The Economy Of Mexico: International Business and Trade

Historical Background and Demographics

Mexico has Many pre-Columbian civilizations including the Aztec and Mayan settlements. In 1521, Spain colonized the territory and still has strong influences over Mexican Culture. The Mexican Revolution took place in 1910 which caused the emergence of the country's current political system.

Area: 1,972,550km2 (14th largest in the world)

Population: 113,724,226 (11th largest in the world)

The population is based on 2011 estimates, and reflects a ten year increase of 23.5%. In 2011 birth rate was estimated to be 18.87 births/1000 population, death rate almost 4 times less at 4.9 deaths/1000 population. The highest income per capita was evaluated at $14,400 in 2011, growing on average 4% annually (except during the 2008-2009 fiscal year). This puts Mexico firmly in the upper-middle income bracket. Middle class began shrinking after the 90's as
income disparity continued to grow.

  • Over 50% of the population live in poverty
    (2011), a rate that has been growing since 2006
  • 5.2% (2011 est.) unemployment rate (51 in the
    world)
  • Underemployment as high as 25%
  • Gross National Income (GNI) is second highest in Latin America at $1.8
    billion in 2009.
  • Country focuses on agriculture, manufacturing
    and mining industry and in services.


Culture and Political Factors

  • Language – Spanish is the official language, although over
    100 Native Indian languages are spoken.
  • Religion - 90% of Mexicans are Roman
    Catholic
  • Traditions- Mexicans do not embrace the
    “time is money” mentality
  • Effort to minimize uncertainty in society
    Society is collectivist (loyalty is key)
  • Male dominated authoritarian society
  • Federal Republic -representative, democratic and republican government
  • Regional power - presence in G8+5 and G-20
  • Founding member of United Nations, NAFTA in1990’s : As part of economic liberalization process instilled deregulation of several ndustries.

A) Promotion of foreign investment,
B) Privatization of key sectors, and
C) Removal of import restriction


Comparative Advantages and Major Industries

Comparative Advantages Include:

Manufacturing

Agriculture

Mineral Resources

Manufacturing is cheap in Mexico due to low wages and low labor costs, as well as lack of government regulation for labor conditions. Over the last decade Mexico has not only been manufacturing more electronics and automobile parts, but also overlooking design aspects as well.

Mexico is one of the leading producers of potatoes and sugar cane, both of which are exported far more vastly than they are consumed, especially potatoes. The corn and bean industries were also subsidized by the government in the 90's to give Mexico a production advantage.

Mexico is the sixth largest oil producer in the world. While funded by the private sector, this industry is heavily taxed and so is a major source of income for the government.

Major Industries:

  • Tourism
  • Food and Beverages
  • Tobacco
  • Chemicals
  • Iron and Steel
  • Petroleum
  • Textiles
  • Clothing
  • Motor vehicles

Mexico Exports:

$336.3 billion (2011 est.)

$298.5 billion (2010 est.)

Canada Exports:

$447.8 billion (2011 est.)

$399.3 billion (2010 est.)

In terms of Tourism, Mexico is the 8th most visited country on the world, with over 20 million tourists every year .

In 2001, Mexico produced 1.85 million motor vehicles. Leading manufacturers include Ford, Chrysler, General Motors, and Volkswagen.

Total manufacturing output in Mexico increased on average by 2.3% per year during the early 1980s by up to 3.9% by the 90's.

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