By Julio Espinoza, Staff Writer
According to the local news, Phoenix Mayor Greg Stanton might be looking for a “higher, statewide office,” potentially the Arizona Secretary of State. Regardless of the political intentions of Stanton, he has been one of the most adamant proponents of a globally minded Phoenix Metro Area. His Department of Economic Development, led by Hank Marshall, has been very active in developing and implementing an international agenda for the City of Phoenix, which has been well received on both sides of the border, with constant visits back and forth. It seems that the City of Phoenix is building more bridges than walls as a few days ago they announced a $2.2 million capital investment deal with a Mexican based (Hermosillo, Sonora) manufacturing firm, after Mayor Stanton opened a new trade office in Hermosillo (the second office, with the original being in Mexico City).
Phoenix and Tucson are not only led by prominent Arizona democrats like Stanton and Rothschild, but also by two very popular mayors with a clear understanding of the opportunities offered by the global market. For the last few years, Stanton and Rothschild have been engaged in trade mission trips and other cooperative mechanisms such as memoranda of understanding with Mexican cities/states and a proper form of legal/business representation on Mexican soil. Memorandum is latin, singular, and its plural is memoranda. MoU are agreements that are not legally binding, but carry a serious message of respect and commitment towards fulfillment.
Why do the mayors of Phoenix and Tucson keep winning in Mexico? What makes them so especial? It is true that paradiplomacy is a very powerful tool for fostering cooperation while seeking a win-win deal that grows the pie for everyone. On the other hand, paradiplomacy can also be a tool for agents with political aspirations because it makes them look good by conveying leadership abroad for the betterment of the local community.
What we have here is a classic example of paradiplomacy, which in political science is defined as the international relations conducted by regional or subnational entities (provinces, states, landers, counties, municipalities, cities, towns, and other forms of local and state government, but not federal) to promote their own interests regardless of the nation-state’s foreign policy as a whole. In addition to subnational (government) entities, now paradiplomacy includes non-profit and for-profit organizations as paradiplomatic agents, because they also have global interests. So my concept of paradiplomacy is broader than the traditional, which only includes government entities.
There might be cases when a given paradiplomacy initiative and a federal foreign policy initiative contradict each other in nature and purpose. For example, while at the federal level the United States is currently pursuing an isolationist and mercantilist foreign policy, some subnational units are more globalist. Subnational units are aware of the opportunities that new markets abroad potentially offer, particularly the new growth market of Mexico, which boasts a growing demand of higher quality products and services and better business infrastructure for sourcing. Even as not quite a mature market yet, Mexico is a good fit for products and services of a value proposition that enhances new category users and creates repeat customers. Also, Mexican firms have grown in size and scope, some of them are now MNC’s or expanding businesses with interests abroad and with eyes on the Hispanic market segments of the United States. The U.S. Hispanics’ purchasing power in general has experienced an expansion in the last years and will continue growing ceteris paribus.
While the City of Tucson has been organizing the Mayor of Tucson Borderlands Trade Conference on a yearly basis and enjoys very friendly relationships with Mexican subnational entities, the city of Phoenix has also been very active in strengthening Phoenix-Mexico cooperative ties. Both cities have been successful in their international efforts reaching out to Mexico. But why? Isn’t Mexico the source of trouble these days? Isn’t Mexico a very different high-context culture that has traditionally been anti-American and very nationalistic?
Mexico could represent a constant constraint for U.S. foreign policy in the Western Hemisphere given its middle-power size, well-established regional diplomatic channels, regional historical leadership, and reputation as a negotiator and defendant of sovereignty, mutual respect, demilitarization, conflict resolution, and non-intervention in domestic affairs. But Mexico could also represent a large market opportunity, as I have expressed in other articles. That is why there is a contradiction in our federal – more subject to electoral calculations – and our local international efforts – more sensitive to job creation and inflationary pressures.
Not only governmental entities, but also non-governmental organizations have been very active in promoting their agendas in Mexico (again not necessarily in line or coordination with other players). This is a very particular characteristic of paradiplomacy: the lack of coordination between different layers of decision making, which sometimes translates into miscalculations. While some other actors in Arizona have tried to replicate the global efforts of our two major Arizona cities, they have failed in their approach and have seen less successful results, sometimes with a bitter taste. For example, according to an Arizona Daily Star article written by Luis Carrasco, a local chamber of commerce in Tucson allegedly ran into legal issues for apparently not complying with a piece of foreign market regulation, a very common mistake when intending to do global business.
Not only nation-states and subnational entities have operations abroad, but also companies expand in the global arena as well. In Spring 2016, Thunderbird global marketing professors, Ettenson and Auh, published an article in the HBR about the internal characteristics of firms that win globally: the 7 tudes: attitude, aptitude, magnitude, latitude, rectitude, exactitude and fortitude. Their argument boils down to the fact that global expansion depends of external factors (supply and demand), as well as internal factors (the capabilities of your organization).
The Mayor of Phoenix and the Mayor of Tucson seem to intuitively understand the value of the “7 tudes” conceptualized by Ettenson and Auh, and have put together very professional teams of economic developers that appreciate doing business abroad and adapting to the new frameworks. In my opinion, understanding the value of approaching a new market with rectitude (observing the law of any foreign country) is perhaps the most important of the “tudes” because your product, service, political initiative, or vested interest has the potential to fail to grow abroad if you don’t comply with all the regulatory and political red tape, like the case of the Tucson chamber of commerce cited above.
If you do not comply with the law, your reputation could take a hit, brand erosion, and paradiplomacy could be counter-productive for your organization. Hiring a T-bird will mitigate your risk of running into internal and external problems while expanding operations in the global market. We understand the value of the mix of strong financial performance and market adaptation. We will take care of your ROI while simultaneously creating sustainable sources of business for America.
Feature photo courtesy of: dreamstime.com