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2003 News Releases
For immediate release:
March 26, 2003
Media contact:
James Hoard
Phone: (214) 922-5307
e-mail: james.hoard@dal.frb.org
Dallas Fed Explores Texas’ Economic
Growth Factors, Banks’ Use of Derivatives and Mexico’s
Export Competition
DALLAS—The
latest issue of the Federal Reserve Bank of Dallas’ Southwest Economy examines
factors determining Texas’ economic growth, banks’ use
of derivatives and Mexico’s export competition.
In “What Wages and Property Values Say
about Texas,” economists Stephen P. Brown and Lori
L. Taylor conclude that when Texas’ rapid population
and employment growth over the past decade is taken into
account, it becomes apparent that Texas offers a combination
of wages, property values, natural amenities and government
policies attractive to labor. That attractiveness has helped
propel the state’s economic growth. The authors also
find that low educational attainment and a high share of
taxes paid by business have helped keep the state’s
labor productivity below the national average.
In “Debunking Derivatives Delirium,” economists
Jeffery W. Gunther and Thomas F. Siems assert that free-market
policies have lived up to their promise of promoting innovation
and more effective risk management among banks. Many factors
contribute to banking system resilience, but the growing
use of risk management tools, including derivatives, has
played a major role. Financial innovation opens new doors
for segmenting and dispersing risk. Banking supervisors are
responding to greater financial complexity with better disclosure
requirements and enhanced capital standards. Beyond that,
the authors contend, greater government control over derivatives
is a bad idea.
The competition
between Mexico and China for market share in North America
is heating up. Economist Erwan
Quintin assesses this new competition in “The Giant
in Mexico's Rearview Mirror.” Mexican companies complain
of rising labor costs, and the Fox administration has accused
China of luring away investors through practices that violate
international trade agreements. Despite the increased competition,
however, Mexico remains an attractive place to conduct business.
Competition will erode exports from some Mexican industries,
but Quintin concludes that Mexico will remain dominant in
those manufacturing sectors where transportation costs are
high and skills require time to develop. He also notes that
Mexico could improve its competitive position by addressing
its chronic weaknesses.
Find the March/April issue of Southwest Economy
online at www.dallasfed.org under the What's New heading.
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