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f Texas

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ecember 2013 (% change year over year)

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House Prices Q3 2013 (% change year over year)

-2 -1 0 1 2 5.7

6.0

Decemberunemployment

rate

A snap shot of Texas and

the Rio Grande Valley

A Publication of the Center for Border Economic Studies

Border Business Briefs

February 1 - April 31, 2014 | v.10 n.1

SouthTexasEconomy

The impact of Maquiladora activity on Valley Economy P.5

Housing prices in McAllen are not moving P.11

EditorSalvador Contreras

ContributorsJames Boudreau

Salvador Contreras

Roberto Coronado

Nacole Ricks

Eduardo Saucedo

Follow us on Twitter

@BorderEconomy

CBEST

The Center for Border Economic Studies (CBEST) is a

research center of the College of Business Admin-

istration at the University of Texas Pan American.

The Border Business Briefs is a quarterly publication of CBEST.

For more information visit us online at utpa.edu/cbest.

Members of the BoardWe are currently taking nominations for Board Members.

For nominations or self nominations please contact CBEST at

cbest@utpa.edu.

February 2014

Dear Reader,

Thank you for being a loyal reader of this publication. This is the first issue under the new Director of CBEST and Editor of this publication. This publication aims to gather and disseminate business news, analysis, and key statistics of value to Business and Civic leaders in the Rio Grande Valley. In an attempt to broaden the interest and visibility of this publication there will be notable differences from previous issues. In particular, frequent readers will notice (1) a decrease in report raw statistics, (2) new layout, and (3) notable rise in ads. In this issue the reader will find the use of infographics, stand alone graph presentations, coordinated color schemes, and expanded use of contributed pieces. We aim for simplicity in presentation, wealth in content, current in statistics, and relevant for decision making.

The publication of this report as all other publications takes the efforts of many people and money to finance it. It is our hope to begin a print edition of this publication later this year. This means that we will ask readers like you to pitch in. Through the Development Office at the University of Texas Pan American we will solicit donations/contributions and ads to finance the publication of future reports. If you wish to advertise or donate please contact CBEST.

We hope you find our updated look, feel, and style an improvement from previous issues. Feel free to send your feedback about the publication and general comments to CBEST.

Best regards,

Salvador ContrerasEditor

A Publication of the Center for Border Economic Studies

Border Business Briefs

1201 W. University Drive, Edinburg, TX 78539 | cbest@utpa.edu | www.utpa.edu/cbest

This Issue

3 Economic Pulse Quick guide to economic actvity in the Valley

5Manufacturing

The impact of Maquiladora industry on the RGV

8Headwinds Transition at the Fed

15Valley Talent

Alberto Dávila receives national award

11Real EstateValley house prices on neutral

17Oranges and DebtStudents Compete in the Up to Us Competition

Border Business Briefs | February 2014

Image sources: Starting on bottom of left page Federal Reserve, Housing and Urban Development, UTPA Office of Public Affairs, Up to Us competition video.

El Paso

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ecember 2013 (% change year over year)

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House Prices Q3 2013 (% change year over year)

-2 -1 0 1.6 2 3

8.2November

unemployment rate

South Texas

Sources: Unemployment rate and non-farm employment are monthly and come from US Department of Labor. Non-farm Employment measures the percentage change from one year ago. Gross sales are quarterly state sales reported by the Texas Comptroller of Public Accounts. Gross sales percentage change meausure Q2 2013 from Q2 2012. House prices index is quarterly data that comes from the Federal Housing Finance Agency. The reported house price is the percentage change in the index from a year ago.

Economic Gauge

Corp

us Christi

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ecember 2013 (% change year over year)

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5 6House Prices Q3 2013 (% change year over year)

-2 -1 0 1 2 6.4

5.5November

unemployment rate

San

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ew Braunfels

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House Prices Q3 2013 (% change year over year)

-2 -1 0 1 2 2.7

5.9November

unemployment rate

Border Business Briefs | February 2014

Manufacturing

The Impact of the Maquiladora Industry on the Rio Grande Valleyby Roberto Coronado and Eduardo Saucedo

A maquiladora is an industrial plant located in Mexico that assembles imported components into

products to be exported mostly to the U.S. Duty is paid only on the value-added during the assembly process upon re-entry to the U.S. A maquiladora may be owned by foreign or domestic entities and the concept has evolved to cover activities as diverse as coupon processing, textiles, engineering research and design, and auto-part assembly.

Maquiladoras have not only become an increasingly significant component of the Mexican economy, they are also an important part of the U.S. corporate

strategy to produce competitively priced goods and services in a competitive global marketplace. For the U.S.-Mexico border region maquiladoras have become one of the main economic pillars. Although tougher global economic environment driven mostly by fierce low-wage competition has changed the

scope and landscape of the industry over the years, maquiladoras continue driving the ever-increasing trade flows between Mexico and the Rio Grande Valley.

Given the importance of the maquiladora industry for border cities, it is no surprise that the Rio Grande Valley and northern Mexico exhibit lockstep economic performance.

Figure 1 shows the strong economic synchronization that exists between McAllen and Reynosa, and Brownsville and Matamoros.

There are some key dates that have marked the recent

“it is no surprise that the Rio Grande Valley and northern

Mexico exhibit lockstep economic performance”

economic history of the U.S.-Mexico border. First, in 1993 the passage of the North America Free Trade A g r e e m e n t ( N A F T A ) , an event that brought great optimism about the future of the b o rd e r l a n d s . Border cities moved from a peripheral role at the edge of the U.S. economy (and Mexico for that matter) to a central and strategic location in a new and larger North American market. Second, the 2001 terrorist attacks in the U.S. were followed by sustained increases in border security requirements. Increased inspection and documentation, even physical barriers, slowed the movement of goods and people along the border. Third, the low-wage global competition intensified around 2001 when China joined the World Trade Organization (WTO). Together these events resulted in a significant restructuring of the maquiladora industry.

In order to have a better grasp on the potential impact that these events had on cross-border economic integration, we carried out a comprehensive

research study where we estimate the impact that the maquiladora industry has on U.S. border cities. Our research findings indicate that the maquiladora industry remains a dominant force for the U.S.-Mexico border economy. The restructuring of the maquiladora since 2001, largely in response to low-wage Asian competition, has affected the industry’s job growth more than output growth. As jobs have shifted out from low-skill industries (i.e., textiles, apparels, and toys) into high-skill industries (i.e., electronics and autos), the result has been fewer but better-paying jobs. The resilience and growth of Mexican maquiladora are good news for neighboring U.S. border cities. While competition from Asia has eroded to some extent maquiladora job growth, the maquiladora industry has been moving up the ladder in terms of increased output, higher wages, and improvements in productivity.

Using data from 1990 to 2006, we find that a 10 percent increase in maquiladora production is associated with a 0.5 to 0.9 percent rise in U.S. border city jobs. However, our results

Figure 1. Rio Grande Valley employment and maquiladora output are highly correlated

Notes: Charts show nonfarm employment annual growth rates (left-axis) for Rio Grande Valley border cities and maquiladora output annual growth rates (right-axis) for Mexican border cities, for the period 1990-2006.Sources: U.S. Bureau of Labor Statistics and Instituto Nacional de Estadistica Geografia e Informatica.

“in 1993 the passage of the North America

Free Trade Agreement, an event that brought great optimism about

the future of the borderlands”

“we find that a 10 percent increase in maquiladora

production is associated with a 0.5 to 0.9

percent rise in U.S. border city jobs”

Border Business Briefs | February 2014

McAllen Brownsville

Overall Impact 6.6 2.2

Construction 4.0 1.3Transportation 6.6 4.6Retail 3.2 1.3Pers. & Business Services 7.4 3.9

Table 1: Effects of Maquiladora Production on Local Employment (Period: 1990-2006)

This table reports estimated elasticity coefficients for the whole city and for some individual sectors. These elasticity coefficients corroborate that the impact of the maquiladora industry varies significantly along border cities and along sectors. The interpretation is similar for each of the individual

sectors.

also indicate that the border average can be misleading, with big differences emerging as we move from one city pair to the next. In addition, our empirical results show that post-2001 the U.S. border cities are less responsive to growth in maquiladora production. However, when looking into specific sectors, we find that U.S. border city employment in personal and business services sectors has become much more responsive post-2001. This, in turn, suggests that today U.S. border cities predominately supply business services to the maquiladora industry (i.e., transportation, finance, insurance, legal and accounting to name

a few sectors) rather than just manufactured parts and components.

Table 1 summarizes our findings for the Rio Grande Valley. We find that Rio Grande Valley benefits

tremendously from maquiladora activity across the border. In particular, we find that McAllen is the U.S. border city that benefits the most from the maquiladora activity. The interpretation of the numbers in the table is as follows, a 10 percent increase in the maquiladora output in Reynosa and Matamoros leads to a nearly 7 percent increase in overall nonfarm employment in McAllen and 2 percent in B r o w n s v i l l e , respectively.

To sum up, the economic integration between the

economy in the Rio Grande Valley and Mexico continues on the rise. While the maquiladora industry has restructured and evolved over the last several years, it continues shaping the Rio Grande Valley economy. As Texas and Mexico continue engaging in more trade, and the maquiladora industry remains growing the Rio Grande Valley should benefit in years to come.

This article is based on a research paper that was recently published in Growth and Change, Volume 44, Issue 3, pages 415–442, September 2013.

Dr. Roberto Coronado is Assistant Vice President in Charge and Sr. Economist, Federal Reserve Bank of Dallas, El Paso Branch

Dr. Eduardo Saucedo is a Lecturer in the Department of Economics and Finance at UTPA.

“post-2001 the U.S. border cities are less responsive to growth

in maquiladora production”

“10 percent increase in the maquiladora output in Reynosa

and Matamoros leads to a nearly 7 percent

increase in overall nonfarm employment

in McAllen”

Headwinds

Transition at the FedBy Salvador Contreras

Ben S. Bernanke oversaw his last meeting as Chairman of the Board of Governors of the Federal Reserve System (the fed) on January 28th. The Fed

also known as the Federal Reserve Bank (Central Bank) of the United States is charged with overseeing the Financial/Banking system and monetary policy of the United States.

First appointed by George W. Bush in 2006, Ben served during one of America’s worst financial crisis. During his tenure he oversaw the greatest expansion in the history of the Fed’s Balance Sheet ($4.1 trillion as of January 30th). The Fed’s Balance Sheet (like all balance sheets) is made up of assets and liabilities. Liabilities to the Fed are things like currency in circulation (coins and paper money in your pocket) reserve deposits by member banks, etc. Assets

are made up of things like United States Gold holdings ($11 billion) and more importantly holdings in various types of US government debt ($2.2 trillion). The rise in the Fed’s Balance Sheet has been through holdings in debt. Assets grew from $870 billion in late 2007 to $4.1 trillion today (a 371% rise).

Under Ben’s tenure through its various Quantitative Easing (QE) policies the Fed has broaden the type of debt that the Fed buys. In particular, the Fed is now owner of an extraordinary large amount of Mortgage Backed Securities ($1.5 trillion).

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$4,000,000

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1-Aug-07 1-Aug-08 1-Aug-09 1-Aug-10 1-Aug- 11 1-Aug-12 1-Aug-13

Size of Feds weekly assets (balance sheet)(millions of dollars)Aug 2007 - Jan 2014

“Assets grew from $870 billion in late

2007 to $4.1 trillion today (a 371% rise)“

Border Business Briefs | February 2014

Source: Federal Reserve

WhoJanet Louise Yellen

EducationPhD Economics, Yale University

Current positionBoard of Governors of the Federal Reserve System, Chair

Previous positionBoard of Governors of the Federal Reserve System, Vice-Chair

Term4-year appointment

Since 2012 the Fed began to buy debt in the open market at a clip of $85 billion a month (about half treasuries and the rest mortgage backed securities). This past summer market expectations had built that the Fed was to begin winding down its QE program. In anticipation of “tapering” yields on US government debt began to rise (see yield chart on the 10-year bills). This is because the market expects the supply of government debt available to the public to rise. The Fed did not actually begin tapering until December (2013) announcing a draw back from $85 to $75 billion a month. This past week (and Ben’s last meeting as Chair) the Fed announced a further reduction of $10 billion ($75 to $65 billion). The effect on yields has not had the expected reaction from the market. Yields for January 2014 are actually down (2.7% on January 30).

Yields rise because the price of government debt rises. There is an inverse relationship between what a bill pays in interest (yield) and its price. A higher price also means that there is an increase demand (or a fall in supply) of government debt in the market. So, in order for yields to be down in January it means that demand for government debt is high. This is not surprising

given that the US economy has reported good economic numbers. In particular, fourth quarter

(2013) real GDP (real means adjusted for inflation) was at 3.2%. Compared to third quarter real GDP growth of 4.1%. In addition, the employment situation appears to have improved. Unemployment currently stands at 6.7% (December). The trade deficit fell by $5 billion (turns out we are importing less oil!) in November.

More importantly, the rest of the world is not as hot as the US. A number of currency depreciations follow market expectations that emerging markets are cooling. Most

Yields on 10-Year Bills (percent)

Source: Federal Reserve

recently, China announced a weaker than expected growth of 7.7% for the fourth quarter of 2013. The Turkish government in the last week of January raised its benchmark rate to 10% to defend a steep decline in the Lira. The Argentinian government has been bleeding dollars (reserves) protecting the Peso. These and other global events have scared investors toward safer American investments (US government debt). The weak January performance in US equities has further fueled this behavior. These crosswinds have protected yields on US government.

Janet L. Yellen, a long-time Fed Board Member (Vice-Chair since 2010) begins tenure as Chair on February 3nd. Janet is the first woman to lead the Fed since its inception in 1913. There is much talk about how Janet will influence and lead the Fed. Ben tenure has been defined by the growth of the Fed’s Balance Sheet. Janet we be judged by how the Fed manages the unloading of trillions of dollars of the Balance Sheet.

Janet (married to George Akerlof, Nobel prize winning Economist) received her PhD in Economics from Yale University in 1971. She began her career in academia (Harvard 1971). She first joined the Federal Reserve System in 1977. Janet held various positions, most recently as Vice-Chair of the Fed. By most accounts, Janet is believed to continue with the current policy strategies at the Fed.

Then the Fed went through extraordinary measures to protect the system by buying non-traditional assets like Mortgage Backed Securities, lending to non-member banks, and taking a massive stake on AIG (once the largest reinsurance firm in the

world). The AIG stake is currently valued at $1.6 billion. These policies were performed with the goal of protecting the financial system and provide stimulus to markets all while keeping an eye out on inflation pressures. In fact, Gold prices (often seen as a barometer of inflation expectations) have actually fallen over the past 12 months by 25%.

The challenges of the Fed going forward will be to slowly unwind its massive debt positions. This will entail the careful orchestration of dumping

(albeit very slowly) government debt in the open market. The fear is that a sudden jolt may raise yields (yields on government debt influence the interest rate that Americans pay to finance cars, credit cards, homes, etc. So it matters!). These can lead to a fall in consumption and private sector investment. Which ultimately hurts the

(up to now sluggish) recovery.

Given the low levels of inflation a large number of Economists forecast a slow unwinding process. First, reduce the Feds monthly purchases by about $10 billion each month (this follows from December and January moves). Then slowly begin to raise the benchmark interest rate. The benchmark rate (Federal Funds Rate) is at zero (more like 0-.25%). Smooth bond markets prevailing one expects little change to borrowing costs in the near future. In the median-term (by late 2014 early 2015) we expect the 10-year yields at a range of 3.25% to 3.75%. If the economy continues to improve higher rates should be of minimal consequence. Recent economic data does suggest an improving US economy, making this scenario plausible.

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Border Business Briefs | February 2014

Building permits (private housing)Mcallen MSA (12-month moving average)

The figure on left shows 12-month annualized level of privately owned housing starts by building permits in the McAllen-Edinburg-Mission MSA. Data is from the US Department of Commerce.

Highlighted are the 2006 (pre-crisis/peak) and 2007 (crisis) periods. The second highlighted area covers the last 3 years up to October 2013.

RentPercent change (y/y)

Real Estate Market

Valley house prices on neutralBy Salvador Contreras

How weak is the housing market? The report released by US Department of Commerce on January 27, 2014 New Residential Sales in the month of December

2013 were not encouraging. Sales for new single-family houses had an annual pace of 414,000 units, down 7% from November’s

annual revised estimate of 445,000 units.

The median new house sold in December for $270,000

(average $311,000). There were an estimated 171,000 homes for sale at the end of December or about 5-month supply.

The housing market in the Rio Grande Valley has too been

moving at an anemic pace. The chart below shows the 12-month annualized rate of new private housing building permits in the McAllen-Edinburg-Mission MSA of 2,570 units for the October 2013 period. This is down 2.3% from the 12-month rate in the month of September of 2,630 units.

This general weakness in supply is also evident in other measures of residential housing in the Valley as a whole. Rents for example, moved up less then one percent in 2014 from a year ago in the McAllen-Edinburg-Mission MSA. The US Department of Housing and Urban Development estimates that the McAllen-Edinburg-Mission MSA three-bedroom unit Fair Market Rent (FMR) price at $816. The Brownsville-Harlingen area FMR is $885 and is up 3.5% when compared to 2013.

Notable is the rise in three-bedroom units FMRs for Laredo and El Paso MSA’s with a 5.6% and 5.8% increase from 2013 levels. Corpus Christi and San Antonio-New Braunfels MSA’s reported -1% and -1.5% declines in FMRs over 2013.

Housing prices have also been week particularly in the McAllen-Edinburg-Mission MSA. The All-Transactions price index by the Federal Housing Finance Agency put McAllen-Edinburg-Mission MSA prices at half a percentage point in the third quarter of 2013 over the same quarter a year earlier. Averaging

“single-family houses had an annual pace of 414,000

units, down 7%“

$8160.5%

RentPercent change (y/y)

$8853.5%

$1,0215.6%

$1,0595.8%

$1,111-1%

$1,117-1.5%

Brownsville-Harlingen

Laredo El Paso Corpus Christi

San Antonio-New Braunfels

McAllen-Edinburg-

Mission

Fair Market Rent 2014 Three-bedroom units

Fair Market Rent is the U.S. Department of Housing and Urban Development market estimates. They are constructed based on adjusted ACS and HUD rent measures. Reported are 2014 three-bedroom HUD rent estimate by MSA. Percent change is 2014 over 2013.

Housing Prices: Selected MSA’s

Percent change, Q3 2013 over same quarter previous year

Average of percent

changes, past 4 quarters

Median listed Price per square foot (November

2013)

Percent change, current month over average of previous year

McAllen-Mission-Edinburg -0.49 0.30 $ 78.29 -0.32

Brownsville-Harlingen 1.06 0.53 $ 108.28 1.20

Laredo -1.58 -1.37 $ 90.96 1.38

El Paso 1.56 0.27 $ 86.11 -0.24

Corpus Christi 6.38 4.44 $ 112.01 3.67

San Antonio-New Braunfels 2.68 2.44 $ 97.58 4.46Data is presented at the Metropolitann Statistical Area (MSA). Column (2) and (3) report All-Transaction house prices. Data comes from the Federal Housing Finance Agency . Median prices are listed prices at Zillow.com. Column (4) reports the median price Zillow reported listed price per square foot in November 2013. Column (5) is the percentage change in price of November over the avearge of the previous 12 months.

over the four quarters shows no rise in prices.

Brownsville-Harlingen MSA on-the-other-hand reports a rise in prices of 1% but only up half a percent when average over the four quarters. The Laredo MSA is the only area reporting strong All-Transaction decline in house prices of -1.6%. Corpus Christi followed by the San Antonio-New Braunfels MSA report the strongest gains. Prices in Corpus Christi were up 6.38% in the third quarter 2013 over the same quarter in 2012.

Another way of looking of this data is by considering the per-square-foot listing price by area. The data comes from listed values reported at the MSA level by Zillow.com. The McAllen-Edinburg-Mission MSA has

the lowest reported listed price of $78 in November 2013. This is down less than one percent over the average percent change in the previous year.

The stellar performers were again the Corpus Christi and San Antonio-New Braunfels

“Averaging over the four quarters shows no rise in

prices“

Border Business Briefs | February 2014

December median listed price per square-foot by city. Data is from listed properties on Zillow.com.

Housing prices per square-foot by city

$136

$77 $70 $57

$111

$52 $76

$195

$89 $77

$120

$63

$220

$66 $80 $78 $67 $81 $75 $63 $79 $73 $83

$112

$74 $71 $71 $74

MSA’s with 12-month average percent changes in price levels of 3.7% and 4.5% respectively. Corpus Christi also had the highest per square-foot listing price at $112 followed closely by the Brownsville-Harlingen MSA at $108. It is important to point out that these are listed homes at the median price level.

Within the McAllen-Mission-Edinburg and Brownsville-Harlingen MSA is also plenty of variation. For example, in the Brownsville area the city of South Padre Island and Port Isabel had the highest listed median price per square-foot of $220 and $195 respectively in December 2013.

At the bottom of the per square-foot December price distribution for the area were the cities of Los Fresnos at $52 and La Feria at $57. Both the city of Brownsville ($77) and Harlingen ($70) median price per square-foot was well below the MSA November price of $108 suggests that the median home listings are disproportionately out-weighted by other cities. In particular, cities with costal views seem to drive the MSA’s numbers.

In the McAllen-Mission-Edinburg MSA the city of Palmhurst has the highest per square-foot median price of $112 followed by the city of Mission at $83. Edinburg comes in third at $81. For Edinburg zip code 78539 drives the price with a median price of $84. McAllen has a median price of $79. Zip code 78503 has a median price of $91 followed by 78504 at $78 and 78501 at $75.

According to data published by the Real Estate Center at Texas A&M the Median price in McAllen in the Month of

December stood at $110,600 with the average house selling at $135,600. The median price is significantly less than that reported by Zillow.com of $168,900 for the same month. There is not enough current data in the Real Estate Center at Texas A&M to make broader valley-wide comparisons. However, the Zillow data shows that the median listing price in the city of Brownsville stood at $83,000, Mission $199,000, Harlingen 123,750, Corpus Christi $175,000, Laredo $165,000, El Paso $149,900, and San Antonio at 168,990.

The cities of La Homa and Abram-Perezville round the bottom median per square-foot in the McAllen-Mission-Edinburg MSA with price levels at $63 and $66 respectively.

Of interest is the level of price fluctuation in the Brownsville MSA relative to the McAllen MSA. The Brownsville-Harlingen MSA has the city with the highest (South Padre Island) and lowest (Los Fresnos) price per square-foot.

Given January’s housing report we expect continued weaknesses in prices and housing market in the fourth quarter of 2013 reports. Housing will likely continue to affect the region unevenly. The McAllen-Edinburg-Mission MSA will likely underperform its southern and northern neighbors in the current month.

Dr. Salvador Contreras is an Assistant Professor of Economics at the University of Texas-Pan American

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Valley Talent

UTPA alum and economics professor Alberto Dávila receives national award

Pictiure taken by Josue Esparza, UTPA Office of Public Affair. By Gail Fagan, Office of Public Affairs (University of Texas Pan American) reprinted with permission

The American Society of Hispanic Economists awarded Dr. Alberto Dávila (BA ‘77), professor and V.F. “Doc” and

Gertrude Neuhaus Chair for Entrepreneurship at The University of Texas-Pan American, its 2014 Academic Achievement Award. This biennial national award recognizes ASHE members who have made a vast array of academic accomplishments

and contributions throughout their careers to the economics profession.

Dávila, a UTPA faculty member since 1996, received the award Jan. 4 in Philadelphia at the annual business meeting of ASHE, which occurs in conjunction with the American Economic Association/Allied Social Science Association annual meetings.

Dávila , who earned both his MS and Ph.D. from Iowa State University, has served as chair of the Department of Economics and Finance since 1997. A labor economist with particular focus on the U.S.-Mexico border, Dávila has authored or

co-authored more than 50 journal articles. His most recent book, co-authored with UTPA Economics Professor Dr. Marie Mora, is “Hispanic Entrepreneurs in the 2000s,” published by Stanford University Press in Fall 2013.

“ASHE members who have made a vast array of academic accomplishments and

contributions”

Previous winners of this distinguished award from ASHE include Ronald Oaxaca, McClelland Professor of economics, University of Arizona (2008); Refugio Rochin, professor emeritus of Chicana/o studies and agricultural economics, University of California, Davis (2008); Francisco Rivera-Batiz, professor of economics and education, Teachers College, Columbia University (2010), and Stephen Trejo, associate professor and associate department

chair, Department of Economics, UT Austin (2012).

UTPA’s College of Business Administration Dean Dr. Teofilo Ozuna said the recognition is a testimony to the scholarly contributions Dávila has made to economics.

“This national distinction enhances the status and excellence of the Department of Economics and Finance, the College of Business Administration, and UT Pan American, “ Ozuna said. “Having excellent scholars and leaders such as Dr. Dávila in our college

contributes to the recruiting of top students and scholars to our college. He is a tremendous role model for our students and faculty in our college.”

ASHE is a professional organization of economists who work to address the underrepresentation of Hispanic Americans in the economics profession by promoting the profession to Hispanics

through education and service. The organization also promotes rigorous research on economic and policy issues affecting Hispanics, both locally and nationally. To learn more about ASHE, go to their website at www.asheweb.net

“Having excellent scholars and leaders such as Dr. Dávila in our college contributes to

the recruiting of top students”

“A labor economist with particular focus on the U.S.-Mexico border”

Border Business Briefs | February 2014

National Debt

Intersection of oranges, aliens, and the national debt UTPA Students Compete in the Up to Us Competition

by James Boudreau

From January 21 until February 21, a team of University of Texas-Pan American (UTPA) students will be conducting a

campaign to raise awareness about the national debt, which was roughly $17.3 trillion and counting at the time of this writing. Their efforts will be part of a national competition, known as the “Up to Us” competition, that encourages college students to educate their local communities about what that figure means. Over 100 teams from universities all over the country initially entered, but UTPA’s team was one of only 25 selected to proceed to the actual campaign phase of the competition.

For their campaign, the UTPA team will be visiting local high school classrooms and neighborhoods, holding tabling sessions on campus, and inviting knowledgeable experts to speak on campus in order to get their message out to both the campus community and the community at large. The message itself will focus primarily on the questions of why national debt seems to be so hard to get rid of, and what it means if we can’t find a long-term solution. The fact is that getting out of debt is fairly straightforward in mechanical terms: the country can spend less, increase taxes, or both. But precisely which types of spending should be cut, or whose taxes should be raised,

are much more difficult questions to answer.

The campaign is completely non-partisan (as is the Up to Us competition itself), so the UTPA team explicitly avoids any suggestion as to whether any combination of solutions is better or worse than any other. But different solutions will affect people differently, so it is extremely important that everyone is made aware of the possible consequences various solutions will have. It is also critical that people understand what could happen to them if the national debt

National Debt(what we owe)

$17.3 trillion

Your share (every American owes)

$55,000

is not reigned in.

In addition to the aforementioned outreach activities, the UTPA Up to Us team will also add a creative flair to its campaign. With the help of a group of theater majors, they have actually created an original play, “The Debt Ultimatum”. The plot focuses on the same general theme of why debt is so hard to get rid of even though we know there are solutions, and the characters illustrate the very real consequences of what those solutions mean to local individuals, and thus why it is something the local community needs to be aware of. “The Debt Ultimatum” will take place in room 107 of the ARHU building on Feb. 7th-9th (7pm start Friday and Saturday,

2pm start on Sunday), and admission is free and open to the public.

At all of their events the team will be asking as many people as possible to complete the Up to Us Facebook quiz. The quiz is very short (just 5 questions), and it doesn’t matter how many questions a person gets right or wrong; the idea is again to simply encourage people to think about what the national debt means for them. You can help the UTPA team out (and learn!) by logging into Facebook, entering “Up to Us App” in the search bar, and taking the quiz. Just be sure to select UTPA as the team you’re completing the quiz for, as the number of quizzes each team gets completed is one metric the judges will use to determine the winner of the competition. Finally, the UTPA Up to Us team has also created a short film about the underlying issues behind the national debt. To see their finished product, which is more imaginative than you might think (it involves aliens and oranges), simply go to YouTube and type “UTPA Up to Us” into the search bar. You’ll also be helping the team out by doing this, as the number of unique views they receive on YouTube during the competition period is another piece of evidence they can use to demonstrate that their campaign has had an effect.

The YouTube video, “Grey”: http://www.youtube.com/watch?v=Yps8EoyfAhU

The link for the Facebook quiz is: https://www.facebook.com/itsuptous.org/app_1411778269049309 for computer access, or http://fbapp.itsuptous.org/fanpage/?mobile=1 for mobile devices.

Dr. James Boudreau is an Assistant Professor of Economics and faculty advisor for the University of Texas-Pan American Up to Us team.

2013 GDP (what we are worth)

$17.1 trillion

Debt/GDP (how bad)

101 %

Border Business Briefs | February 2014

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