manuel sanchez : mexico and texas – ties and mutual benefits remarks by mr manuel sanchez, deputy governor of the bank of mexico, at the centennial lecture series, the university of texas, el paso, texas, 10 september 2015. * * * i would like to thank you for the opportunity to participate in the centennial lecture series of the university of texas at el paso. it is a great honor to speak in this distinguished academic center, which has contributed considerably to closer relations between mexico and the united states. i congratulate those of you who have been an essential part of the success story of this institution. the university of texas at el paso has grown at an impressive pace during its first century. after starting out as a small school specialized in mining and metallurgy in 1914, today it is a full - fledged branch of the university of texas, offering a wide range of degrees. el paso now leads in programs on border issues and the relationship between the united states and mexico. enrollment has increased notably over the years, with the hispanic community accounting for a large majority of the student body. today, i would like to focus on mexico and texas as two increasingly integrated economies. i will begin with a review of how their links have expanded over time, yielding significant mutual benefits. i will then briefly describe recent developments in and the outlook for the mexican economy, in a context in which the united states and texas play important roles. finally, i will discuss monetary policy and inflation in mexico. as usual, my remarks are entirely my own and do not necessarily reflect the views of the bank of mexico or its governing board. mexico and texas mexico and texas have a deeply interconnected history of growth. the state of texas can be rightly viewed as one of the largest economies in the world, and its geographic proximity to mexico makes it all the more logical for the two to exploit mutually advantageous opportunities. their symbiosis is a natural consequence of a common cultural heritage, and, in economic terms, includes trade, investment, human capital, and many other areas. in particular, texas is mexico ’ s main trading partner within the united states, and mexico is the state ’ s main partner as well. in fact, texas accounts for more than twice as much of total mexican trade volume as china. as with the united states as a whole, commercial linkages were deepened by the north american free trade agreement, perhaps the most profound structural change ever undertaken by mexico. 1 mexico purchases many goods from texas

##pensable to an objective assessment of future concrete reforms. concluding remarks the unsatisfactory long - term performance of the mexican economy is of significant interest to both economists and policy makers. low per - capita gdp growth does not reflect mainly a problem of employment and investment, but one of productivity. in order to envision more rapid improvement in social wellbeing, we need to identify the structural obstacles to productivity expansion, notably in services and nonmanufacturing industries. structural reforms should, then, be focused on removing the root causes of impediments. a major task is one of measurement, as shown by the fact that statistical studies quantifying the effects of previous structural changes are relatively scarce. i am confident that your discussions will contribute greatly to an understanding of what mexico needs to do to attain much higher levels of prosperity. for an excellent exposition of static and dynamic inefficiency arguments applied to informality, see heckman, j. j. et al. ( 2010 ), “ policies to promote growth and economic efficiency in mexico, ” nber working paper series, november. bis central bankers ’ speeches bis central bankers ’ speeches