. . . World Bank economists estimate that developing countries need annual growth rates of 5% to 6% for at least a decade to begin to move people out of poverty. But Mexican GDP growth from 1997 to 2005 averaged just 3.5% a year -- and a good part of that was attributable to the post-devaluation bounce of the late 1990s. Mexico's modernizers have fair warning: Either produce better results or risk going the way of Bolivia.

The economy's anemic performance can be best observed in the export sector. Mexico's share of U.S. imports fell to 10.2% in 2005 from 11.5% in 2001 and that includes oil. Strip out oil, and the deterioration is even worse. Mexican bureaucrats like to blame this on "unfair" competition from China but the truth is that Mexico, sitting on the border of the world's largest economy, has been unable to exploit its own comparative advantages.

The reason is simple. A 21st-century economy is shackled by 20th-century monopolies, vestiges of the old Institutional Revolutionary Party (PRI), in some of the economy's most crucial sectors. Single or dominant players control pricing in telecommunications, cement, transportation, electricity and oil. Market data show that Mexicans are overpaying for all of it. This impacts living standards for consumers. But it also hurts Mexican output. Growth is damped and so are new opportunities. Capital is misallocated and excess labor persists. On the export front, producers have little choice but to pass their high costs on to their customers, which means they become less competitive in world markets.

If Mexico is to enter the global growth game it has to reduce its internal cost of production. This isn't rocket science. But it is rather inconvenient for the Mexican political class, which relies heavily on the monopolists as its clients. What is particularly discouraging is that it may have become cheaper than ever for domestic producers to buy political influence since the collapse of one-party rule under the PRI. With politicians weaker today than they used to be, they can be more dependent on special interests.

This could explain why leadership on the competition question has disappeared just at the time it is so badly needed. Three weeks ago, in a stunning rejection of economic reality, the Mexican Congress made it illegal to discount the sale of books. By legalizing price collusion among distributors, Congress has ensured that discounters can't move into the market.

For years Mexico has been running in place, failing to create jobs for its own citizens. Naturally, Mexicans wanting jobs leave, and gravitate toward the closest job producer: the United States. It's no coincidence that immigration into the United States ebbs and flows based on U.S. economic performance and associated job creation.

Ireland, for many years, had something in common with today's Mexico: it's largest export, seemingly, was young people. More recently, growth-oriented policies have turned Ireland into one of Europe's shining economic stars. Consequently and not surprisingly, Ireland's migration issue has changed from emigration to immigration.

What all this points to is that immigration is not a state issue, or even a national issue for the United States. It starts with the domestic economy of Mexico, which for this country means immigration must be addressed as a matter of foreign policy.