While exports for the entire nation declined – including in Houston, the nation’s largest exporter – one Texas city’s export market grew.
El Paso exports increased 22 percent between 2014 and 2015, one of the highest leaps of any metropolitan area in the country, and made the city the 11th largest export market in the nation.
Federal Reserve Bank of Dallas business economist Jesus Cañas says El Paso has been building to this position since the 1960s. He attributes the growth to “intra-industry” trade of intermediate goods between Mexico and El Paso.
“What we usually do is we manufacture the same product at different stages of production between the two countries,” Cañas says. “El Paso is the backbone of this manufacturing relationship.”
El Paso is the leading exporter of goods to Mexico, a title it took from Detroit. Almost 86 percent of El Paso’s exports went to Mexico in 2015. The majority of El Paso exports are for the auto industry, but they also have a market for electronic products, electrical equipment, appliances and components.
“They also do a lot of electrical manufacturing as well,” Cañas says, “lots of electrical components.”
The increase in the export market is also due in some part to U.S. imports. Mexico’s trade agreements include some countries the U.S. cannot trade with, so Mexico can import manufacturing components for products that end up in U.S. markets. This arrangement bolsters the intra-industry trade between Mexico and El Paso. “It’s a very interesting relationship,” Cañas says.
Trade benefits the city, too. El Paso provides business services like accounting, transportation, warehousing and commercial real estate to accompany the trade flows, helping the city’s economy.
“In fact, we have done some computations and we estimate that every time manufacturing output goes up in Juarez,”Cañas says, “employment in El Paso grows about 3 percent.”
Post by Sunny Sone.