The Arizona-Sonora Region

3.1.1 History

Arizona-Sonora cooperation goes back to more than 40 years ago. The Arizona-Mexico Commission and its companion organization, the Comision Sonora-Arizona in Sonora, Mexico were established in 1959 with a common goal to eliminate trade barriers and enhance partnership. Utilizing the impetus provided by NAFTA and building on a long history of political collaboration to facilitate business opportunities, the state of Arizona is working with the office of Mexico’s President to solidify a partnership that will stimulate regional economic growth through cross-border cooperation (Arizona-Mexico Commission 2000).

In 1993 the relationship entered a new stage when the governors of the two states announced support for the Strategic Economic Development Vision for the Arizona-Sonora Region. This vision marks the beginning of an ambitious process of formal integration between the economies of the two states.

Figure 5.3 Arizona – Sonora Region

3.1.2 Socio-economic profile

Both Arizona and Sonora are rather peripheral states in the US and Mexico respectively.

The Arizona-Sonora Region encompasses two adjacent border states that share 361 miles of the 2,000 mile long boundary between the US and Mexico (The University of Arizona 2000). The population of Arizona is 4.3 million and that of Sonora is about 2 million. The major industries in Sonora are agribusiness, electronics, automotive and textiles. The two primary manufacturing industries in Sonora are the maquiladora and automotive industries. Even before NAFTA, the maquiladora played an important role in generating employment and export. Maquiladoras now employ approximately 50 percent of all manufacturing workers in the state. Fifteen industrial sectors are represented in Sonoran maquiladoras, ranging from electronics, the most important sector in terms of employment, to food processing. The majority of all imports to Sonora originate in the US (Arizona State University and the University of Arizona 2000).

The state of Arizona, on the other hand, is a largely service-oriented economy. The largest economic sector is services employing more than 883,000 people in 2003. Wholesale and retail trade provides also a big portion of state employment. Many of these jobs are directly related to tourism, an industry that injects more than 12 billion USD into the sector each year. The construction sector is also an important provider of jobs. The manufacturing sector is not so significant in terms of employment, taking only 7.6% of total employment in the state.¹⁰⁾ As such, Arizona and Sonoran economies are complementary in terms of industrial structure. One indication is burgeoning export processing industrial sector in the Maquiladora in Sonora. The main reason for the attraction to Maquiladora is factor cost differentials between the US and Mexico.

10) www.azcommerce.com

The two states complement each other in terms of transportation infrastructure. Arizona’s transportation network of air, rail and highways is complemented by Mexico’s deep-water port at Guaymas.

Table 5.3 Major Indicators of Arizona and Sonora

Arizona Sonora Arizona-Sonora

Area (sq. miles) 114,006 69,825 183,831 Population (1995) 4,306,908 2,085,536 6,392,444 Persons per sq. mi 38 30 35

% Population increase (1990-1995) 17.5 14.0 16.5

% Population age between 16 and 64 63.4 62.3 63.1

3.1.3 Organizational set-up and activities

As bilateral trade and investment between the US and Mexico grows, more economic growth is expected in the Arizona-Sonora region. To exploit the opportunities arising from NAFTA, both states of Arizona and Sonora made formal bilateral ties with the creation of a Committee for Economic and Social Development and the Commissions on each side. These entities serve as platforms for a permanent exchange of information.

Cross-border cooperation is basically managed by the two commissions.

Membership consists of representatives of government agencies, private sector organizations, institutions of higher education, and the general citizenry. The Arizona-Mexico Commission is a private/public organization that works to create relationships on both sides of the border within the region. It has been a force in advancing cross-border issues and a resource for those who embrace a vision of partnership between Arizona and Mexico (not just Sonora). But the Sonora region only deals with Arizona. In this sense, there exists imbalanced relationship between Arizona and Sonora

Given a weak position of the Arizona-Sonora vis-à-vis other regions in North America, both Commissions developed a strategic economic development vision for the cross-border region. The vision contemplates cohesive, mutually beneficial regional development for the transnational corridor between Phoenix and Hermosillo. The vision also employs the concept of industry clusters in organizing economic development initiatives.

The main industrial clusters in the region are machinery, electronics/electrical equipment, metal products, transportation/logistics, food processing and tourism.

The vision emphasizes complementarities, international competitiveness, and the quality of life within the binational region. The state of Arizona established foreign trade zones and adopted generous tax measures to host outside investment. Of course, the low-cost production sites in Sonora’s maquiladora were emphasized. The main assets that the cross-border region has are an integrated multimodal transportation network, skilled workforce and the best climate. One resource that Arizona has established is the highly successful Match-Mex Program, which puts owners of small Arizona business in direct contact with business and government officials in Mexico.

3.1.4 Evaluation

Since NAFTA’s inception, exports to the world from the Arizona-Sonora region have increased 83 percent. Maquiladora employment in Sonora has more than doubled. Looking at some statistics, one can readily tell that border regional integration has been progressing. For example, cross-border vehicle traffic and the number of visitors crossing the cross-border have been steadily increasing over time. The state of Arizona evaluates that establishing the supplier linkages to the Mexican border states via political initiatives is paying dividends for Arizona-based companies. It foresees a bright future of expanded trade and growth via cross-border cooperation

between Arizona and Sonora. The two commissions do and will play a significant role in cross-border cooperation.

Compared to the southern California and Baja California, the Arizona-Sonora presents rather a successful example of cross-border cooperation capitalizing the force of free trade agreement. However, the major difficulty facing the Arizona-Sonora and as a matter of fact the whole US-Mexican border regions is finding financial resources and the necessary political support.