Managing Regional Impacts of Trade Liberalization: Informal Practices and Collaborative Economic Development on the U.S.–Mexico Border

Research Methods

The surprising nature of these changes motivated a year of field research (July 2009 to July 2010) to better understand their sources. During that year, the author performed site-based observations at city meetings, including city council, public presentations, meetings of economic development organizations and business associations, and conferences. The author also performed 102 semistructured interviews of individuals from both sides of the border in both city pairs. Interviewees were sought for their firsthand involvement and/or expertise regarding key economic development projects in the post-NAFTA era. They included elected officials, public administrators, business owners and managers, business association leaders, service professionals (e.g., real estate, lawyers, consultants), journalists, academics, and activists. Interviews ranged from 30 minutes to 3 hours and covered interviewees’ experiences in the city (or cities) where they lived and worked, their experiences participating in and/or observing local economic development projects, and similarities and differences between local economic development projects and group dynamics.

In the first 8 to 10 weeks of field research, the main goal of interviewing was to maximize the breadth of organizations and institutions covered. As fieldwork progressed, the author used grounded theory principles, such as coding interviews while in the field (constant comparison) and allowing emerging analytic insights to guide sampling considerations (theoretical sampling) (Charmaz, 2006; Glaser & Strauss, 1968). Both during field research and afterward, more than 850 pages of single-spaced interview transcripts and field notes from site-based observations were read and coded multiple times in qualitative data analysis software (Atlas.ti) to track themes related to local differences in policy implementation. As time progressed, the focus of interviews and documentary research narrowed to those projects that were most important to the local economic development results in both city pairs. Examples of such projects include the construction of international bridges, the attraction of new employment, the promotion of retail growth, investment in higher education, local responses to federal-level proposals to construct segments of a U.S.–Mexico border wall in the metropolitan area, and responses to activists’ efforts in areas such as smart growth and living wage campaigns.

Interviews were analyzed both as data sources to reconstruct event sequences and for information regarding actors’ practical understandings of their work. The reconstruction of events focused on key economic development projects and policy processes, including actions taken, individuals involved, and the ordering of events and decisions in policy implementation. To the greatest extent possible, multiple interviewees with different institutional affiliations were sought to triangulate individual accounts. Interview data were also triangulated with archival research. Regarding practical understandings, interview as well as on-site observational data were analyzed for patterns in actors’ depictions of cause and effect, roles of groups and individuals, and sources of tension to better capture how they understood the work of economic development and the dynamics of policy implementation, and how individuals build and maintain relations in these processes. The data were repeatedly compared with ongoing field observations and archival data collection, forming a basis on which to analyze the role of group dynamics, as well as patterns in individuals’ own understandings in processes of policy implementation (Ewick & Silbey, 1998; Riessman, 1993). By focusing on the relationship between patterns in actors’ practical understandings and the iterative implementation of local policies, this analysis allowed a sustained intensive focus on the informal aspects of local economic development.

During field research, it became clear that interviewees from the two city pairs were recounting essentially the same economic development policies and projects, but with different implementation processes and results. Thus, to complement interviewees’ accounts, the author undertook archival research by gathering several thousand pages of city and organizational records, local historical materials, and local newspaper data. The goal was to minimize bias and maximize factual detail and within-case observation in policy implementation processes. These data allowed for process tracing analysis of the projects. Process tracing focuses on maximizing the number of within-case observations to test for the necessity and sufficiency of various possible causes in generating observed outcomes (Collier, 2011; George & Bennett, 2005; Mahoney, 2012).

Based on the data collection and analysis procedures described, it became clear that the divergence between the city pairs occurred despite highly similar policies and resources. It also became clear that the same policies and resources were leading to different local economic impacts because of informal institutions related to policy implementation in each city pair that were driving the different projects within the same city pair toward similar outcomes of consolidated efforts resulting in significant increases in investment and growth in M-R, and project fragmentation, underperformance, and abandonment in B-M.

Repertoire Elements

The distinct everyday practices of collaboration and problem solving that the two city pairs’ elites used can be distinguished on three main dimensions. On the dimension of the representation of interests, elites in M-R tend to discuss and evaluate proposals on whether they contribute to the region as a whole, which can be labeled as a collective approach. In contrast, elites in B-M tend to discuss an idea’s benefits in terms of individual people or organizations, demonstrating an atomized approach. When conflicts arise, elites in M-R tend to respond by finding a way to pay challengers to withdraw their opposition, which is labeled as a constructive type of local response. In B-M, the response tends to be a direct face-off in which advocates of competing proposals or ideas attempt to discredit or undermine each other until one remains, which here is referred to as an antagonistic type of practice. Finally, when local elites in M-R present their region to outsiders—whether to recruit employers, secure business deals, market to consumers, or request assistance from higher levels of government—they do so as a cosmopolitan locale; one where business is practiced as it is in financial centers and consumption and urban amenities are attuned to the needs of outsiders of all stripes. In presentation to outsiders, B-M projects an atypical image as an idiosyncratic locale carrying vestiges of the “Old West” that outsiders will either love for its distinctiveness or hate for its cryptic insularity. Based on this dimension of their repertoire, elites in M-R tend to cast themselves as catering to and competing with international firms and metropolitan regions at the highest echelons of the global economy. In contrast, B-M elites’ more atypical self-representation has led them to classify their region as a setting for smaller investors with more local competitors. Their sense of themselves as culturally and politically idiosyncratic has also led them to more frequently seek the services of outside consultants rather than locals to promote the region to outside investors and higher government authorities.

These practices are all salient to the demands of NAFTA insofar as the investment it brought from multinational corporations came with concerns about cross-border coordination, transactions costs, risk management, and infrastructure. These needs for gatekeeping skills elevated the impact of the differences between these local practices to a much higher degree than before, when the region was more agriculturally based and opportunities for cross-border investment were far fewer. To understand how the repeated use of practices from one repertoire versus another accumulates iteratively to produce very divergent outcomes from initially similar projects, one of these projects, international bridges, is narrated in detail in the following sections.

Repertoires in Policy Implementation Processes: International Bridges

Commerce across the U.S.–Mexico border is necessary to facilitate the integrated economic activity promoted by NAFTA. It is also a major source of employment and investment unto itself. Just more than 70% of the $530 billion in freight moved between the United States and Mexico in 2015 was carried across the border by truck. In 1995, 7.8% of all U.S.–Mexico truck crossings traveled through B-M, compared with 6.2% in M-R. By 2015 these proportions had reversed to 3.8% for B-M and 10.2% for M-R (U.S. Bureau of Transportation Statistics, 2016). This reversal in traffic flows represents a shift of roughly $15 billion per year in commercial activity from B-M to M-R. This difference in cross-border activity spills over into the broader economic competitiveness of a region based on the imperative of fast, fluid, supply chain coordination (Fullerton, Monzón, & Walke, 2013; Harris, 1994; Robinson, 2002). Examples of activities that thrive because of better coordinated border commerce include warehousing, processing, finishing and packaging of products, and the ability to attract and service the needs (e.g., legal, customs) of new production facilities in Mexico that compete on the speed with which they can manage their cross-border production processes.

Both city pairs followed the trend in the early 1990s to attempt to build as many new bridges as possible to capture a greater local share of NAFTA’s upcoming windfall. Since the mid- to late 1980s, it became clear that Mexico was pivoting away from protectionist and toward liberalized economic policies (Teichman, 1988). The joint announcement in 1990 by Mexican President Carlos Salinas and U.S. President George H.W. Bush of their shared intention to include Mexico in NAFTA alerted local actors on the border that their structural significance in the North American economy would soon change dramatically (Valverde, 1999). The two main bridge projects compared here, M-R’s Anzalduas International Bridge and B-M’s Port Bridge, had formal efforts initiated within 2 years of each other, in 1989 and 1991, respectively. They anticipated similar estimated local budgets of between $20 and $25 million for the U.S. portions (Bell, 2007; Pérez-Treviño, 2004a; Vindell, 1997). Like other international bridges, both faced formidable challenges, ranging from exhaustive environmental impact evaluations to multitiered bureaucratic approval processes with different agencies at the local, state, and national levels, to gathering necessary financial resources, and more holistically, making the strongest possible case for a costly and potentially risky project (Flyvbjerg, Holm, & Buhl, 2002). The U.S. government’s bar of skepticism was already rising in the early 1990s because two international bridges in south Texas—the Solidarity/Colombia Bridge in Laredo and the Los Indios Bridge in Harlingen—were operating at 3% and 30% of their projected capacity in their early years, a significant disappointment (Rangel, 1994). One of the main lessons of these two projects was that building a bridge would not be economically beneficial unless it was complemented by a wide array of supporting infrastructure. As a former president of the Mexico–Texas Bridge Owners Association put it,

It doesn’t do any good to build a bridge if there are no adequate connecting roads, if there are no warehouses, if there is no adequate personnel from customs, the FDA, the Mexican health department, and all the required agencies from both countries. (Rangel, 1994)

These requirements make the project of building an international bridge a particularly apt example of a problem requiring the gatekeeping skills that were central to NAFTA’s economic model.

While they were similar projects undertaken at about the same time, M-R’s Anzalduas International Bridge and B-M’s Port Bridge quickly began to take on different implementation trajectories. Both projects faced skepticism and even stiff opposition from agencies both in the United States and Mexico. These challenges required proponents of each project to repeatedly find ways to overcome resistance without expending too many project resources. The locally distinct ways of responding to these similar challenges ultimately had a dramatic effect on what each city pair could accomplish and how they would position themselves as crossing points for NAFTA-driven economic activity.

The differences between the two bridge efforts began with the way proponents explained their rationales and project benefits. In M-R, the reasoning for the Anzalduas International Bridge was always presented as a matter of a bridge’s potential to increase regional commerce. The bridge sat at the western edge of Reynosa and McAllen, and once built, it promised to cut about one third of the travel time between Monterrey and McAllen by allowing vehicles to avoid the densest portions of M-R (Gaffney, 2009). Such a regional-level argument eluded proponents of the Port Bridge, who, although presupposing that growth at the port would benefit the region, focused on the specific purpose of carrying truck and rail traffic between the port and Mexico. This, too, was intended to relieve the costs associated with traffic through high-density urban areas, but it would only serve the port, missing an opportunity to find common cause with other actors who sought improved transit times.

Despite the ostensible benefits, conflicts with other local actors arose almost immediately for both proposed bridges. In Brownsville, the city and county wanted to move an existing rail bridge further to the west to remove it from the central urban portions of B-M. Feeling threatened that the Mexican government only had an appetite for one rail project in the area, they accused Port Bridge proponents of pushing forward a project that Mexico did not want, given that government reports issued in Mexico stated a preference for infrastructure on the west and not the east side of Matamoros (Pérez-Treviño, 2001, 2004a; Torteya, 2004) The two rival groups tentatively agreed to reserve rail traffic for the west side and truck traffic for the Port Bridge on the east. However, the Brownsville Navigation District (BND), which operates the Port of Brownsville, claimed that the county and city were selling the region out to the Union-Pacific Railroad, which owned the existing rail bridge, and repeatedly tried to reignite efforts for a rail bridge at the port. This more conflictive or antagonistic approach frustrated potential allies and precipitated more clashes over subsequent years, escalating to the point where supporters of one bridge would openly dispute public claims made about progress on the other (Pérez-Treviño, 2000, 2001, 2006; Pérez-Treviño & Negrete-Lares, 2004).

In M-R, similar challenges arose in response to the Anzalduas International Bridge, but they were dealt with differently. Several neighboring cities attempted to block the project by claiming it would harm their own bridges and would risk another waste like that of Colombia or Los Indios. Rather than impugn their rivals’ motives, as was the case for both sides in the Port Bridge debate, supporters of the Anzalduas International Bridge—whose core included McAllen’s bridge authority, municipal government, and economic development agency—offered their oppositional neighbors a share of the future bridge’s revenue in exchange for dropping their disputes. More than 55% of the bridge’s future revenue was committed to other cities, and the Anzalduas U.S. presidential permit application ¹ proposed to delay commercial traffic to prevent destructive competition with nearby Pharr’s International Bridge (“Valley Cities,” 1999; Pinkerton, 1999; Villarreal, 2007). Anzalduas’ proponents made these concessions without requiring active support or risks borne by other cities, making them essentially side payments for relinquishing opposition. They justified them in the light of a project that was not for the sake of maximizing bridge revenue, but for maximizing regional commerce in the long run (Holeywell, 2009). As the director of McAllen’s bridge authority put it, “you cannot make unilateral decisions in a binational setting, which some communities have done. It takes a lot of time to come in and repair. It only makes for ill will, and it doesn’t make economic sense” (Interview No. 58, personal communication, February 19, 2010).

Resistance from various levels of the Mexican government also evoked locally distinct responses in the two city pairs. Promoters of B-M’s Port Bridge sought outside consultants from cities such as Houston and Mexico City to assuage skepticism in Mexico about a bridge on the east side of town. Mexican officials’ concerns had to do with local ecology, the spatial development of Matamoros, and the risk of direct competition with ports further south in Mexico. The recourse to outside consultants as project promoters ² —something actors in M-R did not do in their bridge project or most of their other economic development efforts—reflects how actors in B-M saw themselves as incapable of acquitting their local causes in the eyes of outsiders. As one local mediator affiliated with the university’s government program put it, many saw it as a “missionary” cause to try to bring the best techniques and thinking from outside to Brownsville because they were “far from where the people are” (Interview No. 43, personal communication, December 16, 2009). All told, external consultants for B-M’s Port Bridge received $15.5 million of the original $21 million that BND raised for the project, much of which went into seeking political support in Mexico. Actors in M-R did not have more expertise than their counterparts in B-M in how to build international bridges, but their cosmopolitan view of themselves gave them confidence that they could make their own case successfully to outsiders. As McAllen’s mayor at the time of the bridge’s opening put it, he and other local politicians were focused on McAllen as a city with a “business feel” and a “diversity of products and price competition” for consumers to “attract young human capital” to be able to “outperform any city, anywhere” (Interview No. 95, personal communication, July 5, 2010).

Mexican authorities were also highly skeptical of M-R’s proposed Anzalduas International Bridge. In particular, they were concerned that a proliferation of bridges would essentially subsidize an outflow of wealthy Mexican consumers to the United States while sapping the resources of the Mexican state to provide infrastructure that would more directly benefit its low-income populations. These were the concerns that Mexico’s director of border affairs shared with the leader of the Anzalduas International Bridge effort when he visited her in Mexico City (Interview No. 58, personal communication, February 19, 2010). His immediate response was indicative of a different approach to conflict than in B-M. Rather than attack her motives or seek to circumvent her, the Anzalduas project leader asked how they could best address her concerns. Could they formulate a private concession that would relieve the Mexican government of its financial burden? This response led to a special concession where the builder of the Mexican half of the bridge, in exchange for taking on the $70 million in capital investment needed, would be entitled to all northbound bridge tolls for 30 years (Osborne, 2008).

Proponents of the Anzalduas International Bridge were also able to reduce skepticism on both sides of the border by seeking ways to create the surrounding infrastructure and economic activity that, as the president of the regional bridge owners’ association pointed out, are necessary to make such a project economically beneficial in the long run. This quasi “pump priming” effort was in keeping with an approach that evaluated projects in light of their role in regional development and sought alliances under that rubric. Anzalduas supporters brokered an agreement between private developers on both sides of the border to coordinate their investments by sharing the cost of one master plan for 22,000 acres of industrial parks, housing, and commercial developments that would straddle the border at the future end points of the Anzalduas International Bridge. These developments attracted approximately 40 manufacturers, accompanying logistics facilities, and residential areas for their employees before a U.S. presidential permit for the bridge was granted (Lee, 1998; Pinkerton, 1999). The cosmopolitan aspect of the local approach is evident both in the project’s design and in its lofty ambitions, which a U.S.-side project promoter voiced in claiming that “the fundamentals are there to be the top manufacturing location anywhere” (Pinkerton, 1999).

Meanwhile, by 2003, the Port Bridge project drained its initial $21 million by focusing on battles with the West Rail project and relying on consultants to curry favor for the project in Mexico. Supporters lost energy as it became clear that Mexican authorities were not on board despite more than 10 years of continuous effort. Not long after the BND announced that efforts on the Port Bridge would be placed on indefinite hold. Eventually, county authorities dropped any pretense of cooperation with BND by announcing that they would pursue truck lanes to accompany the West Rail Bridge project, thus eliminating the last justification for a separate Port Bridge. BND authorities again questioned the county’s motives on its alignment with the interests of the Union Pacific Railroad (Pérez-Trevino, 2004b, 2006; Pérez-Treviño & Negrete-Lares, 2004).

The Anzalduas International Bridge opened in 2009. The coordination established in its construction continued to have effects beyond its completion. For example, the construction of a major Mexican federal highway from the Pacific Ocean in Mazatlán to the Gulf of Mexico in Matamoros (Federal Highway 40D or the Carretera Interoceanica—Interocean Highway) has vaulted South Texas ahead of Arizona as the main entry point for Mexican agriculture into the United States. From 2008 to 2015, the volume of Mexican produce entering the United States through South Texas more than doubled (“Historic Anzalduas,” 2015), and industry observers note that “While the McAllen area has increased cold storage and traditional storage significantly . . . Brownsville has been slower to respond,” with B-M’s international crossings needing to be “whipped into shape” to accommodate the increased truck flow more effectively (Hawkes, 2013). In the future, energy transport may have similar or greater potential as a result of Mexico’s recent liberalization of that sector (Taylor, 2014a). Recently, local bridge operators in the M-R area agreed in principle to pool their revenues to allow each bridge to specialize in different kinds of traffic to increase regional efficiency without financially penalizing any one bridge. This agreement extends to using their pooled resources to lobby together for investments from the United States and Mexican governments. Moreover, cities in M-R have continued to explore creative ways to work directly with the Mexican government to increase investments in bridges, such as by allowing municipal governments on the U.S. side to use their own resources to fund investments for added lanes and inspection facilities on the Mexico side (“Historic Anzalduas,” 2015; Taylor, 2014a, 2014b). Based on the slow accumulation of these differential decisions over the course of more than 20 years, it is possible to see how local practices pushed one region above its expected potential and the other below it.

Consistency of Local Practices Across Structural Conditions

The behavior patterns described above were not unique to efforts at building international bridges. To the contrary, local behaviors quite consistent with those practiced in the bridge projects also appeared as actors worked to advance their city areas’ development prospects in a NAFTA regime in efforts ranging from employer recruitment to higher education, to local retail development. These projects alone can account for much of the change in the two city pairs with regard to job creation, workforce training and productivity, international commerce and logistics, cross-border consumption and tourism patterns, and local tax base. In these projects, at many junctures, several ways forward were available to each city pair, yet the decisions taken in each followed the predominant local pattern, significantly affecting the subsequent trajectory and economic impact of each project. The consistency of the repertoire across projects involving different individuals, institutions, resources, and networks demonstrates a degree of independence between the practices and other elements of structural context.

For example, when establishing similar economic development corporations (EDCs) at the end of the 1980s under the same legal mechanism (the Texas Development Corporation Act of 1979) for funding economic development entities with sales tax funds (Longley, Drake-Adams, Moore, & Fort, 2015), a collective approach in M-R led to a broader, more regional scope of activity for the McAllen Economic Development Corporation (MEDC) in M-R. From the start, MEDC recruited firms directly to both sides of the border, maintained unpaid board membership to reduce expectations for private returns, and emphasized the use of EDC funds for public goods over firm-specific incentives. This approach took root in MEDC despite a prior history of political enmity between the mayor and the EDC president, as well as a lack of previous coordination with Reynosa (Interview No. 21, personal communication, August 21, 2009; Interview No. 33, personal communication, October 30, 2009; Interview No. 64, personal communication, March 4, 2010). Elites in B-M created a similar EDC (the Brownsville Economic Development Council or BEDC) with implementation options like those of its nearby counterpart. Yet they made more atomized decisions by demanding that BEDC recruit businesses solely on the U.S. side of the border, requiring payments in exchange for EDC board positions and focusing the use of EDC funds on incentives for individual firms. These in turn affected each EDC’s approach to attracting employers. MEDC built broad cross-border coalitions to invest in public goods, especially in Reynosa, to help make the case for multinational firms to locate in their region. As the overview of economic divergence above shows, Reynosa’s surpassing of Matamoros in manufacturing created significant spillover benefits in McAllen. Meanwhile, BEDC’s awarding of firm-level incentives for jobs led to a series of controversies over which specific firms were deserving of EDC benefits and which were not. These conflicts compounded such that eventually BEDC was split into two smaller organizations (Beshur, 2003; Borunda, 2001; Hethcock & Waltz, 1998; Mahon, 2007; Rocha, 2003).

The border wall presents a case involving different local actors, especially county-level institutions and more involvement from individual private property owners. Yet the pattern persists. When the U.S. Department of Homeland Security (DHS) received a mandate from Congress in 2006 to build 700 miles of physical barriers in different sections along the almost 2,000-mile-long U.S.–Mexico border (Secure Fence Act of 2006), several of these segments were slated for construction in McAllen and Brownsville. Local responses to the same threat were quite distinct. Congress had empowered DHS to disregard several dozen federal laws, including the Endangered Species Act and the Federal Safe Drinking Water Act. Recognizing that they were dealing with an external actor with extraordinary powers, actors in M-R on both sides of the border and at different levels (e.g., city and county) proposed that DHS fulfill its mandate by rehabilitating and augmenting aging levees on the Rio Grande River and allowing these to qualify as a “wall” between the two countries. This solution was constructive in that it acknowledged and helped facilitate DHS’s mandate while minimizing local damage in the form of disruption to property and community. Meanwhile, rather than accept a de facto legitimacy to DHS’s perspective, most local actors in B-M set themselves against the construction of any border wall and took individual legal action. Given the DHS’s unprecedented discretionary authority, practically none of these held up in court, and hundreds of landowners, including the local university, saw portions of their property appropriated for fence construction. Although residents and leaders from both city pairs bristled at the incursion from Washington, when it came to navigating the situation, the two communities mustered very different approaches to negotiating (Garcia, 2007; Leatherman, 2008; Neeley, 2011; Sherman, 2008a, 2008b).