The Texas–Mexico border is a fast-growing region, a complex blend of U.S. and Mexican cultures, languages and customs.

      It is a dynamic area that has benefited from a large and growing population in northern Mexico, rapid growth in U.S.–Mexico trade and a tenfold increase in maquiladora industry activity over the past two decades. Total population in the four Texas border metropolitan statistical areas — Brownsville, El Paso, Laredo and McAllen — is about 1.8 million, and population growth since 1980 has been 65 percent, versus 24 percent nationally. A high birthrate and young population suggest that the border will continue its rapid growth.

      This article describes the business cycles of the four main Texas border cities and, based on their economies’ similarities and differences, relates them to the broader economies of the United States, Mexico and Texas.

      Texas border cities are characterized by some common economic features. There is more transportation and distribution activity than in other U.S. cities, mainly due to servicing international trade. We find a relatively large retail sector serving not only the American but the Mexican side as well. And border enforcement and programs that address high poverty levels make the government sector substantially larger than normal.

      However, there are also differences. Retail trade is not as important to El Paso as it is to Laredo. Similarly, the economic impacts of the transportation and gas and oil sectors are uneven along the border. The manufacturing sector is the No. 1 earnings generator for El Paso, while it is No. 3 in Brownsville, No. 4 in McAllen and only No. 10 in Laredo. Transportation and warehousing is the top earnings generator in Laredo, while health care is at the top for McAllen and Brownsville. Retail trade is No. 2 for the border cities with the exception of El Paso, where it is No 3.

    Analysts often measure regional business cycles by looking at movements in various economic indicators, such as employment or the unemployment rate. But different indicators sometimes lead to...

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