Mexico is Arizona’s No. 1 trading partner with over $15 billion in trade annually. The bulk of Arizona’s international commerce is with Sonora, the immediate neighbor to the south, but there are other potential economic opportunities worth exploring across Mexico. Here the focus is on Guanajuato, one of Mexico’s most economically advanced states with robust international trading ties. Watts College of Public Service and Community Solutions and Morrison Institute for Public Policy at Arizona State University researched the potential for enhanced economic ties between Arizona and Guanajuato, a state and capital city by the same name located in Central Mexico, 227 miles northwest of Mexico City and about 1,100 miles southeast of Phoenix. Watts College and Morrison Institute partnered with the L. William Seidman Research Institute at ASU’s W.P. Carey School of Business to produce a detailed economic profile of Guanajuato in order to guide ongoing and future exploration of expanded trade with Arizona.

This report provides an assessment for fiscal year (FY) 2013 of the economic contribution of Arizona State University (ASU) to the city of Phoenix, Arizona. Estimates are presented for the jobs and incomes that are supported in the Phoenix economy by the spending of the university and its employees and students. The economic contribution to Phoenix of the spending by the university, its employees, and its students, in FY 2013 totaled more than 24,000 jobs, $1.1 billion in labor income, and nearly $1.8 billion in gross product.

The state government general fund shortfall in the next fiscal year is projected to be $2.4 billion. A projected shortfall of $1.6 billion will need to be closed through spending reductions and/or revenue enhancements. The Legislature has focused on reductions in funding to state agencies. However demand does not decline for most public-sector services during a recession. Spending reductions by governments during recessions also worsen economic conditions. State spending cuts would worsen and lengthen the economic recession. The negative economic effects from a personal tax increase would be less than those of a governmental spending decrease. The demand for university services also does not drop during recessions. Any reduction in funding for universities will have a negative and direct effect. A substantial decrease in state government funding for universities will have negative consequences beyond these short-term effects. Any action--such as budget cuts--that undermines the success of the state's universities also impairs the state's economy.