May/June 2006 Federal Reserve Bank of Dallas
Border Benefits from Mexican Shoppers By Jesus Cañas, Roberto Coronado and Keith Phillips

Along the U.S.–Mexico border from Brownsville to San Diego, more than 665,000 people cross from one country to the other every day to work, study, visit family and shop. U.S. citizens travel into Mexico to find bargains, have dinner, get a haircut and go to the dentist. Mexicans venture north to buy items ranging from groceries to high-end fashions.

The Mexican shoppers are big business for U.S. cities on or near the border. Unlike retailers in most interior U.S. cities, stores in Laredo, El Paso, Nogales and other border towns are actually an export industry in most years contributing to a U.S. trade surplus in cross-border shopping. The retail export industry provides employment for workers with low and moderate skills and helps explain why job growth in some areas along the border has been among the fastest in the nation since the 1980s.

Because cross-border shopping is so important to local economies, businesses, workers and community leaders are interested in such issues as the size of retail activity, its impact on the local economy and the factors that determine its growth. Researchers have studied the close link between the value of the peso and the ebb and flow of cross-border retailing. Another, more recent concern is the impact on retailing of more stringent border controls resulting from America’s campaign against terrorism.

These topics formed the core of a January conference in San Antonio that brought together scholars and industry experts on cross-border shopping activity. It was hosted by the Federal Reserve Bank of Dallas, through its San Antonio and El Paso branches, and cosponsored by the Federal Reserve Bank of Chicago’s Detroit Branch and the International Council of Shopping Centers.