MEXICO: POPULATION AND EMIGRATION PRESSURES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP89T00294R000300310003-2
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 23
• Document Creation Date: December 22, 2016
• Document Release Date: November 9, 2011
• Sequence Number: 3
• Publication Date: July 1, 1987
• Content Type: REPORT

Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
E.~E*f Directorate of
Intelligence
L77-V, "I
Mexico: Population and
Emigration Pressures
Copy 3 8 6
ALA 87-1003/
July 1987
Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
 25X1
Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
 Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
Directorate of Confidential
Intelligence
Emigration Pressures
Mexico: Population and
Division
Office of African and Latin American Analysis, with
a contribution b LA.
Comments and queries are welcome and may be
directed to the Chief, Middle America-Caribbean
This paper was prepared byl
Confidential
ALA 87-10031
July 1987
Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
 Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
Confidential
Summary
Information available
as of 30 April 1987
was used in this report.
Emigration Pressures
Mexico: Population and
bounds.
Mexican demographic trends portend growing domestic economic and
social strains as well as continuing problems of illegal emigration to the
United States. Although Mexico has made significant progress toward
reducing its rate of population growth over the past 20 years, an earlier
baby boom will cause Mexico's population to expand at a comparatively
fast pace through the end of the century. This continuous high growth of
the labor force will have major implications for the United States, with
hundreds of thousands of Mexicans seeing the United States as a land of
opportunity and attempting to cross the border illegally. In addition, some
friction with the Mexican Government is likely over implementation of the
new US immigration laws, although this should remain within manageable
2000-could easily become the largest city in the world.
By the year 2000, Mexico will have drastically cut its population growth
rate to less than half of the 4 percent per year that it reached in the 1960s.
Implementation of family planning programs, advances in female educa-
tion, declining infant mortality, and greater female participation in the
labor force will help lower birthrates. Nevertheless, at the turn of the
century, Mexico's population growth rate will far exceed that of industrial-
ized countries and the number of people within its borders will have grown
by 50 percent in only 20 years. In addition, Mexico City-which at present
trends will have a population of some 26 million inhabitants by the year
Shifting patterns of demographic growth and migration will present the
Mexican Government with a number of formidable challenges in the years
to come. These include:
? Job creation. Unemployment is likely to be the most serious and
intractable problem as the baby boom of the 1960s and early 1970s
reaches working age.
? Urbanization. The swelling number of migrants to urban centers and the
natural increase of the urban population will create demands for public
services that the government probably will not be able to meet.
? Education. Although the school-age population will shrink as a percent-
age of the total population, it will grow in absolute numbers, straining an
educational system already hard pressed to deliver on the skills training
Mexican workers need.
? Agricultural production and employment. Mexico's inefficient agricul-
tural sector probably will not be able to satisfy growing demand for
staple foods or provide sufficient job opportunities for surplus
farmworkers.
Confidential
ALA 87-10031
July 1987
Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
 Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
Confidential
? Regional imbalances. A steady influx of migrants from poor, agricultural
states into the most urbanized and commercially developed states will
add to existing regional imbalances and further centralize Mexico's
population.
From a political perspective, these population pressures are likely to pose
additional problems for the ruling Institutional Revolutionary Party (PRI).
Unemployment almost certainly will become a major political issue as the
ranks of the jobless grow, probably creating friction between the govern-
ment and Mexico's co-opted labor unions. Deteriorating public services in
urban areas may heighten the middle-class perception of the government as
a corrupt and inefficient bureaucracy. Protest votes for the National
Action Party, the leading opposition party, may grow particularly in the
more affluent northern states, which resent being taxed to support other re-
gions.
On the international front, friction over illegal immigration into the United
States probably will intensify. Mexican officials are concerned that the
new US immigration law will lead to the sudden return of thousands of ille-
gal workers, creating problems in relocating and employing workers.
Although the government has taken no official stance on the US law, it has
allowed hearings in the Mexican Senate and sponsored academic confer-
ences that focus on alleged US maltreatment of Mexican workers. We
expect the pressures for Mexicans to emigrate to the United States will
continue at high levels, despite US efforts to stem the tide. A rapidly
increasing male working-age population and slimmer chances of finding a
job probably will spur more Mexicans to emigrate. We believe the trend to-
ward more family groups emigrating to the United States will further swell
the number of illegal immigrants seeking a better standard of living across
the border. Higher wages and an increasing demand for farm labor in the
United States will continue to be the chief drawing cards.
Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
 Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
Confidential
The Demographic Trends
Falling Fertility But Continued High Birthrates
Declining Mortality
Fewer Youth But a Growing Labor Force
A High Pace of Urbanization
The Long-Term Outlook and Domestic Fallout
Inadequate Agricultural Production and Employment
Regional Imbalances and Migration Patterns
Implications for the Ruling Party
2
3
4
7
Demographic Methodology 15
Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
 Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
Confidential
Figure 1
400 Kilometers
40 Miles
Wilted States
Coahuila
L Nuevo
'aLe6n
Durango ~..~
2acatecas/ l Vamaul
) t
~1Ae. x i c o
I
San Luis
yarn T Potosi
Jalisco ~~`2rr/?=3 j if
uadalajara 4
.% A
1. Aguascalientes
2. Guanajuato
3. Queretaro
4. Hidalgo
acruz Bahl. do
Campeche
5. Tlaxcala
6. Mexico
7. Distrito Federal
8. Morelos
rGuatemat*-.
Boundary representation is
not necessarily aumoruauva.
Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
 Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
Mexico: Population and
Emigration Pressures
Table 1
Comparative Population Growth Projections,
Selected Countries
Mexico will experience a tremendous increase in
population-in absolute terms-over the rest of this
century, reflecting past high rates of growth. This will
be true despite Mexico's declining rate of population
growth, which fell from nearly 4 percent in the 1960s
to just over 2 percent in 1986. Indeed, a recent US
Census Bureau projection estimates that the country's
population growth rate will slow even further, dipping
below 2 percent by the year 2000. Even with a
reduction in the birthrates, however, Mexico's popula-
tion will continue to grow at a rate far above the 0.5
percent projected for industrialized countries from
1980 to 2000 (see table 1). As a result, by the year
2000, Mexico will have nearly 104 million people
within its borders-compared to 268 million projected
for the United States-a 50-percent increase over
1980 figures (see figure 2).'
This paper looks beyond the statistics to examine the
major demographic trends sweeping Mexico through
the year 2000. It also analyzes the long-term outlook
and domestic fallout of these trends. The paper
concludes with an assessment of the impact on the
United States of population developments in Mexico,
including a discussion of the potential for increased
friction between the two countries over illegal
immigration.
' Demographic estimates and projections made under contract by
the US Census Bureau provided the basis for much of the statistical
analysis in this paper. The Census Bureau drew on Mexican census
and survey data, making adjustments for possible misreporting in
all age groups. In addition, the Census Bureau estimated Mexican
emigration from a combination of Mexican and US census data,
surveys, and refugee statistics. Looking at the overall population
picture, the possible outcome in the year 2000 ranges from 100
million to 117 million. The lower estimate assumes a faster drop in
the fertility rate than we think is likely while the upper range
Average Annual Population
Growth Rates, 1980-2000
Total
Labor force
2.0
3.1
3.0
3.4
2.9
3.7
2.7
3.4
2.6
3.4
2.5
2.9
2.3
3.0
Paraguay
2.3
3.0
Peru
2.2
2.9
Brazil
2.0
2.3
Colombia
1.8
2.5
Chile
1.4
2.1
Argentina
1.3
1.5
Uruguay
0.7-
0.9
Upper- midd le-income LDCs
1.9
2.2
Industrialized countries
0.5
0.7
Like other Third World countries, Mexico is experi-
encing demographic shifts that will have a varied
effect on the rate of growth of different age groups
and will increase urbanization pressures. To under-
stand these potential pressures, it is important to
analyze the factors that underlie Mexico's population
growth and examine trends that will boost the size of
its cities
Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
 Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
Figure 2
Mexico: Population Projections
1
25 1960 70 80 90 2000
Falling Fertility But Continued High Birthrates
Fertility rate trends are a key component in under-
standing Mexican demographic patterns. The number
of children the average Mexican woman will have-
the total fertility rate-will continue to decline
through the year 2000, according to US Census
Bureau estimates (see inset, "Glossary of Terms").
The US Census Bureau estimates that the fertility
rate, after falling by 33 percent during 1960-80, will
decline another 45 percent by 2000 (see figure 3). In
our opinion, this development is largely the result of
two factors:
? The government has made a concerted effort to
widen the use of contraceptives (see inset, "The
Shift to Family Planning").
? Female literacy has risen 12 percentage points to 81
percent in 1980 and secondary school enrollments
have increased markedly. According to Mexican
census data, women with no schooling have more
than twice as many children on the average as
Figure 3
Mexico: Comparative Total Fertility Rates
- High
variant
Baseline
projection
Low
variant
Mexico
__ ----Industrial
countries'
0 1960 65 70 75 80 85 90 95 2000
a A weighted average of 19 industrial countries.
Sources: US Bureau of the Census, World Bank.
women who finish primary school, and have more
than three times as many children as women who
complete secondary school.
home are important factors.
Improved chances of survival during the first year of
life also will help lower the number of children each
woman will bear in order to attain a desired family
level. Moreover, a higher average age at marriage and
lower cultural barriers to female jobs outside the
These trends notwithstanding, the crude birthrate will
remain high (see figure 3). High fertility and falling
mortality through the early 1970s produced a large
number of women who are now entering their child-
bearing years. According to US Census Bureau data,
women aged 15 to 49 already represent one-fifth of
the total population and their share will grow to more
than one-fourth by the end of the century as the
Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
 Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
Confidential
Term Definition
Crude The number of births per thousand
birthrate of population. Measures the compo-
nents of population growth, but does
not indicate the number of children
each woman is likely to have.
Total fertility The total number of births a woman
rate would have ifshe lived to the end of
her childbearing years and irher
fertility in each of those years exact-
ly matched the current fertility of
women in her own and other age
groups. Defined as the sum of the
birthrates of women of different ages
at a given time.
Crude death The number of deaths per thousand
rate of population. Like the crude birth-
rate, does not measure the number
of deaths for each household.
Natural rate The difference between the crude
of increase birthrate and the crude death rate.
Labor force The part of the population between
the ages of 15 and 64 that is em-
ployed or actively seeking
employment.
growth of this age group outstrips the expansion of the
population as a whole. Overall birthrates thus will
remain high even though we expect each woman to
have fewer children.
Declining Mortality
A second key ingredient in understanding population
dynamics is trends in mortality rates. Improvements
in the mortality rate and life expectancy will be more
gradual than in past decades, allowing the overall rate
Term Definition
Labor force The labor force as a percentage of
participation the working-age population. Accord-
rate ing to World Bank data, slightly
more than ha f of all the men and
women of working age hold jobs or
are looking for jobs.
Primary- The population aged 5 to 14.
school-age
population
Secondary- The population aged 15 to 19.
school-age
population
Working-age The population aged 15 to 64.
population or
potential
workers
Prime The population aged 25 to 54.
working-age
population
of population growth to decelerate (see figure 4).
According to the US Census Bureau, the mortality
rate will drop by about 20 percent during 1980-2000,
compared with a 50-percent decline during the previ-
ous 20 years. The Census Bureau expects that at the
turn of the century the average Mexican will live to
the age of 73, a gain of six years compared with life
expectancy in 1980, and 16 years compared with
1960.
Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
 Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
Confidential
Growing doubts about the economy's ability to sup-
port a rapidly growing population prompted the Eche-
verria administration to launch an intensive. family
planning program in 1973. By the early 1970s, rising
demand for subsidized goods, food, and social ser-
vices were straining Mexico's budgetary resources
and helping to push the current account deeper into
the red. Shifting away from a longstanding policy of
encouraging large families, the government intro-
duced a constitutional amendment allowing the sale
of contraceptives and calling for publicly supported
family planning programs.
Mainly as a result of this governmental program,
fertility declined a dramatic 21 percent from 1975 to
1980. During this period, the government opened
several thousand rural health facilities, mounted an
advertising and educational campaign, goaded hospi-
tals and clinics to persuade clients to practice contra-
ception, and provided cheap contraceptives. Accord-
ing to official surveys, contraceptive use tripled in
just five years.
Difficulty and expense in treating the leading causes
of death will blunt future progress in reducing mortal-
ity rates and extending the average Mexican's life
span, in our view. Vaccinations and better access to
sanitation and safe water supplies in the last two
decades-particularly in rural areas-slashed the
number of deaths due to diarrhea and infectious
diseases. These improvements sharply reduced infant
mortality and the crude death rate and lengthened life
expectancy at birth. According to Mexican statistics,
cardiovascular diseases have now replaced parasitic
and infectious diseases as the primary cause of death.
Fewer Youth But a Growing Labor Force
The interaction of changing fertility and mortality
rate trends will generate a rather dramatic shift in
Mexico's age structure by the year 2000. The swing to
smaller families will cause the growth of the primary
Figure 4
Mexico: Birth, Death, and Natural
Increase Rates
school age population to taper off to an average
annual rate of 0.5 percent during 1981-2000, accord-
ing to US Census Bureau estimates (see figure 5). This
figure compares with 3.5 percent during the previous
20 years. As a result, we calculate that, by 2000, the
share of the population made up of children under 15
years of age will shrink 12 percentage points-from
about 44 percent to 32 percent (see figure 6). This
level will still be above that of industrialized coun-
tries, where children represent only about 25 percent
of the population.
A follow-on decline in the percentage of secondary
school students, however, will not occur until well into
the next decade, according to Census Bureau projec-
tions (see figure 5). During the remainder of this
decade, the lagged effect of lower fertility rates will
be evident in this age group, resulting in the propor-
tion of persons between the ages of 15 and 24
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
 Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
Confidential
Figure 5
Mexico: School Age and Working Age
Populations
remaining roughly 20 percent of the population (see
figure 6). Even with the substantial decrease in
growth, Mexico will not experience a decline in the
number of school-age youths, as has occurred in the
industrialized countries, until about 2020.
Similarly, the percentage of Mexicans in the labor
pool will continue to swell. According to Census
Bureau estimates, the working-age population will
continue to expand at an average annual rate of
approximately 3 percent during 1981-2000 (see figure
5). The growth in the rolls of the working-age group
(15 to 64) will be fed largely by the maturing of
Mexico's well-documented "youth bulge" from the
1960s.2 Reflecting this surge, the share of those in the
prime working-age group (25 to 54) will grow by 10
percentage points-from 28 percent to nearly 38
percent (see figure 6). Overall, the ratio of potential
workers to dependents under age 15 will improve from
about 1:1 in 1980 to 2:1 in the year 2000.
The "youth bulge" will not be the only factor prompt-
ing labor force growth, however. Female participation
in the workplace is projected by the World Bank to
continue to rise. The move toward smaller families
will enable women to keep jobs longer and to enter the
work force earlier. Moreover, while increased school
enrollments will keep younger workers (15 to 24) out
of the labor force longer, Census Bureau data indi-
cates rising life expectancy will help increase the
number of older workers.
Assuming, as Mexican officials do, that these factors
exactly offset one another, the average number of new
jobseekers each year will rise from 800,000 during the
1980s to 1.1 million during the 1990s. Even under this
estimate, Mexico's labor force will grow by one of the
most rapid rates in Latin America and more than four
times faster than the average for industrial countries,
nearly doubling by the end of the century (see table I
and figure 7).
A High Pace of Urbanization
Another impact of these population trends will be that
a steady stream of rural migrants and the natural
increase of the urban population will sharply boost the
number of urban dwellers. Census Bureau estimates
suggest that, by the end of the century, approximately
three out of four Mexicans will reside in urban
centers, compared with two out of three in 1980 (see
figure 8). On the basis of past trends, rural migrants
probably will head to the three largest industrial and
service centers-Mexico City, Guadalajara, and 25X1
Monterrey-and to cities along the US border, lured
mainly by job openings in assembly plants and hopes
of crossing into the United States. Largely because of
the influx of migrants, Mexico City is expected to add
600,000 people to its population each year and nearly
double in size to 25.8 million in 2000. If this growth
occurs, Mexico City will become the largest city in
the world.
The results of efforts to promote a more balanced
growth of cities and regions are likely to be no better
than mixed. Attempts to create alternative industrial
25X1
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
 Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
Confidential
Figure 6
Mexico: Age Distributions
80+
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
0-4
I I' I _I I I I I I I I
6 5 4 3 2 1 0 1 2 3 4 5 6
Millions
Total population: 37.1 million
80f
75-79
7(1-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
I5-19
I0-14
5-9
0-4
3 2 1 0 1 2 3 4
Millions
80 t
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
0-4
I-__1_ L_I I.. -1
6 5 4 3 2 1 0 1 2
Millions
Youths, 15-24
20.0%
0-14
32.1%
0-14
44.4'7,
0-14
44.5%,
Prime working
age, 25-54
37.8"/
Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
 Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
Confidential
Figure 7
Mexico: Comparative Labor Force Projections
United
States
United
States
Sources: US Bureau of the Census, US Bureau
of Labor Statistics, CIA estimates.
Mexico
I I I __ L
0 1960 70 80 90 2000
centers began during the 1970s oil boom, but, even
when Mexico had resources, the record shows decen-
tralization programs were not very successful. Tax
incentives to encourage industries to open in other
areas are still too small to weigh much in decisions on
plant location, according to the World Bank. More-
over, because tax breaks are available for both
wealthy and poor regions, firms usually opt for the
higher income zones. Insufficient plant and equip-
ment, accompanied by a general deterioration in the
country's infrastructure, are also holding back devel-
opment of industrial parks and complexes, especially
in areas away from established commercial centers.
Mexico's highly
centralized government decisionmaking is an addi-
tional factor discouraging firms from locating outside
the capital.'
' The one exception is the maquila program, initiated in 1966,
which allows foreign firms to set up wholly owned subsidiaries for
assembling export products and has fostered the growth of cities
The Long-Term Outlook and Domestic Fallout
The absolute growth in Mexico's population and the
nature of demographic trends sweeping the country
will place growing strains on the political system and
on an economy already suffering from insufficient
resources. Mexican policymakers will face formidable
challenges on a number of fronts. In our judgment,
the most pressing problems will stem from demands
for jobs, social services, food, and land, and from
regional imbalances in these sectors.
Labor Market Pressures
On the basis of US Census Bureau estimates and our
own econometric forecast,' we calculate that rising
unemployment clearly will pose serious and growing
' Our analysis of the impact of economic factors on unemployment
is based in part on the results of an econometric model. While we
recognize that no model can gauge with precision the exact effects
variables will have, we nevertheless are confident that the results
provide a good measure of the orders of magnitude involved.
Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
 Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
Confidential
Figure 8
Mexico: Comparative Urbanization Trends
Table 2
Mexico: Labor Force and
Employment Projections a
Employ-
ment
(million
Labor Force
(million persons)
Unemployment Rate
(percent)
Industrial
countries
persons)
A
B
C
A
B
C
1985
20.9
23.8
23.8
23.8
12.2
12.2
12.2
1986 b
19.9
24.7
24.7
24.7
19.4
19.4
19.4
1990
21.1
27.4
28.4
28.9
23.1
25.8
27.1
1995
23.0
31.4
32.5
33.2
26.6
29.1
30.6
2000
25.2
35.4
36.7
37.2
28.9
31.4
32.3
I I I I
50 1960 70 80 90 2000
a A weighted average of 19 industrial countries.
Sources: US Bureau of the Census, United Nations.
problems for Mexican policymakers during the com-
ing years. We see little prospect that real economic
growth during the next decade will achieve the 6- to
7-percent annual rate that private-sector forecasters
calculate is required to provide jobs for new entrants
to the labor market. We project that Mexico's econo-
my will emerge from the steep recession that occurred
in 1986 because of the expected spending surge
leading up to the 1988 presidential election. Beyond
that point we suspect that Mexico could reasonably
expect to continue expanding at about a 3-percent
pace. At this rate of growth, our model projects that,
on average, 400,000 jobs will be created each year
during the period 1988-2000. If participation rates
remain at current levels, this will produce a 3-
percentage-point increase in unemployment-to 26
percent-during 1988-90. We estimate that jobless-
ness will rise nearly 6 more percentage points by the
end of the century (see table 2).
a Alternative A assumes a falling participation rate, B assumes a
constant participation rate, and C assumes a rising participation
rate.
b Mexico City has not issued an estimate of end-of-year unemploy-
ment since mid-1986, when it reckoned that the jobless rate would
reach 17.8 percent. A simulation of an econometric model indicated
the recession may have driven unemployment up even higher.
Sources: Official Mexican estimates for 1985 and CIA estimates
for 1986-2000.
The sensitivity of these estimates to assumptions
about labor force participation, emigration rates, and
real GDP growth varies. We calculate that an alter-
native participation or emigration rate probably
would not cause much more than a 2.5-percentage-
point deviation from this baseline estimate. A differ-
ent economic performance during the next decade,
however, could have a larger effect on unemployment.
If lower oil prices or a new round of stop-and-go
economic policies limited real GDP growth to only 2
percent each year on average during the 1990s, our
projections indicate the unemployment rate would rise
4 percentage points over our 31-percent baseline
estimate for the year 2000. On the other hand, if
higher oil prices raised the average annual rate of
economic growth to 4 percent, the jobless rate would
be about 4 percentage points less at the end of the
century.
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
 Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
Confidential
Mexico has traditionally attempted to deal with un-
employment through the use of fiscal policy tools, but,
in our view, these tools may not be as effective in the
future. For one thing, Mexico's current and growing
unemployment problems are largely the outcome of
past economic mismanagement and underlying struc-
tural deficiencies and probably will not respond to the
degree of stimulus that Mexico City will be able to
afford. For example, econometric simulations indicate
that a 1-percentage-point increase in real government
investment would only result in a 0.2-percentage-point
increase in real economic growth. This would, in turn,
generate a mere 0.1-percentage-point decrease in the
unemployment rate. We believe Mexico's massive
debt and difficulties in borrowing abroad to finance
public spending will preclude the huge increases in
government consumption and investment that under-
pinned real economic growth and rapid employment
in the 1970s.
The slow process of correcting structural problems
also dims long-term employment prospects.
Mexico City's import sub-
stitution policy encourages capital-intensive indus-
tries, stifles labor-intensive export industries, and
chokes off the growth of the agricultural sector. In our
view, even though Mexico has joined the GATT,
taken steps to loosen import controls, and lowered
tariffs, these imbalances will remain for some time to
come. World Bank data indicate that at the end of
last year more than half of domestic production was
still fettered by quantitative restrictions on imports,
and the average tariff was more than 20 percent. The
Bank argues that Mexico must go even further to
open the economy in order to revive productivity and
boost industrial and agricultural employment growth.
Those policy changes made to date have met with
much domestic criticism, however, and we do not
expect major progress in the near term.
Insufficient Social Services
In our opinion, the rapid pace of population increase
and urbanization is likely to create dramatic shortfalls
in basic social services such as housing-particularly
for lower income groups. Mexican officials put the
1980 housing deficit at 4.5 million units. They have
estimated that 11 million units must be added to the
existing housing stock of 12 million by the end of the
century. Even with increased government spending,
however, we do not believe average annual construc-
tion would outpace the 400,000 average output during
the 1970s construction boom. Moreover, even during
that period, up to 65 percent of new housing-much
of it substandard-was erected by the inhabitants
themselves or by illegal builders.
Mexico also is likely to fall behind the demand for
water systems in urban areas. In 1980, 61 percent of
urban dwellers had safe drinking water, down from 68
percent a decade earlier, according to the World
Bank. Only about half of urban residents had access
to sewage disposal systems, compared with 60 percent
10 years earlier. In addition to resource constraints,
distance to water supplies and the expense of extend-
ing pipes to squatter settlements in unsuitable geo-
graphic areas will limit the government's ability to
correct this problem.
Even in rural areas, where water systems have im-
proved substantially, Mexico clearly has a long way to
go to correct existing deficiencies. According to the
World Bank, one out of every two rural residents had
access to safe drinking water in 1980, up from one out
of five a decade earlier. A little more than 10 percent
of rural dwellers were connected to a sewage disposal
system in 1980.
In both urban and rural areas, inadequate water
systems and waste treatment will have negative impli-
cations for health and irrigation of farmland. The
World Bank reports that untreated domestic and
industrial waste-some of it toxic-is routinely emp-
tied into sewers, water bodies, and open areas, and we
see no sign of a major change in these practices. With
most infant deaths resulting from diarrhea, we believe
that contaminated water will be the leading factor
keeping the rural infant mortality rate almost 50
percent higher than in urban areas. Because decayed
human waste is also carried through the air, we expect
respiratory diseases will become even more wide-
spread. Pollution of scarce water resources may hold
back development of and agricultural fields, particu-
larly in the area outside Mexico City that uses
municipal waste water for irrigation.
25X1
25X1
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
 Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
Confidential
According to the US Embassy, urban congestion has
already led to unhealthy levels of air pollution, and, in
the absence of corrective government policies, we
believe the situation can only deteriorate. Population
pressures and the concentration of more than one-half
of the country's industry in Mexico City probably will
exacerbate levels of air pollutants that in 1980 were
up to 600 percent higher than standards set by the
World Health Organization. We doubt that the gov-
ernment will limit the use of private vehicles, the
major source of carbon monoxide and hydrocarbon
emissions. To make matters worse, government efforts
to reduce the amount of lead in gasoline by replacing
lead with other additives has simply increased ozone
levels, which are consistently reaching harmful levels
in Mexico City. Even if the government did have the
necessary political mettle, it would need to reallocate
limited budgetary resources to expand and properly
maintain its overcrowded bus system, which is itself
another prime contributor to air pollution because of
the high sulfur content of diesel fuel.
Despite the expected slowdown in the growth of
Mexico's school-age population, the already-strained
education system is likely to be overwhelmed.
Through the end of the century, we estimate Mexico
will need to provide facilities for close to 120,000 new
primary and secondary school students each year if
current enrollment rates remain constant. Just to hold
real expenditures per student constant at the present
low level, the government would have to boost real
spending on education-which currently takes 5 per-
cent of the budget-by 3 percent annually. The
enrollment of 45,000 additional university students
each year will pose an additional strain because of
heavy subsidization of public universities and over-
crowded conditions at state colleges. Even now, ac-
cording to Embassy reporting, 91 percent of the
students at Mexico's largest university never obtain a
degree, and the education they receive often is unsuit-
ed to available jobs. These problems will only increase
as enrollments rise.
Strains on the education system will have a number of
important economic implications. The creation of a
more skilled labor force, in our opinion, will require a
longer term commitment to opening new vocational
schools, improving the quality of training in secondary
schools and universities, and raising the enrollment
rate at the secondary level above current levels.
Budgetary constraints, cuts in real expenditures on
education in the 1980s, and pressures on the job front
make us skeptical that Mexico City is willing to give
education a higher priority. Mexico's consequent in-
ability to ease shortages of skilled workers and techni-
cians will hold labor productivity down, hobble the
development of nontraditional exports, and limit the
extension of health services and telecommunications.
Inadequate Agricultural Production and Employment
Mexico's inefficient agricultural sector probably will
not be able to satisfy the food demands of its growing
population or provide sufficient jobs to soak up in-
creasing numbers of surplus farmworkers. In spite of
the fact that farmworkers make up one-fourth of the
labor force, the agricultural sector accounts for only
9 percent of GDP and production of such basic foods
as beans, corn, rice, and wheat have grown more
slowly than consumption. According to World Bank
data, imports of these major crops represented a
negligible percentage of domestic consumption in the
1960s. By 1980, however, they accounted for up to
one-third of Mexico's food needs.
In our view, politically sensitive government policies
are primary reasons why Mexico probably will not be
able to reverse its agricultural deficiencies. For exam-
ple, World Bank reports indicate that, under Mexican
law, ranchers risk having their holdings expropriated
if they own more land than the legal maximum-
defined as the area needed for 500 animals-or if they
raise crops. These regulations effectively curtail the
expansion of both production and employment be-
cause they do not permit large enough land holdings
or a more efficient system combining livestock and
crop production, according to the Bank. In our judg-
ment, quirks in land ownership policies almost cer-
tainly will perpetuate land invasions, falling invest-
ment, and underutilization of arable land.
Furthermore, Mexico's scope for expanding agricul-
tural production- even with the implementation of
more appropriate policies-is narrowing. Politically
Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
 Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
Confidential
Figure 9
Mexico: Population Distribution by Region
West
18.1
West
16.9
expedient, large-scale irrigation projects were highly
successful in spurring agricultural growth in the
1960s. However,
Mexico City is reaching the limit of possible irrigated,
arable land. Moreover, increments in existing large
irrigation schemes will bring smaller increases in
production.
A growing rural population probably will aggravate
existing land shortages and drive more workers to
seek off-farm employment. Land distributed to peas-
ants is likely to consist increasingly of woods and
pastures unfit for farming, according to Embassy
reporting. Consequently, even fewer peasants would
be able to survive from their farm income alone. In
our view, low agricultural productivity probably will
increase the pressure for peasants to find other jobs by
holding farm labor demand below rural population
growth and widening the gap between farm and
manufacturing wages.
Regional Imbalances and Migration Patterns
Migration patterns are likely to aggravate existing
regional imbalances. According to Census Bureau
estimates, the states that will grow the fastest-
Quintana Roo, Baja California, Mexico State, Quere-
taro, Campeche, and Morelos-already are the most
urbanized and boast commercial, tourist, and oil
industries. The drawing power of Mexico State in
particular, which reflects the growth of cities near the
capital, is expected to further centralize Mexico's
population (see figure 9). Continuing an historic trend,
rural migrants will come primarily from poor, agricul-
tural states, led by Michoacan, Oaxaca, and Zacate-
cas
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
 Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89TOO294ROO0300310003-2
Confidential
Figure 10
Mexico's Population in the Year 2000
1. Baja California Sur
2. Colima
3. Quintana Roo
4. Tlaxcala
5. Campeche
6. Aguascalientes
7. Nayarit
8. Queretaro
9. Zacatecas
10. Tabasco
11. Durango
12. Morelos
13. Yucatan
14. Baja California Norte
15. Hidalgo
16. Sonora
17. Coahuila
18. San Luis Potosi
19. Chihuahua
20. Tamaulipas
21. Oaxaca
22. Chiapas
23. Guerrero
24. Sinaloa
25. Nuevo Leon
26. Michoacan
27. Guanajuato
28. Puebla
29. Jalisco
30. Veracruz
31. Distrito Federal
32. Mexico
Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89TOO294ROO0300310003-2
 Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89TOO294ROO0300310003-2
Confidential
It is too early to assess the effect of the new US
immigration law on net Mexican emigration. Accord-
ing to the US Embassy, the Mexicans are afraid of a
return of several hundred thousand illegal immigrants
from the United States. If such a worst case scenar-
io-from the Mexican perspective-were to come
true, the northern states probably would feel the
pressures first and would be hard pressed to accom-
modate a sudden influx of returnees. The maquila
industry, with a total of 250,000 employees, is too
small to absorb currently laid-off workers in heavy
industries in the north and clearly could not soak up
thousands of surplus workers-most of whom are
unskilled farm laborers. Consequently, we expect that
some displaced workers would migrate to other Mexi-
can cities in search of jobs. A recent Mexican Govern-
ment study also foresees some problems in relocating
returning migrants away from border cities and find-
ing housing and jobs for them, but it concludes-and
we agree-that these problems will be short term.
Census Bureau estimates show that significant
changes in the pace of emigration have only a margin-
al impact on the size of the domestic Mexican labor
force. For example, if tougher US laws on hiring
illegal immigrants gradually cut the number of emi-
grants by the year 2000 to one-half of the 1980 figure,
the working-age population would grow by less than 1
percent over the baseline estimate.' Should some
economic disaster in Mexico cause emigration to
double by the year 2000, the working-age population
would shrink by only 2 percent (See appendix).
Implications for the Ruling Party
Urban and regional population pressures and the
fallout from increasing unemployment will almost
certainly pose important challenges for the ruling
Institutional Revolutionary Party (PRI). According to
the US Embassy, taxes on the more prosperous
northern states to sustain the growing central region
are already resented. In the past, Mexico City has
received more than 55 percent of all government
allocations for social improvements-a per capita
'On the basis of US and Mexican census data and a 1983 US
survey, the Census Bureau estimates that nearly 200,000 Mexicans
emigrated to the United States on average each year during
share four times higher than the national average.
Increasing taxes in the north for needed infrastruc-
tural improvements in Mexico City and the south
might generate even more protest votes and more
support for the leading opposition party, the National
Action Party. The opposition may also gain some
backing from urban dwellers in the major cities.
Deteriorating public services could further alienate
the middle class and heighten the PRI's image as
inefficient and corrupt.
Mounting unemployment and falling real wages could
intensify friction between labor-one of the pillars of
the ruling party-and the government in the next
decade, in our view. Mexico City may not be able to
count on the cooperation of the country's largest trade
union, the Confederation of Mexican Workers, after
the death of labor czar Don Fidel Velazquez, who is
86 years old. According to the US Embassy, Don
Fidel's heir apparent holds the same conservative and
progovernment views, but he lacks the current labor
leader's magnetism and may not be able to keep union
members in line. Even now, wildcat strikes suggest
that some cracks are appearing in labor unity. At the
same time, minority leftist and Communist unions
may press hard for concessions on wages and jobs.
Discontent over income distribution-already among
the most unequal in Latin America, according to the
World Bank-could grow as young, unskilled workers
enter the labor force and depress real wages even
further.
A high and sustained rate of unemployment also
carries the risk that part of a generation will be left
out of the job market and become politically es-
tranged. Most of the new entrants on the labor market
will be young adults seeking their first job. Young
people who are unable to find jobs are less likely to
develop links to the PRI. This group also is likely to
boost the size of the underground economy that
operates outside government controls. In addition,
unemployed youths will provide a larger pool of
manpower for illegal activities, such as drug cultiva-
tion and trade.
Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89TOO294ROO0300310003-2
 Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
Confidential
The new US immigration legislation may create
some-in our view, manageable and short run-
friction in bilateral relations, largely because emigra-
tion to the United States provides a key political
safety valve. The de la Madrid government so far has
refrained from taking an official position on the US
law, but it has publicized its efforts to prepare
reception areas in the border states for the possible
sudden return of thousands of emigrants. In addition,
hearings in the Mexican Senate, government-
sponsored academic research and conferences, and the
PRI's own study on migration have focused attention
on the law.
tinuing promise of substantially higher wages.
Over the long term, however, we agree with Mexican
and US observers' views that the US legislation will
not itself be sufficient to turn around the rising tide of
illegal immigrants from Mexico. Given a rapidly
increasing male working-age population, the poor
outlook for agricultural employment, and that the
majority of illegal immigrants are male farmworkers
who stand a slim chance of finding a job in urban
Mexico, the pace of emigration is not likely to slow.
Job shortages, shrinking real wages, and poor public
services are likely to cause the number of illegal semi-
skilled immigrants to pick up as well. We believe that
a trend observed by the Immigration and Naturaliza-
tion Service toward emigration of workers accompa-
nied by their families is likely to persist and that it
will further swell the number of illegal migrants.
These workers will be drawn by a US labor market
that will continue to create employment opportunities
because of the gradual aging of the US population,
the growing demand for cheap farm labor, and con-
Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
 Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
Confidential
Appendix
Demographic Methodology
The US Census Bureau prepared three alternative
projections of Mexican population growth during
1980-2000, shown in table A-1. The baseline scenario
assumes that net annual international emigration-
the difference between the number of people leaving
and those entering Mexico, including foreigners-
during 1980-85 remains constant through the end of
the century. The Census Bureau estimated the net
annual flow of Mexicans-including illegal immi-
grants-to the United States at 197,230 on the basis
of refugee statistics, data on the foreign-born popula-
tion by period of entry from the 1980 Mexican and
US population censuses, and a 1983 US survey. This
figure takes only permanent migrants into account,
not temporary migrants, who may number 400,000
during peak seasons according to a Mexican house-
Table A-1
Mexico: Alternative Projections of
Population Growth, 1980-2000
hold survey.
Two alternative scenarios analyze the impact of shifts
in Mexican emigration. The first takes into account a
possible slowdown in emigration caused by tighter US
immigration regulations and assumes that net inter-
national emigration declines by one-half by the year
2000. The "worse case" alternative-from the US
perspective-assumes that net international emigra-
tion doubles by 2000-an outcome that we believe
probably would only be provoked by a catastrophe in
Mexico
1980
1990
2000
Rural population
24.3
25.9
27.2
Ages 15 to 64
11.2
13.1
14.2
Urban population
45.8
60.9
76.4
Ages 15 to 64
24.9
37.6
50.9
Total population
70.1
86.8
103.6
Ages 15 to 64
36.1
50.7
65.1
24.3
26.0
27.5
25X1
Ages 15 to 64
11.2
13.1
14.4
Urban population
45.8
60.9
76.9
Ages 15 to 64
24.9
37.7
51.3
Total population
70.1
86.9
104.4
Ages 15 to 64
36.1
50.8
65.7
Faster Migration
Rural population
24.3
25.9
26.7
Ages 15 to 64
11.2
13.0
13.9
Urban population
45.8
60.7
75.2
Ages 15 to 64
24.9
37.6
50.1
Total population
70.1
86.6
101.9
Ages 15 to 64
36.1
50.6
64.0
Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
 Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2
Confidential
Confidential
Declassified in Part - Sanitized Copy Approved for Release 2011/11/09: CIA-RDP89T00294R000300310003-2