Thursday, September 2, 2010

GDL's construction boom: legit or lavado de dinero?

Mexico was hit particularly hard by the recent/ongoing recession in the U.S. because of its symbiotic relationship with our economy. We drive a good part of the Mexican economy through our consumption of agricultural products and manufactures. Gringos also make up the majority of the international tourist market here in Mexico lindo, and when American families cut back on vacations, Mexico really feels the pinch. The recession was additionally hard for our neighbor to the south because of its dependence upon remittances, the money that immigrants send back home to families in Mexico. As their jobs disappeared, Mexican families on both sides of the border have suffered.
So, in the midst of economic crisis, how does one explain Guadalajara's apparently booming construction industry? One sees high-rise office buildings and apartments, condos, exclusive gated communities, upscale restaurants and commerical plazas in the works all over the city. Where has all this investment come from during such hard economic times? There are likely a number of sources of capital for these projects, some legitimate, others not. Guadalajara is one of Mexico's strongest industrial centers and the state of Jalisco is very productive agriculturally. There's a great deal of money in this town accumulated through perfectly legal means and apparently the numbers for the manufacturing sector are nothing shabby at the moment. That capital needs an outlet and well-to-do Guadalajarans are not exactly shy about conspicuous consumption. U.S. and European businesses have also taken note of that tendency and are making inroads here (our local mall boasts a P.F. Chang's, a Stuart Weitzman  boutique, and tons of very cool, modern furniture imported from Europe, to give just a few examples of international capital's interest in the city).
However, the sheer quantity of construction projects raises many eyebrows, as does the fact that many recently completed projects are unoccupied. A local journalist and numerous taxi drivers have confirmed that many here think that there's too much building in the city in the midst of a recession for it to not involve a great deal of money-laundering. What is perhaps the most ironic is that as the narcos diversify their holdings and wash their profits at the same time, the result is actually pretty positive for Mexico in terms of creating jobs and generating momentum for the the increasingly large middle class in this country. NAFTA and the narcos have brought Mexico out of the lost decade of the 1980s and helped it survive the current crisis, but with sad, sad consequences for the overall level of civility and security.

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