"The paper seeks to make sense of the impacts and responses to the current war on drugs in Nuevo Laredo, a border city with the U.S. at the center of the mayhem of violence confronting Mexico today. In it the impacts of Drug Trafficking Organizations (DTOs) in Nuevo Laredo (NL) as well as prospects for recovery are examined drawing from three perspectives: a political economy analysis of competitiveness in a border city; the specifics of illegal drug business in Mexico as compared to Colombia using Michael Porter’s “Competitiveness Diamond”; and the strategies of local government to regain governance. The results are summarized in five theses. One, the outbursts of violence over the last ten years have created deep uncertainty, with important consequences for economic and government decision making; in consequence, NL has reaffirmed its primary function of managing international trade resulting from its privileged location. Stagnation of other sources of dynamism will hinder the possibilities of a stronger NL while Mexico advances toward greater integration with the U.S. Two, NL has become a violence ridden city due to the open rift between a DTO (the Gulf Cartel) and its recent competitor (the Zetas). The build up to the current violence levels, however, follows a different path in NL than in places like Ciudad Juárez. In the latter, the drug business evolved from traditional local drug dealers to the full-blown Juárez cartel. Conversely, in NL the initial groups were wiped out and substituted by cadres from the DTOs. Third, the NL elite, created and nurtured around the international trade business has generated an ethos of efficiency, achievement, and stubbornness when facing difficulties, percolating into other aspects of social life.

Fourth, despite the slow motion of Mexico’s decentralization, NL has opened the municipal government to civil society in an effort to restore confidence in government. The endurance of this gain in governance is an open question. Fifth, NL and its sister city, Laredo, Tx, have become more integrated than other border cities due to their intimate economic relationship. Greater integration in security policy and in infrastructure for the future is more importance than for other twin cities."--publ. note