More On Remittances

Do exports "counteract" imports?


Commenter NM says my last post "doesn't make useful sense" because I don't answer questions like:

How many dollars of imports did America buy from Mexico, including oil, to counteract the $120.4 billion they bought from us?

The answer, according to the State Department, is that Mexican exports to the U.S. amounted to $223 billion in 2007.

So yes, Americans consume more Mexican goods than Mexicans consume American goods. But in what sense does this affect my main point that remittances are good for Americans?

Mexican imports into the U.S. do not "counteract" against American exports to Mexico. It simply means that U.S. consumers have more goods to enjoy. If anyone is convinced that this trade deficit poses a problem, more immigration (and more remittances) would help narrow the deficit by pushing up Mexican incomes and allowing them to buy more of our exports.

One more fact: Merely looking at U.S. exports to Mexico doesn't fully account for how much Mexican consumers contribute to the U.S. economy.

Official calculations of exports exclude a billion-dollar industry—the goods sold directly to Mexicans who cross into the U.S. to shop at stores in border towns. These "border exports" are not exports in the strictest sense of the word, but have much of the same impact. An article by Benjamin Gochman and Rutilio Martinez of the Consulting Group of the Americas LLC explains (unfortunately, the full article does not appear to be available online, but it is from the Rocky Mountain News, Feb. 19, 2005.)

Border exports to Mexico are the goods and services that Mexicans buy in American cities located on the U.S.-Mexican border or a few miles north of this border. These exports include consumer goods, used cars, firearms, capital goods such as used agricultural machinery, and a small number of luxury cars. Outside of firearms, these purchases are perfectly legal and could be registered as exports. However, the U.S. Department of Commerce does not register these purchases as exports. Therefore, there are no official figures on the magnitude of these exports. However, in 1998, the U.S.- Mexico Chamber of Commerce estimated American border exports at $20 billion dollars (U.S.-Mexico Chamber of Commerce, 1998).