (of course), working together to fight the very same criminal networks that operate on both sides of our border and throughout North America (harming our societies and economies). Their joint declaration (http://bit.ly/bdeSAi) touches on many (although not all) of the important facets of how North America — Canada, the US, and Mexico — not only should work together, but need to work to foster economic growth and prosperity together.
A recent 2010 KPMG study on Competitive Alternatives (see it here: http://bit.ly/9tABLn ) really drives home the point about Mexico’s potential to support the global growth of US (and Canadian) industries — finding in their analysis of more than 100 cities in 10 countries that “…Mexico represents the lowest cost country examined. Mexico’s major cities have a business cost advantage of 18.2 percent, on average, relative to the US baseline.” Not only that, but their recently-related tax analysis also found that tax reforms in Mexico also seem to be paying off, according to KPMG: “Among the countries studied, Mexico has the lowest TTI at 59.9; in other words, total tax costs in Mexico are 40.1 percent lower than in the US…” (link to PDF: http://bit.ly/9fuz6D ). Imagine how such cost savings — as part of a binational business strategy — could improve the global market potential for sales of US products and services.
Unfortunately, most of the political and media dialogue continue to emphasize the one- (okay, two-) dimensional aspects of the entire US-Mexico relationship (#1 illegal immigration, and #2 narco violence), a message that is only likely to grow louder (and raise more negative feelings toward Mexico) as the election season moves forward.
Looking past the political rhetoric and the too-easy “secure the border” statements, the take-away we have here from today’s news is that the rest of the world is continuing to advance economically and work in partnership with their neighbors to grow stronger (more likely than not at the expense of US jobs and wealth) — while most of our leaders in the US are ignoring the vast potential that exists for the NAFTA region to prosper more quickly than many other regions of the world could (given the combined strengths of the three countries). It’s unfortunate that not more policy work, planning, or leadership exists to enhance that more competitive and more positive vision of North America — but perhaps that’s just politics and the game of winning votes. Let’s hope this year ends with a group of elected officials that wants to learn about this important opportunity for North America. That’s our two-pesos.