Gringo capitalism: beyond border control.

OVER THE LONG term, the only way to reduce illegal immigration along the southern border is prosperity--in Mexico. To that end a group of venture capitalists is attempting to jump-start the Mexican economy's job-creating engine.

Investors and entrepreneurs working with economists from Claremont Graduate University want to create a $100 million venture capital fund for Mexico's risk-taking class. They take encouragement from the fact that the Mexican economy has grown at an annual rate of about 4 percent in recent years. And it is clear that a steady supply of jobs does keep some workers from heading north. Resort areas, for example, do not see the local population packing up for a border crossing.

But there are many hurdles. The rules for doing business in Mexico are remarkably, shall we say, informal. Mix gray-market transactions with Mexico's steady rumble of political instability, add a dollop of very risky venture capital plays, and the odds for success are not good.

Still, it is precisely that kind of risk taking that Mexico needs to foster a class of sophisticated small business owners. If the Mexico Opportunity Fund manages to at least identify the roadblocks to Mexico's capital formation, it will have been much more successful than most attempts at border control.