- The Washington Times - Thursday, June 29, 2006

Luis Manuel Rodriguez, 33, a construction worker from Veracruz, Mexico, came to the U.S. for a simple reason.

“There’s more work, and it pays better,” he said while waiting at an informal day-laborer site off New Hampshire Avenue in Takoma Park last week.

“Of course I’d like to return [to Mexico], but first they need to generate better employment,” the lanky, shaggy-haired Mr. Rodriguez said in Spanish.

Mr. Rodriguez is one of an estimated 6.2 million Mexicans in the U.S. illegally. Most arrive searching for better jobs, higher wages and more certain long-term prospects than they can find in Mexico, the Pew Hispanic Center found in a 2005 survey.

Designing and implementing policies that will create better jobs and higher wages are two of the major challenges that will face the winner of Mexico’s presidential election Sunday.

The country’s candidates capped their campaigns yesterday with rallies to make one last pitch to Mexico’s voters.

The two front-runners, Andres Manuel Lopez Obrador of the Democratic Revolution Party and Felipe Calderon of the National Action Party, are running on markedly different economic platforms and plans to create a governing coalition.

Mr. Calderon’s policies are similar to those of outgoing President Vicente Fox. He has said he would try to open Mexico’s energy sector to private investment and abide by rules under the North American Free Trade Agreement (NAFTA). He also wants to make Mexico more competitive with China and other developing nations.

Mr. Lopez Obrador has proposed rejecting some parts of NAFTA, providing subsidies for the poor and developing New Deal-style public works to create jobs. He has vowed to keep foreign companies out of the country’s rich but underdeveloped oil fields. And he has decried corruption, a corrosive force in Mexico’s economy.

A third candidate, Roberto Madrazo of the Institutional Revolutionary Party, is a distant third in polls.

Whoever wins will face many of the same problems that Mr. Fox has.

Mexico’s economy during much of Mr. Fox’s term was stagnant. Gross domestic product growth in the past six years has averaged only 2.2 percent, said Raul Feliz Ortiz, a professor at the Center for Economic Research and Education in Mexico City.

Slow growth reflected not only a U.S. recession, but also Mexico’s inability to reform an economy built around manufacturing exports amid rising competition from other countries with lower-cost labor.

Mr. Fox was unable to build an effective governing coalition with Mexican lawmakers and his economic platform largely stalled. A new president will face the same challenge of building a working majority among the three main political parties and with a new cast of legislators.

Voters will elect a new slate of lawmakers in both chambers of Congress. Mexican law forbids politicians from holding the same office for two consecutive terms.

“Because the electorate is so divided among the three main candidates, whoever wins also may win a minority government. It will be very difficult to build a consensus, and chances are that the new administration will also encounter many of the same obstacles Fox encountered,” said Armand Peschard-Sverdrup, director of the Mexico Project at the Center for Strategic and International Studies, a Washington think tank.

Mr. Peschard-Sverdrup said Mexico’s poor economic performance would make reform a priority issue, but that it would not guarantee results.

In part, pressure to reform the economy is relieved by immigration to the U.S.

The Pew Hispanic Center estimates that the legal and illegal Mexican-born population in the U.S. has grown by about 500,000 people a year for the past decade.

“Unemployment in Mexico is quite low because we have been able to export 400,000 people every year. If we are able to keep exporting our labor force, our unemployment will remain low. But that is not enough to improve the Mexican economy,” Mr. Feliz said, using a lower estimate for the number of migrants.

Instead, Mexico requires fundamental tax reform and heavy investment in roads, ports, energy and education before its economy can create enough good-paying jobs to keep people at home.

Mr. Feliz noted, for example, that Mexico has an abundant supply of cheap labor in the south of the country but inadequate roads and ports to support industry there.

To fund such investment, Mexico would have to reform its tax system and raise more revenue, he said. Mexico has one of the lowest ratios of tax receipts to economic output among wealthy or middle-income countries, said a report by the Organization for Economic Cooperation and Development. That is partly because of extensive tax evasion.

Mexican lawmakers rejected Mr. Fox’s tax-reform proposal in 2003, halfway through his single six-year term.

Even if a newly elected president builds a coalition and implements reforms that spur growth, immigration flows probably would not be affected immediately.

“It will take years of robust growth for the Mexican economy to create enough jobs to absorb all new entrants to the labor market and hold them in Mexico, and it will take even longer to reverse the widespread perception that the future is brighter north of the border,” Pamela K. Starr, an analyst with the Eurasia Group and a professor of Latin American studies at Georgetown University, said in a report for the Council on Foreign Relations.

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