Breaking Out of the Box

This has fueled an increasingly loud backlash in the United States, where several measures meant to crack down on the migrant flow are working their way through the U.S. Congress. Lawmakers have proposed everything from more walls along segments of the Mexican border and more Border Patrol agents, to a guest-worker program and "regularization" of undocumented workers. Yet none of these measures will end the immigration crisis, and most would actually make it worse. Roughly 90 percent of all Mexican illegal immigrants leave jobs to come to the United States; they seek higher wages. Illegal immigration is unlikely to shrink until the income gap begins to narrow.

How to do so? Valuable lessons can be gleaned from the continent that supplied America's original pool of immigrants. When the European Union added Greece, Spain and Portugal as member countries in the 1980s, it channeled massive amounts of aid to these newcomers and Ireland to narrow the income gap separating them from more-prosperous nations like Germany and France. About half of the $500 billion in aid was spent unwisely; the best investments were in roads and communications linking these four countries to richer markets. Between 1986 and 2003, the per capita GDP of the four nations rose from 65 percent of the average EU member country's economic output to 82 percent. Spain spent much of the $120 million it received on new roads that boosted commerce and tourism. As a result, Spanish immigration to other EU countries all but ceased. Ireland now ranks as the second richest member of the EU in per capita terms--and for the first time in its history, it is actually receiving rather than sending immigrants.

North America isn't Europe. But the region's three countries should draw on the EU's experience and think in more regional terms. The leaders of the United States, Canada and Mexico must articulate a vision that recognizes how instability or recession in one affects the other two. At the same time, they need to remind their constituents that when the value of a neighbor's house rises, so does theirs.

Transforming that vision into programs to promote development in Mexico, the trio's poorest partner, will require leadership, capital and institutions that have been sadly lacking in recent years. Take for example transportation: the three governments have never put together a continentwide plan for transportation and infrastructure despite the huge increase in trade crossing their borders. The first thing NAFTA partners should do is establish a North American Investment Fund that would invest $200 billion over 10 years in roads and communications connecting the poorer southern part of Mexico to the North American market. If we build them, they will stay: companies will be more likely to invest there, encouraging many Mexican workers to stay home and others, already in the United States, to return. Experts estimate that such investment could double Mexico's rate of GDPgrowth.

The funds should be administered by the World Bank. As the main beneficiary, Mexico would provide half of the total, the United States could chip in with an additional 40 percent and Canada the remainder. To ensure optimal use of the funding, Mexico also needs to increase taxes, modernize its labor laws, and open up the state-run energy and electricity sectors to private investment. The United States and Canada could help Mexican leaders sell those overdue reforms by promising to commit resources to a joint effort to narrow the income gap.

While the idea of funding Mexican development may sound ludicrous, this investment would also benefit the U.S. economically, and the total is less than half of what the EU spent. Washington's $80 billion contribution would amount to about a third of what the Bush administration has spent in the last three years in Iraq.