Paradiplomacy is a relatively new international phenomenon that blurs the lines between local and global affairs. Greater exposure to international forces and opportunities has prompted local governments to act beyond their own jurisdictions. The external actions of internal actors can help account for differences in economic development between places like El Paso, TX and McAllen, TX. In the early 1980s, the border cities of McAllen and El Paso represented distinct stages of economic development. Agriculture prevailed in McAllen while manufacturing was dominant in El Paso. However, the passage of the North American Free Trade Agreement (NAFTA) in 1994 profoundly altered the United States-Mexico border region by creating new avenues for paradiplomacy. While El Paso struggled after the passage of NAFTA, McAllen successfully capitalized on new opportunities south of the border. In 2015, McAllen surpassed El Paso to become the fifth largest metropolitan area in Texas (Federal Reserve Bank of Dallas 2018). This thesis presents a comparative study on the role of paradiplomacy in channeling the benefits of trade liberalization and in explaining contrasting patterns in economic development post-NAFTA. The findings indicate that the presence of sustained and coordinated paradiplomacy in McAllen spurred economic development as documented across three major policy areas including business recruitment, infrastructure, and higher education. In contrast, the underutilization of paradiplomacy in El Paso led to missed economic opportunities and limited development planning.



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