It was the major topic of conversation at the North American Development Bank’s 2023 meeting, which took place recently in San Antonio.
Federal, state, and local officials from the U.S. and Mexico, as well as business groups, academic institutions, financial institutions, investors, project managers, and experts, met at a meeting to talk about how to speed up building of infrastructure along the border.
Changing global supply networks in Mexico, more cross-border trade, and a business-friendly environment in the area are all helping Texas’s economic growth and population growth, allowing it to pass California in both areas.
Investment Opportunities in the Border: Texas, Chihuahua, Coahuila, Nuevo Leon, Mexico
Hector Cerna, president and CEO of the International Bank of Commerce in Eagle Pass, Texas, stated that they had mentioned a couple of panels discussing the exodus of individuals and companies from states like California and New York to Texas. Bloomberg News reported that since 2019, approximately 17,000 businesses have relocated their headquarters or operations from California and New York to states such as Texas. It is evident that this brings individuals and payrolls. That impacts our border. The impact on the nearshoring that we anticipate and the anticipation of the increase in that number in Texas are being considered.
On Thursday, Cerna was the person in charge of a group talk called “Investment Opportunities in the Border: Texas, Chihuahua, Coahuila, Nuevo Leon, Mexico.”
Panel Discussion on Economic Development and Migration Trends in Texas
On the panel were the deputy economic development secretary for Nuevo Leon, Emmanuel Loo, the secretary of innovation and development for Chihuahua, Maria Angelica Granados Trespalacios, the governor’s representative for Coahuila, Enrique Martinez y Morales, and the president and CEO of the Texas Association of Business, Glen Hamer.
Hamer says that California, New York, and Illinois have lost the most people over the past few years, which has helped Texas the most.
Population and Economic Growth in Texas and Nearshoring to Mexico
The U.S. Census Bureau says that in 2022, more than 30 million people lived in the state. Since the year 2000, more than 9 million people have moved to the Lone Star State.
California has about 38.9 million people living there now, but that number has been slowly going down since the year 2020. A neutral study group called the Public Policy Institute of California says that the state will have lost 800,000 people between 2020 and 2023.
The U.S. Bureau of Economic Analysis says that in 2022, California’s GDP was $3.598 trillion and Texas’s GDP was $2.355 trillion.
From 2020 to 2022, Texas’s economy grew by 31%, while California’s economy grew by 19%.
Nearshoring to Mexico and Investment in Nuevo Leon
Loo said that nearshoring to Mexico has been going on for a while, but it has gotten a lot bigger after 2020 because trade relations between the US and China are getting worse and the pandemic has changed how global supply networks work.
Since 2021, Loo has helped to bring about $25 billion more in investments to the state of Nuevo Leon. This includes the $5 billion electric car plant that Tesla wants to build in the city of Monterrey.
Loo says that there is a lot of interest from companies in China and Taiwan in the Mexican state of Nuevo Leon for nearshoring jobs.
Foreign Direct Investment in North America
Loo stated that they had met with an organization in Taiwan, which is responsible for exporting a trillion dollars of electronics to the United States. They were asked about the amount of business they anticipated relocating to North America. A spectrum of approximately $250 billion of foreign direct investment into North America was reported to us. The numbers related to North America are unprecedented and unfamiliar to us. Some individuals are relocating to Mexico. Some individuals are also relocating to Texas.
Trade and Investment Growth in Texas, Mexico, and Chihuahua
In 2022, the total worth of goods moved between Texas and Mexico was $285,6 billion, which was a 24% rise from the year before. In 2022, the amount of trade between California and Mexico rose by 8% to $91.3 billion.
Like in the nearby state of Nuevo Leon, manufacturing sites and job chances have grown quickly in Chihuahua. In the first half of 2023, Chihuahua got about $1 billion in FDI from 30 new foreign companies. This led to the creation of 1,300 new jobs.
Trespalacios stated that there is a significant growth and expansion in Chihuahua due to the presence of key industries such as automotive, aerospace, medical devices, logistics, mining, and agribusiness. The company is currently prioritizing talent development,
which is a global challenge. Nearshoring is a positive situation for everyone involved, but it does come with significant challenges.
Char Miller, an environmental history professor at Pomona College in Claremont, California, says that it doesn’t matter whether Texas or California is first.
In the near future, Texas may grow in people and GDP to catch up to California. Miller fears, though, that problems with water and power supply could stop growth in the Southwest.
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