This paper was prepared for the Brookings Panel on Economic Activity of September 5, 2003.We want to thank Sascha Becker, Bill Brainard, Pierre O. Gourinchas, Gordon Hanson, Graciela Kaminski, Tim Kehoe, Aart Kraay, Anne Krueger, Norman Loayza, George Perry, Romain Ranciere, Luis Serven, Sergio Schmuckler, Carolyn Sissoko and Alejandro Werner for helpful discussions. For providing data we thank Jos煤e Campos, Jaime de la Llata, Gerardo Leyva, Arturo L贸pez at INEGI, and Alfonso Guerra and Jessica Serrano at Banco de M茅xico. Miguel D铆az, Pedro J. Mart铆nez, Paulina Oliva and Roberto Romero provided excellent research assistance.