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DIRECTOR/Editor-in-Chief Salvador Contreras, Ph.D. EDITORIAL BOARD Pablo Camacho, Ph.D. Texas A&M International University Salvador Contreras, Ph.D. The University of Texas-Pan American Alberto Davila, Ph.D. The University of Texas-Pan American Tom Fullerton, Ph.D. The University of Texas at El Paso Gautam Hazarika, Ph.D. The University of Texas at Brownsville
Jim Lee, Ph.D. Texas A&M University-Corpus Christi ADVISORY BOARD Eduardo Caso Lone Star National Bank Raudel Garza Harlingen EDC Maria Mann SCIC-Women’s Business Center Alex Meade Mission EDC Rebecca M. Olaguibel City of McAllen Cynthia M. Sakulenzki RGV Hispanic Chamber of Commerce Fred Sandoval City of Pharr Joey Treviùo Weslaco EDC
CENTER FOR
BORDER
ECONOMICS STUDIES
COLLEGE OF BUSINESS ADMINISTRATION The Center for Border Economic Studies (CBEST) is a public policy research unit of the College of Business Administration at The University of Texas-Pan American. CBEST is dedicated to the study of problems and issues unique to the U.S. and Mexico border economy. CBEST conducts interdisciplinary research that supports economic development, trade, entrepreneurship, innovation, social mobility, and access. Among its technical reports, the Center publishes the Border Business Briefs (BBB), a quarterly publication, and the Business Outlook Forecast, an annual publication. CBEST has strategic partnerships with private sectors, foundations, government agencies, research scholars, and nonprofits to fulfill its mission. CBEST focuses on research in the area of interdisciplinary policy, in support of sustainable economic development. We publish articles, monographs, books and reports that examine economic, social and political issues in the border region and make them available to policymakers, business leaders, government officials, academics, students, and the border community in order to foster informed decision making. In addition, CBEST provides contract services in policy research, survey design, data collection, data research analysis, data interpretation, presentations and reports. These services are performed for a fee. Please contact CBEST for additional information on the contract services we provide. 1201 W. University Drive, Edinburg, TX 78539 | cbest@utpa.edu | utpa.edu/cbest
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The work of the Center for Border Economic Studies is financed through contracts, grants, gifts and sponsorships. Your sponsorship plays an important role in the work we do. We accept gifts and sponsorships of any size. Currently, we have four explicit sponsorship levels:
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LETTER FROM THE EDITOR
Dear Reader, As 2014 drew to a close many raised questions about politics, economics, and business conditions heading into 2015. The start of 2015, saw reduced oil prices, dropping below the $50 mark; that same week the 114th Congress was sworn in. The political landscape in the United States experienced a change of power as the Republicans increased their hold in the House and took control of the Senate, all while Texas welcomed Greg Abbott as the state’s 48th governor. Even our neighbors next door, Mexico, started the year in turmoil with the disappearance of 43 students in the state of Guerrero as accusations of corruption reigned.
With all the year’s revelations, the Rio Grande Valley itself experienced a revamping of its political scene including a new sheriff in Hidalgo County, J.E. “Eddie” Guerra and a new Hidalgo County district attorney, Rick Rodriguez, who ousted Rene Guerra, a 32-year officeholder. In 2015, the Valley looks forward to major change in higher education with the start of The University of Texas Rio Grande Valley. The new University is anticipating some 30,000 students to be enrolled. But enrollment numbers aren’t the only excitement, so is the construction of the SpaceX launch facility in Cameron and the establishment of a new School of Medicine. Overseeing UTRGV and the rest of the universities in the University of Texas System will be newly appointed Chancellor Bill McRaven, a retired U.S. Navy admiral.
While UTRGV makes plans to grow so does the Valley around it, the Texas Department of Transportation and the Hidalgo County Regional Mobility Authority will likely begin construction of a proposed 90-mile loop roadway to expand the Valleys infrastructure. In total the changes, challenges and opportunities for the coming year are in great supply. My goal as editor is to disseminate timely, relevant and actionable information that adds to the discourse and entrepreneurship spirit of South Texas. I’d like to thank you for continuing to turn to the Border Business Briefs as a source for information on the social and business developments in South Texas. I hope this publication will continue to inform you on the economic, social, and business developments happening in area.
This publication and other work by CBEST are made possible by the generosity of volunteers and sponsors like you. We like to take a moment to thank the City of Pharr for their generosity. If you are not already a sponsor, please visit us online at utpa.edu/cbest and become a part of our volunteer family.
We hope you enjoy this issue. Feel free to send us your comments at cbest@utpa.edu. Best regards,
Dr. Salvador Contreras Editor-in-Chief 4
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Copy Editor Jannesa Campbell Creative and Design Studio Twelve01 Research and Special Projects Jose Clemente Abdelhamid Riani
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Entrepreneurship South Texas Economic Gauge
08 Branding Mexico Indonesia Nigeria Turkey: Emerging Economy 10 Commerce The Cost of Terror: Trade tribulations post 9/11 16 Economy Space X: TTTGetting a Cut: Local Municipalities See Upward Trend in Sales and Use Tax Revenues 20 Entrepreneurship Entrepreneurial Challenges among border cities 22 Cross-Border Shopping Behavior 24 Economy Where the jobs are in South Texas 28 Tourism Book it: Hotel Revenues are up at RGV cities 32
Valley Talent Elevating engineering research for knowledge’s sake B order B usiness B riefs | S pring 2015
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B order B usiness B riefs | UTPA. edu / cbest
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BRANDING
Mexico Indonesia Nigeria Turkey: Emerging Economy By Sharon Schembri
Today’s developed nations and advanced economies are becoming a shrinking part of the world economy. This shift has meant that undeveloped nations and emerging economies are now attracting a greater piece of the global economic trade and wealth. Global organizations and brands are therefore turning their attention to emerging economies.
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Branding is key and within that effort consistent branding is crucial. Jim O’Neill of Goldman Sachs is known for recognizing the emerging economics of Brazil, Russia, India, and China (BRICs) as a powerful economic force. These four large and fast growing countries are distinguished from other promising emerging markets with demographic and economic potential. BRICs comprise more than 2.8 billion people (a little over 40 percent global population) and contribute more than 25 percent of global Gross Domestic Product (GDP). As early as 2003, BRICs have been recognized as an economic force helping to shape world economic development. However, with the U.S. and Europe still facing the lasting effects of the 2008 recession BRICs’ potential has not been fully realized. The struggles by BRICs in realizing their full potential has shifted focus to the MINTs: Mexico, Indonesia, Nigeria, and Turkey. Demographic forecasts for MINTs are highly favorable in the next 20 years. Mexico for example has a strong manufacturing section that is estimated to add between $20 and $60 billion to Mexico’s economy through 2018. Mexico’s export market is driven from various industries such as Information Communications Technology as well as Research and Development. More surprisingly, China is expected to be Mexico’s second largest export market by 2030. With special interest in Mexico as a fast emerging economy, the U.S.-Mexico border region is strategically located to participate in this coming wave. Christopher Wilson and Erik Lee of the Wilson Center recently published a report in which they state that the U.S.-Mexico border region is poorly understood. The region faces great challenges but with even greater potential. As an area of joint economic production for both U.S. and Mexico, billions of dollars of goods pass through this strategically dense and vibrant corridor. Wilson and Lee estimate that approximately 6 million U.S. jobs are dependent on Mexican trade. Border security and organized crime compound the challenges involved. The rise in MINTs for border business owners
and operators offers exciting opportunities. The rise of the MINTs will attract global attention and local business owners and operators must be well positioned to face an onslaught of new market entrants. Yet, there is an observed low market orientation throughout the border region, which means local business owners and operators will not fare well when competing with big name brands arriving to cash in on the fast emerging U.S.Mexico border region economy. The goal therefore is preparation. Local business owners and operators are advised to invest in market research that generates business and branding strategies. Investing in research driven strategy will enable local businesses to improve and enhance their current market understanding and achieve a higher level of market orientation. Branding is key and within that effort consistent branding is crucial. More to the point, timing is of the essence! Dr. Sharon Schembri is an Assistant Professor of Marketing at The University of Texas-Pan American.
Endnotes: Bell, H. A. (2011). Status of the ‘BRICs’: an analysis of growth factors. International Research Journal of Finance and Economics, 69, 19-25. Broderick, Daniel (2014), “What’s driving Mexico’s growth?” ForbesBrandVoice: Forbes, accessed October 15, 2014 from http:// www.forbes.com/sites/hsbc/2014/07/22/whats-driving-mexicos-growth/ Durotoye, A. (2014). The MINT Countries as Emerging Economic Power Bloc: Prospects and Challenges. Developing Country Studies, 4(15), 99-106. Global Sherpa (2014). BRIC countries – background, latest news, statistics and original articles. Globalization, Sustainable Development and Social Impact in World Rankings, Countries and Cities. Accessed October 15, 2014 from http://www.globalsherpa.org/bric-countries-brics Hill, Patrice (2014), “Emerging economic powers to challenge U.S., IMF with own aid bank,” Business & Economy: The Washington Times, access October 15, 2014 from http://business.time.com/2014/01/10/ brics-in-trouble/ HSBC Bank (2014), “Mexico trade forecast report,” HSBC Global Connections, Accessed October 15, 2014 from https:// globalconnections.hsbc.com/us/en/tools-data/trade-forecasts/mx Shuman, Michael (2014), “The BRICs have hit a wall,” World Finance: Time, accessed October 15,2014 from http://business.time. com/2014/01/10/brics-in-trouble/ Wilson, Christopher E. and Lee, Erik (2013), “The state of the border report: A comprehensive analysis of the US-Mexico border,” Border Research Partnership, Wilson Institute: Washington, DC.
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COMMERCE
The cost of terror:
Trade tribulations post 9/11 By Adam G. Walke and Thomas M. Fullerton, Jr.
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Canada and Mexico are two of the three largest trading partners of the United States. According to the U.S. Census Bureau, in 2013 U.S. imports of goods from Mexico totaled more than $280 billion while imports from Canada surpassed $332 billion. While trade between the United States and its neighbors increased substantially in 1994 after the North American Free Trade Agreement, the pace of regional integration has slowed since the Sept. 11, 2001 terrorist attacks, says Mary R. Brooks of Dalhousie University. According to a New York Times article by Richard Oppel the intensified security screening at ports of entry in the aftermath of 9/11 resulted in delays for vehicles crossing international borders into the United States. The Australian Department of Foreign Affairs and Trade (DFAT), Joann Peterson and Alan Treat at the U.S. International Trade Commission wrote that the paperwork burdens also increased for importers and commercial insurance premiums may have risen due to perceived risk of terrorism. Jason Ackleson of New Mexico State calls the post-9/11 security measures a “thickening” of the nation’s borders. A number of studies have examined the impacts of tightened border security on trade relationships between the United States and Canada (see MacPherson et al., 2006; Vance, 2008; Nguyen and Wigle, 2009; Globerman and Storer, 2011). John Taylor, Douglas Robideaux (both at Grand Valley State University) and George Jackson (at Wayne State University) quantified various costs associated with shipping goods across the northern border and found that these were equivalent to 2.7 percent of the total 2001 value of U.S.-Canada merchandise trade. Similarly, Patrick Georges and Marcel Mérette (both at the University of Ottowa) in their 2012 paper found that the efficiency cost of the post9/11 security measures was equivalent to 0.8 percent of Canadian gross national product. A hypothetical policy of reducing the stringency of border security to pre-9/11 levels is estimated to increase Canada’s trade volume by 2.8 percent. On the other hand relatively few studies have examined the economic impacts of post-9/11 security measures on the southern border.
Tom Fullerton of The University of Texas at El Paso in his 2007 paper explained that the effects of border security on the economies of El Paso and Ciudad Juárez have intensified. Gustavo Del Castillo Vera at El Colegio de la Frontera Norte estimated that extended wait times for cargo trucks crossing the U.S.-Mexico border cost the economy of Mexico $7.5 billion per year. One factor relating to wait times is the ability of manufacturers operating in the region to ship their products across the border on a justin-time (JIT) basis (as suggested by John Sargent and Linda Matthews at The University of Texas-Pan American in their 2004 paper). Studies done on Canada by Anneliese Vance of the University at Buffalo, Georges and Mérette have pointed out that companies who rely on JIT inventory management practices are especially vulnerable to increased border wait times. Freight Transportation Costs The analysis of the rise of transportation cost takes into account the heightened border security after 9/11. For the sake of analysis then the impact on border freight transportation costs is examined. Transportation costs can be defined as the customs value of traded goods plus insurance and freight costs (the CIF value) minus the customs value alone (the Free on Board or FOB value). Following the 2011 work of Steven Globerman and Paul Storer (of Western Washington University), transportation costs Adam G. Walke is Associate are divided by the FOB Economist with the Border value to obtain the cost Regional Modeling Project at The ratio shown. University of Texas at El Paso Transportation Cost Ratio = ((CIF– FOB) / FOB) × 100
Dr. Thomas M. Fullerton, Jr. is Professor of Economics at The University of Texas at El Paso B order B usiness B riefs | S pring 2015
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The CIF and FOB values for this analysis represent United States imports from Mexico passing through the four border region districts: Laredo, El Paso, Nogales and San Diego. The data was retrieved in 2012 from the U.S. International Trade Commission (USITC). The behavior of the transportation cost ratio for these four customs districts from 1990 to 2011 is depicted in Figure 1. The graph shows that freight transportation costs followed a clear downward trend in the 1990s. This trend can be attributed to various factors including declining labor costs, deregulation of the trucking industry, and the adoption of technologies that reduce the amount of time trucks travel without a full load. For example Kenneth Boyer’s 1997 paper on deregulation and the flattening of trucking costs of distance. There is also evidence rail transportation may have also benefitted from productivity improvements over the course of the sample period, according to Siew Hoon Lim (of North Dakota State University) and C.A. Knox Lovell (U. of Georgia and U. of Queensland). After the turn of the millennium, the downward trajectory of the transportation cost ratio was arrested or at least temporarily, reversed (Figure 1). Steven Globerman and Paul Storer documented that the cost of freight transportation from Canada to the United States follows a similar pattern.
Increased inspection times at ports of entry and new paperwork requirements for importers are among the various factors that might have contributed to the flattening out of transportation costs beginning in 2001. However, due to the absence of complete time series data for border wait times or other measures of heightened border security, it is difficult to disentangle the effects of trans-boundary freight shipments from other factors that might cause transportation costs to rise. A flattening out of the CIF/FOB ratio could be expected to result from systematic adverse changes in national-level transportation operating costs. But the observed patterns of change in the major components of operating costs in the United States and Mexico do not provide consistent evidence in favor of this explanation. According to 2014 figures, the Bureau of Labor Statistics shows that productivity in the freight trucking and line-haul railroad industries continued to increase during the post-9/11 period and real unit labor costs continued to decline at a steady pace. Although the rate of increase in the price of diesel fuel accelerated in the United States after 2000, that was not generally the case for Mexico (for historical prices see Energy of Information Administration [EIA] 2012 and Instituto Nacional
Figure 1: Transportation Cost Ratio for Border Customs Districts 1.5
C I F / F O B R AT I O
1.4 1.3 1.2 1.1 1.0 0.9 0.8 0.7 90 12
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de Estadistica y Geografia [INEGI] 2012). We documented in our 2014 paper that changes in the composition of imports shipped from Mexico and the average shipping distance cannot explain the fluctuation of the CIF/FOB ratio either. While the available evidence is only suggestive, the flattening out of the transportation cost after 9/11 does not seem to be predetermined by systematic trends in the costs of transportation inputs, the nature of merchandise shipped or the distance travelled. It is therefore plausible that tighter border security after 9/11 contributed to the change in shipping costs shown in Figure 1. Impacts on Trade Figure 2 shows that the rate of growth in imports from Mexico through the border customs districts decelerated sharply beginning in 2001 showing a possible link to the 9/11 attacks. However this isn’t the only factor that could have contributed to the fluctuation in transportation costs. According to Kevin Gallagher (of Boston University), Juan Carlos Moreno-Brid (of U.N. Economic Commission for Latin America and the Caribbean) and Roberto Porzecanzki (of Tufts University) a number of factors could explain the reduced dynamism of Mexican exports. These explanations include real appreciation of the peso relative to the dollar, insufficient investment in manufacturing within
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Figure 2: Value of Mexican Imports through Border Customs Districts
Mexico and increased competition with China after its entry into the World Trade Organization. According to Peter Walkenhorst, Nora Dihel (both of the Organisation for Economic Co-operation and Development) and related work by Trien T. Nguyen and Randall M. Wigle (both of the University of Waterloo) show that the consequences of intensified border security for trade volumes can be studied by examining the effects on freight transportation costs. The rationale for this approach is that longer delays at ports of entry likely entail higher costs in the form of expenditures on labor, fuel, and warehousing services. However, these types of expenses are not fundamentally different from those resulting from any other increase in travel time. The longer and more variable border wait times are likely one of the culprits that impose additional and indirect costs on trade ratios. For example Hui Huang and John Whalley, in their 2008 paper, indicated that importers are likely to respond to border delays by reducing the frequency of trans-boundary shipments and increasing inventories above optimal levels. The resulting inventory carrying costs are expected to be quite substantial and may be compounded by the cost of spoilage in the case of perishable B order B usiness B riefs | S pring 2015
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goods. Furthermore, new administrative hurdles may result in increased expenditures for the services of third parties such as customs brokers. Unlike routine transportation costs the indirect consequences of heightened border security are not directly tied to the cost of drivers’ time, fuel or vehicle maintenance expenses. That being said the post-9/11 border security measures are a likely culprit when it comes to the increased transportation costs due to additional time spent crossing the border. The security measures imposed also drive indirect costs up as well. In summation, the increase in routine transportation costs and indirect costs after 9/11 are expected to have a negative effect on the volume of imports from Mexico. To examine this hypothesis, elasticity estimates have been calculated based on the results from a regression analysis. Prior to 9/11, a 10 percent increase in transportation costs was associated with a 0.4 percent decrease in the volume of imports from Mexico through the border customs districts. However, in 2001 after the 9/11 terrorist attacks the increase in transportation costs could be estimated to reduce the volume of imports by 0.75 percent. This shows the hypothesis that the post-9/11 border security measures have amplified the impact of the CIF/FOB ratio on trade. The sudden rise in costs has been most likely generated by additional, indirect and direct costs as discussed above. Conclusion New border security measures have been instituted and are resulting in what some analysts have termed a “thickening” of United States borders. One consequence of this is an increase in frictional costs associated with transporting goods (wheel and freight) across the international boundary. This is one of several factors that are likely at fault for the deceleration in the pace of growth for Mexico’s exports to the United States since 2001. Although it is important to note that the effects of heightened border security are not uniform across all segments of the border. For more detailed analysis of freight transportation costs and trade effects at the customs district level please see our 2014 paper.
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Endnotes: Ackleson, J. (2009) From “thin” to “thick” (and back again?): the politics and policies of the contemporary U.S.-Canada border, American Review of Canadian Studies, 39, 336-351. BLS. (2014) Industry productivity, Bureau of Labor Statistics, Washington, D.C. Available at http://www.bls.gov/data/ (accessed on 18 September 2014). Boyer, K.D. (1997) American trucking, NAFTA, and the cost of distance, Annals of the American Academy of Political and Social Science, 553, 55-65. Brooks, M.R. (2008) North American freight transportation: the road to security and prosperity, Edward Elgar, Cheltenham, UK. Del Castillo Vera, G. (2009) Tiempos de espera en los cruces fronterizos del norte de México: una barrera no arancelaria, Comercio Exterior, 59, 551-557. DFAT (2004) Combating terrorism in the transport sector: Economic costs and benefits. Department of Foreign Affairs and Trade, Barton, Australia. Available at http://www.dfat.gov.au/publications/index.html (accessed on 11 October 2012). EIA. (2012) No. 2 distillate prices by sales type. Energy Information Administration, Washington, D.C. Available at http://www.eia.gov/ petroleum/data.cfm (accessed 5 November 2012). Fullerton, T.M., Jr. (2007) Empirical evidence regarding 9/11 impacts on the borderplex economy, Regional and Sectoral Economic Studies, 7, 51-64. Gallagher, K.P., Moreno-Brid, J.C. and Porzecanski, R. (2008) The dynamism of Mexican exports: lost in (Chinese) translation? World Development, 36, 1365-1380. Georges, P. and Mérette, M. (2012) Toward a North American security perimeter? assessing the trade, FDI, and welfare impacts of liberalizing 9/11 security measures, Economic Modelling, 29, 2514-2526. Globerman, S. and Storer, P. (2011) Regional and temporal variations in transportation costs for U.S. imports from Canada, Journal of Regional Analysis and Policy, 41, 120-137. Huang H. and Whalley, J. (2008) Baumol-Tobin and the welfare costs of national security border delays, Economics Letters, 99, 290-292. INEGI. (2012) Precio de productos petrolíferos: PEMEX diesel. Aguascalientes, Mexico: Instituto Nacional de Estadística y Geografía. Available at http://www.inegi.org.mx/sistemas/bie/ (accessed 5 November 2012). Lim, H.L. and Lovell, C.A.K. (2009) Profit and productivity of US class I railroads, Managerial and Decision Economics, 30, 423-442. MacPherson, A.D., McConnell, J.E., Vance, A. and Vanchan, V. (2006) The impact of U.S. government antiterrorism policies on Canada-U.S. cross-border commerce: an exploratory study from western New York and southern Ontario, The Professional Geographer, 58, 266-277. Nguyen, T.T. and Wigle, R.M. (2011) Border delays re-emerging priority: within-country dimensions for Canada, Canadian Public Policy, 37, 49-59. Oppel, R.A. Jr. (2001) A nation challenged: the borders; new security clogs U.S. borders, New York Times, 20 September, pg. C1. Peterson, J. and Treat, A. (2008) The post-9/11 global framework for cargo security, Journal of International Commerce and Economics March, 1-30. Sargent, J. and Matthews, L. (2004) What happens when relative costs increase in export processing zones? Technology, regional production networks, and Mexico’s maquiladoras, World Development, 32, 20152030. Taylor, J.C., Robideaux, D.R. and Jackson, G.C. (2004) U.S.-Canada transportation and logistics: border impacts and costs, causes, and possible solutions, Transportation Journal, 43, 5-21. USCB. (2014) Top trading partners, U.S. Census Bureau, Washington, DC. Available at http://www.census.gov/foreign-trade/statistics/country/ (accessed 17 September 2014). USITC. (2012) Interactive tariff and trade dataweb. United States International Trade Commission, Washington, D.C. Available at http:// dataweb.usitc.gov/ (accessed 15 October 2012). Vance, A. (2008) Strategic responses by Canadian and U.S. exporters to increased U.S. border security measures, Economic Development Quarterly, 22, 239-251. Walke, A.G. and Fullerton, T.M., Jr. (2014) Freight transportation costs and the thickening of the US-Mexico border, Applied Economics, 46, 1248-1258. Walkenhorst, P. and Dihel, N. (2006) Trade impacts of increased border security concerns, International Trade Journal, 20, 1-31.
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ECONOMY
Getting a cut Local Municipalities See Upward Trend in Sales and Use Tax Revenues
By Jose Clemente and Salvador Contreras
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The state of Texas enforces a 6.25% sales and use tax on qualifying retail sales, taxable services, leases, and rentals of goods. Several taxing jurisdictions, such as various cities in the Rio Grande Valley, may opt to impose additional sales and use tax up to 2%, with a combined total tax of 8.25%. Remarkably, the state has given city governments the authority to manage themselves and this includes raising their own revenues to support various city facilities and services. According to the 2012 Survey of Texas Municipal Leagues, the majority of general fund revenue of Texas cities comes from property taxes, sales and use taxes, and franchise taxes. Out of these, cities heavily depend on property taxes. Other sources of revenue come from the court fines, permit and fees, and interest earnings. Recent trends in the Metropolitan Statistical Areas (MSA) of Brownsville-Harlingen and McAllenEdinburg-Mission indicated positive growth in gross sales revenues. From the 2014 Quarter 1 report on Quarterly State Sales and Use Tax Analysis, Brownsville-Harlingen MSA had $1,656,735,013 in gross sales revenues relative to 2013 Quarter 1 report of $1,642,660,096. This means a growth of 0.9 percent. Purchases made outside of Texas but used in the state are subject to use tax. Brownsville-Harlingen MSA reported $13,441,039 for use tax purchases in 2014 Quarter 1. Considering both sales and use tax revenues, the total amount subject to tax is $692,231,842. The McAllen-Edinburg-Mission MSA had a 1 percent growth in terms of gross sales in 2014 Quarter 1 reporting. Specifically, the gross sales for 2014 Quarter 1 was $3,949,650,175 compared to previous year’s $3,908,713,645. Use tax purchases amounted to $19,392,294. In the end, the amount reflected for sales and use tax in the MSA was $1,502,947,433. The MSA data indicates a positive growth in terms of gross sales revenues. Given this, we also expect city governments to have experienced growths in tax revenues. B order B usiness B riefs | S pring 2015
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Figure 1: Growth in Sales and Use Tax Revenues, Small Cities, July 2013-July 2014
AVERAGE GROWTH RATE
56.49
15.61
-1.20 Rio San Benito GrandeCity
1.32 Alamo
6.57
5.61
4.59
0.25 Mercedes
Donna
Hidalgo
Port Isabel
San Juan
CITIES The sales and use tax is a major contributor and source of city revenues. This article illustrates a one-year view of the average growth rates in sales and use tax revenues from July 2013 to July 2014 in select cities in the Rio Grande Valley (RGV). Using the 2000 census information, the cities were divided according to their population sizes- small (less than 30,000), medium (30,000 to 100,000), and large (more than 100,000). The following data was collected from the Office of Texas Comptroller of Public Accounts.
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sales and use tax revenues from 2013 were higher compared to 2014’s collections. The cities of Hidalgo, San Juan, Donna, Mercedes, Alamo, and Port Isabel experienced positive growth in sales and use tax revenues.
The growth rate for each month is calculated over the same month in the previous year. We then calculate the average growth rate per city over the past 12 months. Figures 1, 2, and 3 display the average growth rates by city size.
Figure 2 illustrates selected medium-size cities. The cities of Edinburg and Pharr had the highest growth of 8.06 percent and 6.89 percent, respectively. Additionally, Edinburg had a staggering 26.55 percent growth in sales and use tax revenue in January 2014 relative to the previous year. Based on the figure, Weslaco and Harlingen experienced the least growth in the group. While Mission and Harlingen experienced growth over the past 12 months, these two cities actually had a contraction of 5 percent and 6 percent in July 2014 respectively.
Figure 1 presents the average growth rate in sales and use tax revenues for small cities in the Rio Grande Valley from July 2013 to July 2014. Interestingly, Rio Grande City experienced the most growth of 56.49 percent compared to other small cities. According to Maria Barrera of the city’s finance department, this was mainly due to the construction of the new cross-border natural gas pipeline that impacted the sales and use. San Benito experienced the least average growth in that time period. San Benito on average contracted 1.2% over the 12 months period indicating that
Figure 3 exhibits selected large cities 12-month average growth rates. Corpus Christi had the highest growth rate at 5.82 Jose Clemente is percent. McAllen had the lowest MBA student at growth at less than 1 percent. In The University of Texas-Pan American addition, Corpus Christi collected 14 percent more in revenues in Dr. Salvador December 2013 relative to the Contreras is previous year. McAllen experienced Assistant Professor contraction in sales and use tax of Economics at The University of revenues for seven of the 12. Consistent with the McAllen trend, Texas-Pan American
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Figure 2: Growth in Sales and Use Tax Revenues, Medium Cities, July 2013-July 2014 8.06
AVERAGE GROWTH RATE
6.89
5.22
1.96
Mission
Pharr
Harlingen
2.23
Weslaco
Edinburg
CITIES
Figure 3: Growth in Sales and Use Tax Revenues, Large Cities, July 2013-July 2014
AVERAGE GROWTH RATE
5.852
3.14
1.96 1.04 0.52
Brownsville
McAllen
Laredo
Corpus Christi
El Paso
CITIES
Laredo experienced contractions for half of the 12 months. In conclusion, 11 out of 12 selected cities experienced a positive growth in sales and use tax revenues in 2014 over 2013. This is an indication
of increased spending in these cities. However, the data presented are average growth rates. Caution must be used in interpreting the data since some cities experienced a contraction in some months. That said, a broad measure of growth in the region is indeed positive. B order B usiness B riefs | S pring 2015
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ENTREPRENEURSHIP
By Jim Lee
Entrepreneurial challenges
among border cities
Immigration from Mexico and Central America presents unique challenges as well as opportunities for entrepreneurs in border cities. This article summarizes the findings of research work conducted by Kent Byus and Donald Deis, both at Texas A&M University-Corpus Christi. The two researchers studied the spending behavior of consumers along the U.S.-Mexico border and compared them with behavior in the rest of the United States. The authors define the U.S. southern border region as the counties in Arizona, California, New Mexico, and Texas that border Mexico. Transient Population Table 1 compares changes in the Hispanic or Latino population of U.S. southern border counties against the rest of the nation. Historically, Hispanics make up over two-thirds of the local population along the southern border, more than County Type
1990
2000
Percentage Point Change
Non-Border
21.6%
25.4%
3.8%
Border
61.7%
65.3%
3.6%
County Type
2000
2010
Percentage Point Change
Non-Border
25.4%
30.1%
4.7%
Border
65.3%
68.2%
2.9%
Table 1: Hispanics as a Percent of County Population Source: Byus and Deis, 2014 20
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double their population share in the rest of the nation. Over the decade of the 1990s, the local population share of Hispanics in the border region grew by 3.6 percentage points, slightly less than the growth elsewhere. This gap widened even further during the following decade; the share of the Hispanic population grew at a slower pace among border counties, but a faster pace among non-border counties. Such population growth trends suggest that many Hispanic immigrants do not settle in communities along the U.S. southern border. Those new arrivals either bypass the border communities after entering the United States or reside near the border only temporarily before relocating to major metro areas, such as Los Angeles in California, and Dallas in Texas. Disadvantaged Consumers According to Byus and Deis, the transient nature of the immigrant population has contributed to
both challenges and opportunities for government officials and entrepreneurs alike in border communities. They analyzed those issues through the concept of disadvantaged consumers. Disadvantaged consumers are commonly defined as members of low-income households living in the inner city. With limited transportation facilities, these residents face limited shopping choices. Further, because of their immobility, low-income households face higher consumer product prices relative to similar goods sold in the suburbs or elsewhere. Many new immigrants in the United States also face challenges similar to those faced by disadvantaged consumers. Partly due to language barrier and a new economic environment, they are generally unfamiliar with popular American brands and many services available to them in the marketplace. Many of them are also unfamiliar with commercial promotions, the intricacy of pricing practices, and the availability of consumer credit, all of which are commonplace in the U.S. retail market. Low Spending Potential To illustrate the challenges that Hispanic immigrants face, Table 2 lists the average spending potential indexes for U.S. southern border counties. Each index compares the average spending of a specific product or service category by residents in those local communities relative to the average nationally. The U.S. average is 100. The table suggests that consumers in the border region spend substantially less in all major spending categories than their counterparts elsewhere in the United States. The average amount of consumer spending on apparel in that region is only about half of the national average. Discrepancies in spending, however, cannot be explained solely by discrepancies in incomes. Byus and Deis found no statistically meaningful differences in a number of measures of household economic conditions between border and non-border counties. Given the large share of immigrant population along the U.S. southern border, Table 2 data suggests a unique pattern in consumption by Hispanic immigrants. Business Challenges If not incomes, then what causes immigrants to underspend? One possible explanation is related to the remittances that those immigrants send to
Spending Category
Spending Potential Index
Apparel
51.2
Entertainment
79.0
Food
79.5
Housing
75.0
Table 2: Spending Potential Index of Border Counties
their family members and relatives in their home countries. Immigrants’ remittance payments reduce their disposable income that could otherwise be allocated to their own consumption. Another possible explanation for the immigrants’ lower levels of spending is their relatively poor credit records. Relative to native residents, new immigrants generally have a short credit history and are less well established financially. According to Experian’s VantageScore, the average household credit scores of border cities in Texas, including Harlingen, Laredo and El Paso, have been placed at the bottom 10 among all U.S. cities during the past three years. Residents with relatively poor credit ratings are less able to obtain loans or home mortgages. Regardless, the lower consumer spending potential across communities on the border with Mexico represents a challenge to business development. The spending potential index is one of many indicators of the likelihood that a business will succeed in a specific market. For instance, other things being equal, it would appear less likely that an apparel retailer will thrive in a border city because of the community’s substantially smaller spending potential for clothing. The challenge of low consumer spending in border communities requires entrepreneurs to be competitive if they intend to carve out a place for themselves in the marketplace. Dr. Jim Lee is Professor of Economics and Director of the South Texas Economic Development Center at Texas A&M University-Corpus Christi. Endnotes: Byus, Kent, and Don Deis, “Disadvantaged Consumers on the Southern Border: The Social Entrepreneurs’ Challenge,” Texas A&M University-Corpus Christi, College of Business Working Paper, 2014.
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CROSS-BORDER
Shopping Behavior by Monica Hernandez
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Mexican Cross-border shoppers into South Texas often define local economic activity. In a recent publication, Monica Hernandez at Texas A&M University-Corpus Christi and Handan Vicdan at Emlyon Business School investigate how Mexicans shop in the U.S.-Mexico border. Their goal was to better understand individual roles and drivers of shopping behavior. Using interviews and focus groups, the investigators uncovered that Mexican cross-border consumer behavior is characterized by unique individual and cultural elements and contradictions. Why Mexican Cross-Border Shop? One of the fastest growing economies on the U.S. border is the city of McAllen. According to the McAllen Chamber of Commerce, annual retail sales in McAllen during 2013 exceeded $3.7 billion in 2013 and lodging tax receipts exceeded $3.8 billion. Traffic of Mexican nationals is high in this area, with annual U.S.-Mexico Hidalgo bridge crossings of more than 5.3 million vehicles and more than 350,000 boardings at the McAllen International airport. The amount of “manifiestos” or requests for sales taxes refunds on items purchased by Mexican nationals comprises almost 7 percent of the city’s total annual retail sales. Mexican shopping explains why Hidalgo County –one of America’s poorest counties– is home to one of the highest-grossing malls in the country. Mexican distinctive consumer behavior Their study reveals interesting observations about Mexican shoppers behavior. Their common themes highlight the active role of female shoppers, a pattern of positive emotions and strong revisit intention, as well as the importance of the social aspects related to the Mexican culture. An individual challenge yet a social affair Mexican families or groups usually travel to the U.S. border for a few days, typically for one weekend. These shoppers want to get the most out of their short lengths of travel (and money) to complete their desired objective. Despite the limited time allocated to shopping, they challenge themselves to complete all planned and unplanned purchases. When traveling with companions, individuals agree to meet at a particular place and time after their shopping experience. Losing track of time in the mall is quite frequent, so the respondents in the survey indicated it is hard to meet on time.
A well-planned activity Mexican border shoppers exhibit a clear pattern of positive anticipated emotions. Similarly, they have a strong revisit intention. This may explain their saving behavior. By matching high enthusiasm levels to their unique shopping behaviors, Mexican shoppers reach their optimal experience. A gender-biased task According to the comments and stories from the participants in the survey study, male shoppers play a passive role and they consider themselves only tourists as opposed to shoppers, whereas female shoppers are the active players. Conclusion Mexican shoppers describe shopping on the U.S.-Mexico border as the optimal experience, an experience that is both formal (allowing seriousness, tasks to be performed, goals to be accomplished) and informal (enjoyable and entertaining). As indicated by the interviewees in the study, Mexicans experience “flow” state while shopping: the intense feelings of enjoyment and immersion characterized by full involvement in an activity. This feeling is typically experienced when people lose track of time and spend hours on the Internet or playing video games. However, this feeling also extended to the retail, as experienced by the Mexican border shoppers. Dr. Monica Hernandez is Associate Professor of Marketing at Texas A&M Corpus Christi Endnotes: Hernandez, Monica D. and Handan Vicdan (May 2014), “Rethinking Flow: Qualitative Insights from Mexican Cross-Border Shopping”, The International Review of Retail, Distribution and Consumer Research, Volume 24, Issue 3, pages 347-360. McAllen Chamber of Commerce. 2013. “Economic Pulse”, URL (accessed July 21 2014): http://www.mcallen.org/pdf/pulse/December2013.pdf.
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ECONOMY
Where the jobs are in South Texas By Jose Clemente and Salvador Contreras
Labor market dynamics in the United States have shifted since the financial crisis. The recession that occurred between 2008 and mid-2009 is now behind us. Five years after, the economy is yet to fully recover to prerecession levels. Some cities experienced a slower job market growth while some the opposite. The road to recovery in the labor market continues to spark debate among citizens, scholars, and policymakers. 24
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Table 1: Pre and Post-recession trend line slopes (selected cities) Cities
2005Q4 2007
Q2 20092014
Change in Slopes
Direction of Change
12-Month Average Growth Rate (%)
El Paso
4.24
5.72
1.49
Up
0.84
Weslaco
0.61
0.39
-0.22
Down
1.04
McAllen
2.57
1.16
-1.41**
Down
1.12
Pharr
2.27
1.06
-1.21**
Down
1.14
San Juan
1.15
0.26
-0.89**
Down
1.16
Mission
2.60
1.69
-0.91**
Down
1.24
San Benito
0.37
0.03
-0.34
Down
1.29
Harlingen
1.18
0.63
-0.55**
Down
1.35
Edinburg
3.31
1.68
-1.63**
Down
1.43
Laredo
6.14
5.27
-0.88**
Down
1.54
Brownsville
2.98
2.26
-0.72**
Down
1.66
Corpus Christi
3.09
7.81
4.72**
Up
1.72
T-test on difference in slopes. Significant at 95 percent confidence level. (**) Indicates that the slopes are not statistically equal.
In this article, we compare changes in employment numbers in selected cities in South Texas between two time periods: before recession (2005-2007) and after recession (Quarter 3 of 2009 to Quarter 3 of 2014). We use publicly available data from the Texas Workforce Commission. This article seeks to evaluate if labor market growth changes between the pre- and post-recession periods are statistically significant. Lastly, we will present the average growth in employment over the past 12 months in selected cities. After the recession, McAllen-Edinburg-Mission and Brownsville-Harlingen Metropolitan Statistical Areas (MSAs) experienced an improvement in education and health services employment. This is consistent with the view that education and health care service sectors are often seen as growing industries in our region. Most often, these two industries are either steady or growing. Employment trends also improved in the federal government, financial activities, leisure and hospitality, manufacturing, and retail trade industries in both MSAs. However, the information sector, which is engaged in producing, processing, and distributing information and data, experienced slack during
the same period. This indicates that South Texas continues to shift from manufacturing to serviceoriented dependency in employment growth. South Texas economy appears to have experienced a structural change in employment growth since the recession. Comparing the period before the recession with afterwards, we identified 10 of 12 selected cities experienced a slow down in the rate of change. This indicates that the rate of change, or the slope, in employment after the recession was lower compared to the rate of change before the recession. For instance, preceding the recession, McAllen had an employment trend line slope of 2.57 units. A trend line measures the tendency of employment over the specified period of time. A higher slope indicates better job creation or higher employment growth tendency over Jose Clemente is an MBA the selected period. Student at The University of This means on average Texas-Pan American the tendency before the recession was that Dr. Salvador Contreras is Assistant Professor of Economics at The employment increased University of Texas-Pan American 2.57 units. In contrast, B order B usiness B riefs | S pring 2015
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12-Month Average Employment Growth Rates (Select Cities)
Corpus Christi
1.72
Brownsville
1.66
Laredo
1.54
Edinburg
1.43
Harlingen
1.35
San Benito
1.29
Mission
1.24
San Juan
1.16
Pharr
1.14
McAllen
1.12
2.00
1.80
1.60
1.40
1.20
1.00
0.80
0.60
0.84 0.40
El Paso 0.20
1.04
0.00
Weslaco
employment trend line slope becomes 1.16 in the post-recession period. This represents a change of trend line slopes of -1.41. Comparing the slopes between utilizing a simple t-test produces a statistically significant change at the 95 percent confidence level.
The cities of McAllen, Edinburg, and Pharr had the worst showings in differences for job growth. These cities experienced rates of change that are smaller than -1 and are statistically significant at 95 percent confidence level, see Table 1. Interestingly, both Corpus Christi and El Paso had a strong bounce back from the pre-recession period. This trend is not surprising since Forbes cited them in its list of fastest growing cities in the United States after the recession. Specifically looking at Corpus Christi before the recession period, the city’s employment trend line slope was 3.09. This suggests that for every month before the recession, the tendency was for employment to increase by 3.09 units. After the recession, Corpus Christi’s employment trend line slope increased to 7.81. Similarly in El Paso, the city’s rate of change was at 4.24 pre-recession and increased to 5.72 post-recession. For the post-recession period, both cities experienced higher employment growth. This may be attributed to their growing economy impacted by the Juarez Maquiladora sector, public spending in military bases, and the influx of an educated workforce in the area as implied by the Federal Reserve Bank of Dallas, El Paso Branch. In terms of average growth over the past 12 months, it is notable that both Brownsville and Corpus Christi experienced the largest average growth rates with 1.72 and 1.66 percent accordingly. Meanwhile, El Paso was the most sluggish of the group in the past 12 months with 0.8 percent growth. Overall, the employment growth rates among the selected cities offer encouraging data of an improving economy. Postrecession data shows that some cities experienced a slower rate of change in employment. Overall, the recovery in South Texas has not allowed employment growth to reach its pre-recession levels. However, post-recession employment growth is encouraging and suggests continual improvement in the labor market.
Endnotes: Kotkin, J. “America’s Fastest-Growing Cities Since The Recession.” Forbes. 6/28/2013. (Retrieved on 11/25/2014 from http://www.forbes.com/sites/ joelkotkin/2013/06/18/americas-fastest-growing-cities-since-the-recession/) Canas, J., Coronado, R., & Gilmer, R. “Is the Recession Over in El Paso?” in Crossroads: Economic Trends in the Desert Southwest. (Retrieved on 11/25/2014 from http://www.dallasfed.org/assets/documents/research/crossroads/2010/cross1001.pdf)
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TOURISM
Book It: Revenues are up at RGV cities By Abdelhamid Riani and Salvador Contreras
Tourism is a growing industry in South Texas. Cities such as South Padre Island and McAllen attract visitors from near and far to their beaches and shopping centers. In this article, we look at the growth in hotel revenues for select cites in the Rio Grande Valley (RGV). To compare hotel revenues over time and across municipalities, we compute the averege revenue per night per room in South Padre Island, McAllen and Brownsville. We also present average growth rates over the past 12 months for major cities in the region. 28
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400 300 200 100 0
Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14
Revenue/Room/day growth index
Figure 1: Growth in hotel revenues per room normalized to 100 (January 2010) South Padre Island
Data comes from the Texas Comptroller of Public Accounts. To make the data easy to interpret we normalize January 2010 revenues to 100. Figures 1 and 2 present an index that measures growth in per room revenues. Figure 1 shows the growth pattern in hotel revenues per room for South Padre Island. In July 2013, the score of 438.90 implies that revenue was four times higher when compared to January 2010. July 2013 had a 9 percent growth from July 2012. Returns per room peak in the months of March and July with the latter being consistently the highest. July’s summer time period peak is indicative of the high number of visitors to South Padre Island followed by the Spring Break period peak in March.
Figure 2 shows the growth in revenues per room for the cities of Brownsville and McAllen. The figures show a positive correlation in hotel revenues for McAllen and Brownsville. In Februray 2014, sales per room per night for McAllen reached its peak with a score of 183. This score shows that revenues were 83 percent higher when compared to January 2010. Consistent with the numbers for South Padre Island, the months of March and July for Brownsville and McAllen experience the highest returns per room on average. There is also a difference in peaks between the two cities. For example, in March 2014, as Brownsville’s proceeds increased, McAllen’s daily return per room experienced a decrease. Overall, July 2013 had 9 and 0.87 percent growths from 2012 for McAllen and Brownsville respectively. Brownsville and
McAllen
160 140 120 100 80
Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14
Revenue/Room/day growth index
Figure 2: Growth in hotel revenues per room normalized to 100 (January 2010)
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South Padre Island
Mercedes
McAllen
Mission
Alamo
Mar-14
$78.49
$92.44
$59.36
$51.11
$50.76
Apr-14
$56.81
$98.33
$64.58
$49.62
$46.57
May-14
$59.34
$41.16
$50.52
$39.92
$39.14
Jun-14
$107.81
$47.04
$57.18
$44.32
$37.06
Date
To better capture the growth trend of hotel revenues in the RGV, we present the average daily revenue per room and average growth rates over past 12 months for selected cities in the region. Results are presented in the Table 1 and Figure 3. In Table 1 we present average revenues per room per night for selected months and cities. We compute the average nightly revenues by dividing the total monthly revenue for each selected city by the product of their total capacity and number of days in the selected month. South Padre Island had the highest average daily revenue per room over the period March to June 2014. During the month of June, revenues ranged between $37.06 in Alamo and $107.81 in South Padre Island. Mercedes is ranked second with an April peak of $98.33 average daily revenue. The total and average daily revenues for the selected cities in each of the four months inidicate that March and April experience the highest earnings per room of $332.15 and $315.91 and an average amount of $110.72 and $105.30 respectively.
Table 1: Average daily revenue per room (selected cities)
Hotels in the RGV continue to be a vibrant sector of the economy with an average yearly growth rate of 7.58 percent for the selected cities. Numbers were found by averaging the year over year growth in revenue per room for each of the selected cities from June 2013 to June 2014. Mission, McAllen and Weslaco experienced the highest growth rates of 16.24, 13.09 and 10.34 percent respectively over the preceding 12 months. Port Isabel and Alamo experienced the lowest growth rates with 1.05 and 0.63 percent, respectively. Despite South Padre Island’s modest growth as compared to Mission and McAllen, it still experienced the highest revenue over the same period with $97.3 million. Overall, the general trend in hotel revenues is positive. An overage growth rate of 7.58 percent indicates a healthy industry as compared to the national growth rate of 5.4 percent in 2013 according to STR. While there is variation in per room per night revenues, monthly peaks are related to hosting visitors in key shopping periods and vacation holidays. Figure 3: Average growth rates over past 12 months (selected cities)
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Weslaco
South Padre Island
Port Isabel
Pharr
Mission
Harlingen
Edinburg
Alamo
McAllen
Brownsville
Abdelhamid Riani is a Ph.D. student in Finance at The University of Texas-Pan American Dr. Salvador Contreras is an Assistant Professor of Economics at The University of Texas-Pan American
Endnotes: STR gathers lodging industry supply, demand and performance data from hotels located in more than 160 countries. (http://www.str.com/)
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VALLEY TALENT
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Elevating engineering research for knowledge’s sake
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Dr. Karen Lozano is our featured Valley talent this quarter. Lozano is the Julia Beecherl Endowed Professor of Mechanical Engineering and director of the Nanotechnology Center of Excellence. She has an impressive and distinguished track record as educator, researcher, and innovator. In the course of her career, Lozano has helped, guided, and inspired many students including women and minorities to succeed in the male-dominated field of engineering.
She was the fifth woman to graduate with a Bachelor of Science in mechanical engineering in 25 years at Universidad de Monterrey; the fifth woman to obtain a Ph.D. from the Department of Mechanical Engineering and Materials Science at Rice University in about 87 years; the first Mexican woman to obtain a Ph.D. from any department in science/engineering at Rice; the first woman professor in engineering at The University of TexasPan American, and one of very few female Hispanic tenured professors in mechanical engineering in the U.S. Her accomplishments have been a call to promote science and engineering careers among K-12 students. These accomplishments have indirectly imposed on her a social and moral responsibility toward developing strong outreach and mentoring programs while conducting technical research to develop technologies that benefit society. Lozano has taken it upon herself to educate and explain to young women the opportunities and career fulfillment that science and engineering careers can provide. She has surpassed barriers and stereotypes that women and minorities in science, technology, engineering, and mathematics (STEM) fields experience and has turned them into real-life examples to motivate and encourage students to achieve their dreams. She actively promotes, encourages, and mentors students of all ages to pursue engineering careers. She has been instrumental in developing stateof-the-art research projects at UTPA and has synergistically connected these with mentoring activities to promote student success. She has tailored high-tech research projects to maximize undergraduate student participation. The chance to provide undergraduate students with hands-on opportunities significantly increases their motivation to pursue and successfully complete a degree in STEM programs. Her ongoing projects are ideal to recruit students to STEM fields and motivate them while instilling in them a passion for learning and discovery. She has experienced that students best appreciate the richness of STEM fields by hands-on research experiences. She finds that helps students become aware of latest technology breakthroughs, but more importantly it helps them learn complex concepts; develop writing, communication and presentation skills; face failure and solve problems (successful research projects are the results of many failures); design a path for success; function independently; B order B usiness B riefs | S pring 2015
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develop time management skills; establish a personal connection to their job; and add years of working experience. She also takes every available opportunity to mentor students on work ethics, importance of hard work, discipline, responsibility, persistence, determination, and the pursuit of excellence. Her goal is to prepare students to be successful in their careers. Lozano’s most important measure of success is her students. She recognizes her own achievements in graduating talented engineers that receive competitive offers of employment or acceptance to Tier I institutions to pursue graduate education. She joined UTPA in January 2000. She came driven by the opportunity to be an agent of change and a bearer of opportunities for the Rio Grande Valley. Her dream was to be a scientist and she was convinced that she could develop a research-driven career at UTPA. Developing a high-tech successful research agenda at a non-Ph.D. granting institution was not an easy task. The research focus had to be tailored to maximize undergraduate research participation while successfully maintaining high quality innovative research projects. Through hard work, she overcame challenges and successfully developed a research agenda that synergistically engaged undergraduate students. She quickly realized the interest and momentum it gathered. During the first year she had several students that volunteered to work with her, after a few months she received an instrumentation grant and started equipping a state-of-the-art nanoreinforced polymer composite research lab. Right after, she received a CAREER award (one of the most prestigious awards given to young scientists in the U.S.). She was the first person at UTPA to receive the CAREER award. She has since filed for patents and developed a start-up company among other activities. She has continued to write research proposals, develop a large research team (about 15-20 undergraduate students per semester), write numerous journal articles, present at national and international conferences, develop a strong K-12 outreach program, participate at numerous National Science Foundation (NSF) panels, and be a journal reviewer. Currently, as the director of the Nanotechnology Center of Excellence, she directs a team of approximately 40 undergraduate students, five master’s students, four post-doctoral researchers 34
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and 10 professors. She avidly promotes research collaborations among faculty members at UTPA to promote collaborative research projects that subsequently benefit students. She has actively collaborated with faculty from 12 different departments within UTPA in research related activities. The active learning experiences that undergraduate students are exposed to promote engagement of student’s educational goals. Students finish their degrees, improve their grades, and get motivated to pursue graduate school. Many of her students obtained or are enrolled in Ph.D. programs at UT Austin, Texas A&M, Georgia Tech, and Rice University. Her team has developed over 250 publications, conference presentations, posters, and patent applications. She has received several awards and honors such as being invited to a roundtable discussion with President Barack Obama; Regent’s Outstanding Teaching Award, 2013; featured in the national report released by the Partnership for a New American Economy, “Patent Pending: How Immigrants Are Reinventing The American Economy”; congressional witness at a STEM Committee Hearing; UTPA Distinguished Faculty honor granted by UTPA alumni; Committee of Visitors (NSF); Innovations That Could Change the Way You Manufacture granted by the Society of Manufacturing Engineers; UTPA nominee for the UT System Chancellor’s Innovation and Entrepreneurship Award; two University Excellence Research Awards; Who’s Who in the World; “Who’s Who in America”; UT System Chancellor’s Award for Outstanding Teaching; Provost’s Award for Latin American Studies; Who’s Who in Engineering Education; Who’s Who Among Science and Engineering; Emerald Honor Award; Who’s Who Among America’s Teachers; Powerhitter in Business and Technology; UTPA Provost’s award for Outstanding Technical Achievement; UTPA President’s Award; and Most Promising Scientist Award from HENAAC, among others. In addition, she has established a publication record and produced patents that compare well with faculty at Tier 1 institutions. She enthusiastically acknowledges her support team, family, colleagues, students, administrators, and friends.
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