Behind the Debate: Propelled to Protest, Driven to Migrate

Even as the number of illegal immigrants in the United States was growing, the NAFTA trade pact was off to a roaring start. It pumped up the Mexican economy in its first years and stoked commerce with maquiladoras , the assembly plants that sprang up along the U.S.-Mexico border. Foreign investors were pouring money into the country.

But while NAFTA's early promise heartened Mexico's leaders, an economic earthquake that would push migrants north was beginning to rumble.

Not a Magic Wand

In December 1994, the government of the new Mexican president, Ernesto Zedillo, sharply devalued the peso in hopes of stabilizing the country's wobbly currency. The opposite happened. Foreign investors fled, and Mexico slipped into a deep economic recession for two years. It took a bailout by the International Monetary Fund and the United States to stop the slide, and even with that, Mexico's recovery was slow.

As a result, Mexico's troubles pushed workers north just as the growing U.S. economy was creating new demand for labor.

The peso crisis proved a troubling distraction, diverting the attention of a government that had hoped to be capitalizing on NAFTA to stimulate widespread growth but instead was bogged down in crisis management, said Luis Rubio, director of the Center for Development Research in Mexico City. Not enough roads or ports were built, and business networks did not expand beyond border areas.

"The objective was to develop a supplier's industry in Mexico" to feed NAFTA-stimulated manufacturing, Rubio said. "What happened after the peso crisis was that everybody forgot about that."

What Mexico's leaders surely did not forget at the time was that the nation's huge flow of workers to the United States created an "escape hatch," said Fernandez, the international relations specialist. With as many as half a million Mexicans leaving for the United States each year -- 400,000 of them illegal migrants -- Mexican politicians felt little pressure to create jobs, he said.

"There's not a huge pressure to stop the flow to the U.S.," Fernandez said. "The U.S. needs it and Mexico needs it."

Mexico's big informal economy -- the legions of street vendors and other laborers -- is another disincentive for politicians to stimulate growth of better-paying jobs in the formal economy, economists say. The informal workforce accounts for 32 percent to 48 percent of Mexico's economy, Rubio estimated.

Already struggling, Mexico was forced to contend with competition from China at the end of the 1990s. Price advantages granted to Mexican producers by NAFTA were being phased out, and suddenly Mexico wasn't looking so cheap anymore. From 2000 to 2004, China's vast manufacturing zones -- offering even less expensive labor -- siphoned off business and shaved employment opportunities for Mexicans who might have stayed home rather than risk an illegal migration to the United States.

During the same period, 895 maquiladoras closed, with many moving to China, while others downsized, according to Global Insight, an economic consulting firm.

Guatemala also picked off business that might have gone to Mexico, and even Costa Rica -- seldom thought of as a source of very cheap labor but buoyed by a relatively high literacy rate -- scored a coup, enticing Intel to locate there instead of in Mexico.