What Is El Paso’s Comparative Advantage?

Development economists like to talk about an economy’s comparative advantage. Investopedia says this about Comparative Advantage:

Comparative advantage is an economic term that refers to an economy’s ability to produce goods and services at a lower opportunity cost than trade partners. A comparative advantage gives a company the ability to sell goods and services at a lower price than its competitors and realize stronger sales margins. The law of comparative advantage is popularly attributed to English political economist David Ricardo and his book “Principles of Political Economy and Taxation” in 1817, although it is likely that Ricardo’s mentor James Mill originated the analysis.

Like all things either comparative or advantageous, Comparative Advantage is a relative term. So what does El Paso’s economy have, or have cheaper or more productive, that other places don’t?

Well, you don’t have to bust your head trying to figure it out, because we have a local think tank that’s been sifting the data.

The Hunt Institute for Global Competitiveness says their mission is “to produce high quality market analysis tools that can strengthen regional and binational cross-border economic and social development.”

Now I reckon that they’ve got some smart people over there at the HIGC (do you mind if I call it that?), and they’ve been working on it for a while. They’ve done all kinds of economic modeling, and made some reports, and if you sift through the considerable high-quality jargon, looking for some nuggets of truth, you’ll come up with this, which I lifted that from a synopsis of a report called Paso del Norte Economic Indicator Review under their Strategic Sector Analysis tab.:

Our analysis confirms the region’s significance and demonstrates the need to expedite the flow of trade and add value along supply chains passing through the region to strengthen and secure a position on a national and international level.

That’s right. El Paso’s significance lies in the fact that El Paso is on the way to someplace else.

Of course. El Paso’s very name implies that.

I’m not faulting the people over there at the Hunt Institute for Global Competitiveness. I reckon that they’re smart people and they’ve put a lot of time and thought into the study of the region and they’ve done some quality work. It is what it is. But I reckon the way to “expedite the flow of trade and add value along supply chains” is to get out of the way. And short of extortion, I don’t really see a way to monetize that.

You know, back in 2015, the Borderplex Alliance hired some out-of-town hotshots to come up with a strategic plan for the region. I critiqued it here.


  1. It never ceases to amaze me how willing people are to spend tax money to learn things that we all already know. And, further, how quickly whatever advice is paid for, gets ignored in favor of more costly and ridiculous options. In this particular case, your statement about our very name pretty well sums it all up. People only travel *to* El Paso to get to someplace else!

    1. My wife is teacher. When she worked at UTEP they had a policy of arranging flight schedules for prospective new hire employees that ensured they flew in at night so they couldn’t see Juarez. That was a well define policy position at UTEP. El Paso is not for everybody

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