Centennial Speaker Provides Positive View of U.S.-Mexico Economic Future

By Rachel Anna Neff

UTEP News Service

The second presentation of the 2013-14 Centennial Lecture series featured Shannon K. O’Neil, Ph.D., who spoke about Mexico’s economic growth since the North American Free Trade Agreement (NAFTA) came into effect in 1994.

As a senior fellow for Latin America studies at the Council on Foreign Relations (CFR) – an independent, nonpartisan membership organization, think tank and publisher – O’Neil’s work has been published in Foreign Affairs, Foreign Affairs Latinoamérica, Americas Quarterly, Política Exterior, Foreign Policy, The Washington Post, The Los Angeles Times and USA Today, among others. Her blog, Latintelligence, analyzes developments in Latin America and U.S. relations in the region.Shannon K. O’Neil, Ph.D., speaks at the second Centennial Lecture of the 2013-14 series. Photo by Ivan Pierre Aguirre / UTEP News ServiceShannon K. O’Neil, Ph.D., speaks at the second Centennial Lecture of the 2013-14 series. Photo by Ivan Pierre Aguirre / UTEP News Service

She holds a B.A. from Yale University, an M.A. in international relations from Yale University and a Ph.D. in government from Harvard University.

O’Neil first moved to Mexico shortly after NAFTA came into effect, and she witnessed the Mexican economy opening up to the wider world. The economic boom filled restaurants and planes while the streets reverberated with the sounds of new construction.

The political unrest of the 1994 Mexican election, which saw two Institutional Revolutionary Party (PRI) leaders assassinated and the rise of the Zapatista movement in southern Mexico, shook Mexico’s economic markets.

The question on everyone’s mind, according to O’Neil, was if this was another typical boom and bust cycle that Mexico had experienced repeatedly over the years. The peso lost seven percent of its value, and the Peso Crisis would have lasting effects on the economic relationship between the United States and Mexico because the U.S. intervened and stabilized Mexico’s currency. Since Mexico had already opened up its markets and privatized many enterprises, the country couldn’t return to its protectionist policies of the past.

In O’Neil’s estimation, the result was that the Mexican middle class rebounded. Upon her return to Mexico as a visiting professor in 2000, O’Neil saw that many economic changes were permanent. The amount of smog and pollution had decreased because the middle class could afford newer cars with catalytic converters.

Rather than a boom and bust market, Mexico had a stable, yet unspectacular market. One change O’Neil observed was the presence of multinational companies such as supermarkets alongside the typical street vendors. One positive change from NAFTA was the price of basic goods had fallen by half; however, the security situation had worsened.

On the whole, Mexico had fundamentally shifted its economy from exporting raw goods and materials to manufacturing and services. With the fall of the PRI in 2000, Mexico had a competitive democracy and a growing middle class.

NAFTA quadrupled the trade between the U.S. and Mexico, and O’Neil stated that 40 percent of the parts assembled in Mexico are actually made in the United States. The trade between these two countries does not rest solely upon manufactured goods, but on an exchange of people and culture as well, she said. After 30 years of migration, Mexicans and Mexican-Americans are a trillion-dollar economic force within the United States that businesses are targeting with their marketing.

For O’Neil, the biggest question of the relationship between the U.S. and Mexico is, “Can both countries realize this economic potential?”

During the question-and-answer session after her talk, O’Neil fielded questions from the audience and emphasized that the situation in Mexico was improving. She said there was another story of Mexico beyond its security concerns, which included maquilas returning to Mexico and the economic possibilities opened up by the Trans-Pacific Partnership (TPP), a new international trade agreement. Afterward, attendees mulled around the reception hall while O’Neil signed copies of her latest book, Two Nations Indivisible: Mexico, the United States, and the Road Ahead, which is an expanded version of her Centennial lecture and analyzes the political, economic and social transformations Mexico has undergone over the last three decades and why these changes matter for the United States.

Although initially brought to the lecture by an Honors College requirement, Yasmine Madrid, a freshman with a biomedical concentration, took away an appreciation for the topic at hand.

“It was deeper look into Mexico’s economy,” Madrid said. “It seems the media always focuses on the negatives and overlooks the positives.”

Isaac Martinez, a doctoral candidate in education, felt the lecture was a good summary of the economic issues between the United States and Mexico. While nibbling on the hors d’oeuvres, he questioned the lack of focus on the seriousness of the security situation in Mexico.

“It was good information, but the bigger question for me is who benefits from these multinational trade agreements, the elite as usual or the working class?” he asked.