Editor's noteBorder security: Some sectors benefit, others suffer

Three issues have combined to make border security big business and a hot political topic (even if the weight of each issue varies from country to country): fear of terrorism, worries about the effects of illegal immigrants on the economy, and more diffuse anxiety about the impact large waves of uncontrolled immigration would have on a country’s culture and mores (witness, for example, the debate in France about prohibiting Muslim girls from wearing a face-covering chador in public schools).

This combination of concerns has directly benefited three industries.

The desire better to monitor who comes into a country — and who, inside the country, should be entitled to tax-supported government services — has led governments around the world to launch elaborate schemes for better identification of people. Most of these schemes involve converting various identification documents — driver licenses, passports, etc. — into biometric, RFID-capable documents. Large databases have been created to store the biometric information of millions of people. The biometric industry has benefited mightily from this trend.

Governments’ desire to prevent unauthorized entry into their countries has led to the construction of sophisticated surveillance and monitoring systems along countries’ borders. Countries such as the United States, Israel, India, Saudi Arabia, Turkey, and many more have launched projects worth billions of dollars to build thousands of miles of both physical and virtual fences, augmented by sophisticated motion and heat sensors, thermal and night imaging, and intelligent CCTV. Parts of these systems are on the ground, others are mounted on UAVs, blimps, and light planes.
The prison and detention industry has benefited as well. Under President Obama, DHS is largely continuing the get-tough policy toward undocumented workers which the Bush administration initiated after 9/11. The most recent expression of this continuation of policy is DHS’s support of a Bush administration’s E-Verify initiative, requiring all contractors doing business with the federal government to use E-Verify to make sure their employees are authorized to work in the United States.

The tougher policy also meant that more and more illegal immigrants are driven from their workplaces and homes — and the concomitant growing need for beds, either in prisons or detention centers, to accommodate them. The private prison industry has benefited — as have large government contractors who are winning bids to manage DHS detention centers.

The preoccupation with border security has thus given considerable boost to three industries - biometrics, surveillance, and prison management, and to the services which support these industries. This has been a boon to many small companies and start-ups with innovative technologies. The rising importance of these three sectors has also been highlighted by the fact that large defense contractors, sensing a shift in governments’ priorities and budgets, have been moving into these sectors.

Some sectors benefit from the growing occupation with border security, but other suffer. Especially affected are those industries that rely on cross-border trade between the United States and Canada. Business leaders and politicians bitterly complain that in a rush to improve border security, the U.S. government has, so far, applied security measures to the U.S.-Canada border which are similar to the measures being implemented along the U.S.-Mexico border. Mexico is not Canada, they argue, and the problems along the southern border are not similar to the issues that should be addressed along the northern border.

This is an important issue: Canada is the U.S.’s largest trading partner, and millions of jobs on both sides of the border depend on the unhampered flow of commerce between the two countries.
From business perspective, then, the border security issue is not unlike other business issues which have come to the fore as a result of the world’s response to 9/11. The urge to bolster security has driven the growth in some sectors of the economy, but has also hobbled other sectors. Our interim conclusion: The right balance between security and commerce is yet to be achieved along the U.S. borders.

Ben