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The Porfiriato brought unprecedented economic growth during the last quarter of the nineteenth century. This growth was accompanied by foreign investment and European immigration, the development of railroad networks and the exploitation of the country's natural resources. Annual economic growth between 1876 and 1910 averaged 3.3%. Large-scale ownership made considerable progress while foreign land companies accumulated millions of hectares. At the end of 
Growth while under the ISI model had reached its peak in the late 1960s. During the 1970s, the presidential administrations of
Mexico's Gross Domestic Product (GDP) in
lost in a single year 19.87% of its value
reaching an exchange rate of $20.37 per dollar in 2017. Interest rates in 2007 were situated at around 7 percent, having reached a historic low in 2002 below 5 percent. Inflation rates are also at historic lows; the inflation rate in Mexico in 2006 was 4.1 percent, and 3 percent by the end of 2007. Compared against the US Dollar, Mexican Peso has devalued over %7,500 since 1910. Unemployment rates are the lowest of all
Poverty in Mexico is measured under parameters such as
A single person in Mexico,
"Si bien la pobreza había venido disminuyendo a lo largo de los últimos decenios, en fechas recientes ha vuelto a aumentar. Entre 2004 y 2008 la proporción de personas que vivían con menos del 50% del ingreso medio aumentó del 18.4% al 21%. También se registró un crecimiento considerable en las últimas estadísticas oficiales sobre la pobreza absoluta, que tienen en cuenta el acceso a alimentos, salud, educación, vivienda y otros factores. De acuerdo con datos recientes del Consejo Nacional de Evaluación de la Política de Desarrollo Social (CONEVAL), entre 2006 y 2010, la proporción de personas que vivían en la pobreza (extrema y moderada) aumentó del 35% al 46% (lo que equivale a 52 millones de personas). El alto nivel de pobreza absoluta se refleja también en otros indicadores relativos a las condiciones de vida: por ejemplo, la mortalidad infantil, que es tres veces superior al promedio de la OCDE, y la tasa de analfabetismo, que supera a la media del conjunto de la Organización. México es el segundo país con las desigualdades más grandes entre los países de la OCDE, después de Chile, si bien la tendencia ha sido descendente en la última década. Las estadísticas más recientes de la OCDE, que figuran en el informe Divided We Stand (diciembre de 2011), señalan que el 10% más pobre de la población de México percibe alrededor del 1.3% del ingreso total disponible, mientras que el 10% más rico recibe casi el 36%. Aunque México es uno de los pocos países de la OCDE donde las desigualdades han disminuido en las últimas décadas, éstas siguen siendo altas y se han convertido en un obstáculo para el crecimiento y el desarrollo." According to the World Bank, in 2004, 17.6% of Mexico's population lived in extreme poverty, while 21% lived in moderated poverty.
Regional disparities and income inequality are a feature of the Mexican economy. While all constituent states of the federation have a
Gross Domestic Product (GDP) in
Mexico is by far the world's largest
The industrial sector as a whole has benefited from trade liberalization; in 2000 it accounted for almost 50% of all export earnings.
Among the most important industrial manufacturers in Mexico is the automotive industry, whose standards of quality are internationally recognized. The automobile sector in Mexico differs from that in other Latin American countries and developing nations in that it does not function as a mere assembly manufacturer. The industry produces technologically complex components and engages in some research and development activities, an example of that is the new Volkswagen Jetta model with up to 70% of parts designed in Mexico.
The "Big Three" (
The electronics industry of Mexico has grown enormously within the last decade. Mexico has the sixth largest electronics industry in the world after
. Promexico.gob.mx. Retrieved on 2010-08-14. with
Mexico is also home to a large number of OEM and ODM manufactures both foreign and domestic. Among them include
There are almost half a million (451,000) students enrolled in electronics engineering programs with an additional 114,000 electronics engineers entering the Mexican workforce each year and Mexico had over half a million (580,000) certified electronic engineering professionals employed in 2007. From the late 1990s, the Mexican electronics industry began to shift away from simple line assembly to more advanced work such as research, design, and the manufacture of advanced electronics systems such as LCD panels, semiconductors, printed circuit boards, microelectronics, microprocessors, chipsets and heavy electronic industrial equipment and in 2006 the number of certified engineers being graduated annually in Mexico surpassed that of the United States. Many Korean, Japanese and American appliances sold in the US are actually of Mexican design and origin but sold under the OEM's client names. In 2008 one out of every four consumer appliances sold in the United States was of Mexican design.
Although much of Mexico's electronics industry is driven by foreign companies, Mexico also has a sizeable domestic electronics industry and a number of electronics companies including Mabe, a major appliance manufacturer and OEM which has been functioning since the nineteen fifties and has expanded into the global market,
Mineral resources are public property by constitution. As such, the energy sector is administered by the government with varying degrees of private investment. Mexico is the fourteenth-largest oil producer in the world, with .
Manufacturing in Mexico grew rapidly in the late 1960s with the end of the US farm labor agreement known as the bracero program. This sent many farm laborers back into the Northern border region with no source of income. As a result, the US and Mexican governments agreed to The Border Industrialization Program, which permitted US companies to assemble products in Mexico using raw materials and components from the US with reduced duties. The Border Industrialization Program became known popularly as The Maquiladora Program or shortened to The Maquila Program.
Over the years, simple assembly operations in Mexico have evolved into complex manufacturing operations including televisions, automobiles, industrial and personal products. While inexpensive commodity manufacturing has flown to China, Mexico attracts U.S. manufacturers that need low-cost solutions near-by for higher value end products and just-in-time components.
The automotive sector accounts for 17.6% of Mexico's manufacturing sector.
Mexico has a MXN 4.027 trillion retail sector (2013, about US$300 billion at the 2013 exchange rate) including an estimated US$12 billion (2015) in
In 2013 the tertiary sector was estimated to account for 59.8% of Mexico's GDP. In 2011 services employed 61.9% of the working population. This section includes transportation, commerce, warehousing, restaurant and hotels, arts and entertainment, health, education, financial and banking services, telecommunications as well as public administration and defense. Mexico's service sector is strong, and in 2001 replaced
Tourism is one of the most important industries in Mexico. It is the fourth largest source of foreign exchange for the country. Mexico is the eighth most visited country in the world (with over 20 million tourists a year).
According to the
Mexico has a single securities market, the 
The
Mexico has a
Mexico's monetary policy was revised following the 1994–95 financial crisis, when officials decided that maintaining general price stability was the best way to contribute to the sustained growth of employment and economic activity. As a result, Banco de México has as its primary objective maintaining stability in the purchasing power of the peso. It sets an inflation target, which requires it to establish corresponding quantitative targets for the growth of the monetary base and for the expansion of net domestic credit.
The central bank also monitors the evolution of several economic indicators, such as the exchange rate, differences between observed and projected inflation, the results of surveys on the public and specialists’ inflation expectations, revisions on collective employment contracts, producer prices, and the balances of the current and capital accounts.
A debate continues over whether Mexico should switch to a US-style interest rate-targeting system. Government officials in favor of a change say that the new system would give them more control over interest rates, which are becoming more important as consumer credit levels rise.
Until 2008, Mexico used a unique system, amongst the OECD countries, to control inflation in a mechanism known as the ''corto'' (lit. "shortage") a mechanism that allowed the central bank to influence market interest rates by leaving the banking system short of its daily demand for money by a predetermined amount. If the central bank wanted to push interest rates higher, it increased the ''corto''. If it wished to lower interest rates, it decreased the ''corto''. In April 2004, the Central Bank began setting a referential overnight interest rate as its monetary policy.
Petty corruption based on exercise of administrative discretion in matters of zoning and business permits is endemic in Mexico adding about 10% to the cost of consumer goods and services. An April 2012 article in ''
"Vast Mexican Bribery Case Hushed Up by Wal-Mart After High-Level Struggle"
''
Mexico is a trade-oriented economy, with imports and exports totaling a 78% share of the GDP in 2019. It is an important trade power as measured by the value of merchandise traded, and the country with the greatest number of free trade agreements. In 2020, Mexico was the world's eleventh largest merchandise exporter and thirteenth largest merchandise importer, representing 2.4% and 2.2% of world trade, respectively (and those rankings increased to 7th and 9th if the EU is considered a single trading entity). From 1991 to 2005, Mexican trade increased fivefold. Mexico is the biggest exporter and importer in Latin America; in 2020, Mexico alone exported US$417.7 billion, roughly equivalent to the sum of the exports of the next 5 largest exporters (Brazil, Chile, Argentina, Peru, and Colombia).
Mexican trade is fully integrated with that of its North American partners: , approximately 80% of Mexican exports and 50% of its imports were traded with the United States and Canada. Nonetheless, NAFTA has not produced trade diversion. While trade with the United States increased 183% from 1993 to 2002, and that with Canada 165%, other trade agreements have shown even more impressive results: trade with Chile increased 285%, with Costa Rica 528% and Honduras 420%. Trade with the European Union increased 105% over the same time period.
* Free Trade Agreement with
The 1994 North American Trade Agreement (NAFTA) is by far the most important Trade Agreement Mexico has signed both in the magnitude of reciprocal trade with its partners as well as in its scope. Unlike the rest of the Free Trade Agreements that Mexico has signed, NAFTA is more comprehensive in its scope and was complemented by the North American Agreement for Environmental Cooperation (NAAEC) and the North American Agreement on Labor Cooperation (NAALC). An updating of the 1994 NAFTA, the U.S., Mexico, Canada ( USMCA) is pending in early 2020, awaiting the ratification by Canada; the U.S. and Mexico have ratified it.
The NAAEC agreement was a response to environmentalists' concerns that companies would relocate to Mexico or the United States would lower its standards if the three countries did not achieve a unanimous regulation on the environment. The NAAEC, in an aim to be more than a set of environmental regulations, established the North American Commission for Environmental Cooperation (NACEC), a mechanism for addressing trade and environmental issues, the North American Development Bank (NADBank) for assisting and financing investments in pollution reduction and the Border Environmental Cooperation Commission (BECC). The NADBank and the BECC have provided economic benefits to Mexico by financing 36 projects, mostly in the water sector. By complementing NAFTA with the NAAEC, it has been labeled the "greenest" trade agreement.
The NAALC supplement to NAFTA aimed to create a foundation for cooperation among the three members for the resolution of labor problems, as well as to promote greater cooperation among trade unions and social organizations in all three countries, in order to fight for the improvement of labor conditions. Though most economists agree that it is difficult to assess the direct impact of the NAALC, it is agreed that there has been a convergence of labor standards in North America. Given its limitations, however, NAALC has not produced (and in fact was not intended to achieve) convergence in employment, productivity and salary trend in North America.
The agreement fell short in liberalizing movement of people across the three countries. In a limited way, however, immigration of skilled Mexican and Canadian workers to the United States was permitted under the 
The overall benefits of NAFTA have been quantified by several economists, whose findings have been reported in several publications like the
A 2008 research brief published by the
, John S. Wilson & Benjamin Taylor; Trade Facilitation Reform Research Brief, The World Bank. 2008. as part of it
Trade Costs and Facilitation Project
suggested that Mexico had the potential to substantially increase trade flows and economic growth through
online free
Mexican Council for Economic and Social Development
*
Mexico Development Gateway
Mexican Economy and the U.S.
from th
Dean Peter Krogh Foreign Affairs Digital Archives
OECD's Mexico country Web site
an
OECD Economic Survey of Mexico
Did NAFTA Help Mexico? An Update After 23 Years
from the
Comprehensive current and historical economic dataInformation about banks in MexicoWorld Bank: Mexico Trade Statistics
*Tariffs applied by Mexico as provided by ITC'
ITC Market Access Map
an online database of customs tariffs and market requirements {{DEFAULTSORT:Economy Of Mexico
The economy of
The World Factbook. CIA. Recently,
Global 2000">
Mexico's labor force consisted of 52.8 million people as of 2015. The Mexico
Mexico (Spanish language, Spanish: México), officially the United Mexican States, is a List of sovereign states, country in the southern portion of North America. It is borders of Mexico, bordered to the north by the United States; to the so ...
is a developing mixed-market economy. It is the 15th largest in the world in nominal GDP terms and the 13th largest by purchasing power parity, according to the International Monetary Fund
The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster glo ...
. Since the 1994 crisis, administrations have improved the country's macroeconomic fundamentals. Mexico was not significantly influenced by the 2002 South American crisis, and maintained positive, although low, rates of growth after a brief period of stagnation in 2001. However, Mexico was one of the Latin American nations most affected by the 2008 recession
The Great Recession was a period of marked general decline, i.e. a recession, observed in national economies globally that occurred from late 2007 into 2009. The scale and timing of the recession varied from country to country (see map). At t ...
with its gross domestic product contracting by more than 6% in that year.
The Mexican economy has had unprecedented macroeconomic stability, which has reduced inflation and interest rates to record lows. In spite of this, significant gaps persist between the urban and the rural population, the northern and southern states, and the rich and the poor. Some of the unresolved issues include the upgrade of infrastructure, the modernization of the tax system and labor laws, and the reduction of income inequality. Tax revenues, altogether 19.6 percent of GDP in 2013, were the lowest among the then 34 OECD
The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate ...
countries. As of 2022, the OECD 38 has members.
The economy contains rapidly developing modern industrial and service sectors, with increasing private ownership. Recent administrations have expanded competition in ports, railroads, telecommunications, electricity generation
Electricity generation is the process of generating electric power from sources of primary energy. For utilities in the electric power industry, it is the stage prior to its delivery ( transmission, distribution, etc.) to end users or its s ...
, natural gas distribution and airports, with the aim of upgrading infrastructure. As an export-oriented economy
A trading nation (also known as a trade-dependent economy, or an export-oriented economy) is a country where international trade makes up a large percentage of its economy.
Smaller nations (by population) tend to be more trade-dependent than larg ...
, more than 90% of Mexican trade is under free trade agreement
A free-trade agreement (FTA) or treaty is an agreement according to international law to form a free-trade area between the cooperating states. There are two types of trade agreements: bilateral and multilateral. Bilateral trade agreements occ ...
s (FTAs) with more than 40 countries, including the European Union, Japan, Israel, and much of Central
Central is an adjective usually referring to being in the center of some place or (mathematical) object.
Central may also refer to:
Directions and generalised locations
* Central Africa, a region in the centre of Africa continent, also known a ...
and South America. The most influential FTA is the United States–Mexico–Canada Agreement
The Agreement between the United States of America, the United Mexican States, and Canada (USMCA) Commonly known as the United States–Mexico–Canada Agreement (USMCA) in the United States and the Canada–United States–Mexico Agreement (CU ...
(USMCA), which came into effect in 2020, and was signed in 2018 by the governments of the United States, Canada and Mexico. In 2006, trade with Mexico's two northern partners accounted for almost 90% of its exports and 55% of its imports.MexicoThe World Factbook. CIA. Recently,
Congress
A congress is a formal meeting of the representatives of different countries, constituent states, organizations, trade unions, political parties, or other groups. The term originated in Late Middle English to denote an encounter (meeting of ...
approved important tax, pension, and judicial reforms. Reform to the oil industry is currently being debated. In 2016, Mexico had 16 companies in the Forbes Global 2000
The ''Forbes'' Global 2000 is an annual ranking of the top 2000 public companies in the world, published by ''Forbes'' magazine. "The Global 2000" annual ranking is assembled by ''Forbes'' using a weighted assessment of four metrics: sales, profit ...
list of the world's largest companies.Forbes
''Forbes'' () is an American business magazine owned by Integrated Whale Media Investments and the Forbes family. Published eight times a year, it features articles on finance, industry, investing, and marketing topics. ''Forbes'' also r ...OECD
The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate ...
and WTO both rank Mexican workers as the hardest-working in the world in terms of the number of hours worked yearly. Pay per hours worked remains low.
History
The Porfiriato brought unprecedented economic growth during the last quarter of the nineteenth century. This growth was accompanied by foreign investment and European immigration, the development of railroad networks and the exploitation of the country's natural resources. Annual economic growth between 1876 and 1910 averaged 3.3%. Large-scale ownership made considerable progress while foreign land companies accumulated millions of hectares. At the end of Porfirio Díaz
José de la Cruz Porfirio Díaz Mori ( or ; ; 15 September 1830 – 2 July 1915), known as Porfirio Díaz, was a Mexican general and politician who served seven terms as President of Mexico, a total of 31 years, from 28 November 1876 to 6 Decem ...
's dictatorship, 97% of arable land belonged to 1% of the population and 95% of peasants were landless, becoming farmworkers in huge haciendas or forming an impoverished urban proletariat whose revolts were crushed one by one.
Political repression and fraud, as well as huge income inequalities exacerbated by the land distribution system based on ''latifundios
A ''latifundium'' (Latin: ''latus'', "spacious" and ''fundus'', "farm, estate") is a very extensive parcel of privately owned land. The latifundia of Roman history were great landed estates specializing in agriculture destined for export: grain, o ...
'', in which large hacienda
An ''hacienda'' ( or ; or ) is an estate (or '' finca''), similar to a Roman '' latifundium'', in Spain and the former Spanish Empire. With origins in Andalusia, ''haciendas'' were variously plantations (perhaps including animals or orchard ...
s were owned by a few but worked by millions of impoverished peasants living in precarious conditions, led to the Mexican Revolution
The Mexican Revolution ( es, Revolución Mexicana) was an extended sequence of armed regional conflicts in Mexico from approximately 1910 to 1920. It has been called "the defining event of modern Mexican history". It resulted in the destruction ...
(1910–1920), an armed conflict that drastically transformed Mexico's political, social, cultural, and economic structure during the twentieth century. The war itself left a harsh toll on the economy and population, which decreased over the 11-year period between 1910 and 1921. The reconstruction of the country was to take place in the following decades.
The period from 1940 to 1970 has been dubbed by economic historians as the Mexican Miracle, a period of economic growth that followed the end of the Mexican Revolution and the resumption of capital accumulation during peacetime. During this period, Mexico adopted an import substitution industrialization (ISI) model, which protected and promoted the development of national industries. Mexico experienced an economic boom through which industries rapidly expanded their production.
Important changes in the economic structure included free land distribution to peasants under the concept of '' ejido'', the nationalization of the oil and railroad companies, the introduction of social rights
Economic, social and cultural rights, (ESCR) are socio-economic human rights, such as the right to education, right to housing, right to an adequate standard of living, right to health, victims' rights and the right to science and culture. Econo ...
into the 1917 Constitution, the birth of large and influential labor unions, and the upgrading of infrastructure. While population doubled from 1940 to 1970, GDP increased sixfold during the same period.
Growth while under the ISI model had reached its peak in the late 1960s. During the 1970s, the presidential administrations of Luis Echeverría
Luis Echeverría Álvarez (; 17 January 1922 – 8 July 2022) was a Mexican lawyer, academic, and politician affiliated with the Institutional Revolutionary Party (PRI), who served as the 57th president of Mexico from 1970 to 1976. Previously ...
(1970–76) and José López Portillo
José Guillermo Abel López Portillo y Pacheco (; 16 June 1920 – 17 February 2004) was a Mexican writer, lawyer and politician affiliated with the Institutional Revolutionary Party (PRI) who served as the 58th president of Mexico from 1976 t ...
(1976–82) tried to include social development in their policies, an effort that entailed increased public spending. With the discovery of vast oil fields during a period of oil price increases and low international interest rates, the government borrowed from international capital markets to invest in the state-owned oil company Pemex
Pemex (a portmanteau of Petróleos Mexicanos, which translates to ''Mexican Petroleum'' in English; ) is the Mexican state-owned petroleum company managed and operated by the Mexican government. It was formed in 1938 by nationalization and expr ...
, which in turn seemed to provide a long-run income source to promote social welfare. This produced a remarkable growth in public expenditure, and president López Portillo announced that the time had come to "manage prosperity" as Mexico multiplied its oil production to become the world's fourth-largest exporter.
In the period of 1981–1982 the international panorama changed abruptly: oil prices plunged and interest rates rose. In 1982, López Portillo, just before ending his administration, suspended payments of foreign debt, devalued the peso
The peso is the monetary unit of several countries in the Americas, and the Philippines. Originating in the Spanish Empire, the word translates to "weight". In most countries the peso uses the same sign, "$", as many currencies named " doll ...
and nationalized the banking system, along with many other industries that were severely affected by the crisis, among them the steel industry. While import substitution had contributed to Mexican industrialization, by the 1980s protracted protection of Mexican companies had led to an uncompetitive industrial sector with low productivity gains.
President Miguel de la Madrid
Miguel de la Madrid Hurtado (; 12 December 1934 – 1 April 2012) was a Mexican politician affiliated with the Institutional Revolutionary Party (PRI) who served as the 59th president of Mexico from 1982 to 1988.
Inheriting a severe economic a ...
(1982–88) was the first of a series of presidents that implemented neoliberal
Neoliberalism (also neo-liberalism) is a term used to signify the late 20th century political reappearance of 19th-century ideas associated with free-market capitalism after it fell into decline following the Second World War. A prominent f ...
policies. After the crisis of 1982, lenders were unwilling to return to Mexico and, in order to keep the current account in balance, the government resorted to currency devaluations, which sparked unprecedented inflation, reaching an annual record of 139.7% in 1987.
One of the first steps toward trade liberalization was Mexico's signature of the General Agreement on Tariffs and Trade
The General Agreement on Tariffs and Trade (GATT) is a legal agreement between many countries, whose overall purpose was to promote international trade by reducing or eliminating trade barriers such as tariffs or quotas. According to its pr ...
(GATT) in 1986 under President de la Madrid. During the administration of Carlos Salinas de Gortari (1988–94) many state-owned companies were privatized. The telephone company Telmex
Telmex is a Mexican telecommunications company headquartered in Mexico City that provides telecommunications products and services in Mexico. Telmex is still the dominant fixed-line phone carrier in Mexico. In addition to traditional fixed-lin ...
, a government monopoly, became a private monopoly, sold to Carlos Slim
Carlos Slim Helú (; born 28 January 1940) is a Mexican business magnate, investor, and philanthropist. From 2010 to 2013, Slim was ranked as the richest person in the world by the '' Forbes'' business magazine. He derived his fortune from h ...
. Also not opened to private investors were the government oil company Pemex
Pemex (a portmanteau of Petróleos Mexicanos, which translates to ''Mexican Petroleum'' in English; ) is the Mexican state-owned petroleum company managed and operated by the Mexican government. It was formed in 1938 by nationalization and expr ...
or the energy sector. Furthermore, the banking system that had been nationalized in the waning hours of the López Portillo administration in 1982 were privatized, but with the exclusion of foreign banks. Salinas pushed for Mexico's inclusion in the North American Free Trade Agreement
The North American Free Trade Agreement (NAFTA ; es, Tratado de Libre Comercio de América del Norte, TLCAN; french: Accord de libre-échange nord-américain, ALÉNA) was an agreement signed by Canada, Mexico, and the United States that crea ...
, expanding it from a U.S.-Canada agreement. The expanded NAFTA was signed in 1992, after the signature of two additional supplements on environments and labor standards, it came into effect on January 1, 1994.
Salinas also introduced strict price controls and negotiated smaller minimum wage increments with the labor union movement under the aging Fidel Velázquez
Fidel most commonly refers to:
* Fidel Castro (1926–2016), Cuban communist revolutionary and politician
* Fidel Ramos (1928–2022), Filipino politician and former president
Fidel may also refer to:
Other persons
* Fidel (given name)
Film
...
with the aim of curbing inflation. While his strategy was successful in reducing inflation, growth averaged only 2.8 percent a year. By fixing the exchange rate, the peso became rapidly overvalued while consumer spending increased, causing the current account deficit to reach 7% of GDP in 1994. The deficit was financed through ''tesobonos'' a type of public debt instrument that reassured payment in dollars.
The January 1994 Chiapas uprising, and the assassinations of the ruling party's presidential candidate in March 1994, Luis Donaldo Colosio and the Secretary-General of the party and brother of the Assistant-Attorney General
In most common law jurisdictions, the attorney general or attorney-general (sometimes abbreviated AG or Atty.-Gen) is the main legal advisor to the government. The plural is attorneys general.
In some jurisdictions, attorneys general also have exec ...
José Francisco Ruiz Massieu
José Francisco Ruiz Massieu (July 22, 1946 – September 28, 1994) was a Mexican political figure. He was governor of Guerrero from 1987 to 1993. He then served as the secretary-general of the Institutional Revolutionary Party (PRI) in 199 ...
in 1994, reduced investor confidence. Public debt holders rapidly sold their ''tesobonos'', depleting the Central Bank's reserves, while portfolio investments, which had made up 90% of total investment flows, left the country as fast as they had come in.
This unsustainable situation eventually forced the entrant Zedillo administration to adopt a floating exchange rate. The peso sharply devalued and the country entered into an economic crisis in December 1994. The boom in exports, as well as an international rescue package crafted by U.S. president Bill Clinton
William Jefferson Clinton (né Blythe III; born August 19, 1946) is an American politician who served as the 42nd president of the United States from 1993 to 2001. He previously served as governor of Arkansas from 1979 to 1981 and again ...
(1993-2001), helped cushion the crisis. In less than 18 months, the economy was growing again, and annual rate growth averaged 5.1 percent between 1995 and 2000. More critical interpretations argue that the crisis and subsequent public bailout "preserved, renewed, and intensified the structurally unequal social relations of power and class characteristic of finance-led neoliberal capitalism" in forms institutionally specific to Mexican society, with GDP growth spurred by one-time privatizations. Per capita economic growth in the 2000s was low.
President Ernesto Zedillo
Ernesto Zedillo Ponce de León (; born 27 December 1951) is a Mexican economist and politician. He was 61st president of Mexico from 1 December 1994 to 30 November 2000, as the last of the uninterrupted 71-year line of Mexican presidents from t ...
(1994–2000), and President Vicente Fox
Vicente Fox Quesada (; born 2 July 1942) is a Mexican businessman and politician who served as the 62nd president of Mexico from 1 December 2000 to 30 November 2006. After campaigning as a right-wing populist, Fox was elected president on the ...
(2000–06), of the National Action Party (Mexico)
The National Action Party ( es, Partido Acción Nacional, PAN) is a conservative political party in Mexico founded in 1939. The party is one of the four main political parties in Mexico, and, since the 1980s, has had success winning local, stat ...
, the first opposition party candidate to win a presidential election since the founding of the precursor of the Institutional Revolutionary Party
The Institutional Revolutionary Party ( es, Partido Revolucionario Institucional, ; abbr. PRI) is a political party in Mexico that was founded in 1929 and held uninterrupted power in the country for 71 years, from 1929 to 2000, first as the Nati ...
in 1929, continued with trade liberalization. During Fox's administrations, several FTAs were signed with Latin American and European countries, Japan and Israel, and both strove to maintain macroeconomic stability. Thus, Mexico became one of the most open countries in the world to trade, and the economic base shifted accordingly. Total trade with the United States and Canada tripled, and total exports and imports almost quadrupled between 1991 and 2003. The nature of foreign investment also changed with a greater share of foreign-direct investment (FDI) over portfolio investment.
Macroeconomic, financial and welfare indicators
Main indicators
Mexico's Gross Domestic Product (GDP) in purchasing power parity
Purchasing power parity (PPP) is the measurement of prices in different countries that uses the prices of specific goods to compare the absolute purchasing power of the countries' currencies. PPP is effectively the ratio of the price of a bask ...
(PPP) was estimated at US$2,143.499 billion in 2014, and $1,261.642 billion in nominal exchange rates. It is the leader of the MINT
MiNT is Now TOS (MiNT) is a free software alternative operating system kernel for the Atari ST system and its successors. It is a multi-tasking alternative to TOS and MagiC. Together with the free system components fVDI device drivers, XaAE ...
group. Its standard of living, as measured in GDP in PPP per capita, was US$16,900. The World Bank reported in 2009 that Mexico's Gross National Income in market exchange rates was the second highest in Latin America, after Brazil
Brazil ( pt, Brasil; ), officially the Federative Republic of Brazil (Portuguese: ), is the largest country in both South America and Latin America. At and with over 217 million people, Brazil is the world's fifth-largest country by area ...
at US$1,830.392 billion, which lead to the highest income per capita in the region at $14,400. As such, Mexico established itself as an upper middle-income country. After the slowdown of 2001 the country has recovered and has grown 4.2, 3.0 and 4.8 percent in 2004, 2005 and 2006, even though it is considered to be well below Mexico's potential growth.
The Mexican peso
The Mexican peso ( symbol: $; code: MXN) is the currency of Mexico. Modern peso and dollar currencies have a common origin in the 16th–19th century Spanish dollar, most continuing to use its sign, "$".
The current ISO 4217 code for the ...
is the currency (ISO 4217
ISO 4217 is a standard published by the International Organization for Standardization (ISO) that defines alpha codes and numeric codes for the representation of currencies and provides information about the relationships between individual ...
: MXN; symbol: $). One peso is divided into 100 ''centavos'' (cents). MXN replaced MXP in 1993 at a rate of 1000 MXP per 1 MXN. The exchanged rate remained stable between 1998 and 2006, oscillating between 10.20 and 11=3.50 MXN per US$. The Mexican peso parity decreased under president Enrique Peña Nietolost in a single year 19.87% of its value
reaching an exchange rate of $20.37 per dollar in 2017. Interest rates in 2007 were situated at around 7 percent, having reached a historic low in 2002 below 5 percent. Inflation rates are also at historic lows; the inflation rate in Mexico in 2006 was 4.1 percent, and 3 percent by the end of 2007. Compared against the US Dollar, Mexican Peso has devalued over %7,500 since 1910. Unemployment rates are the lowest of all
OECD
The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate ...
member countries at 3.2 percent. However, underemployment is estimated at 25 percent. Mexico's Human Development Index
The Human Development Index (HDI) is a statistic composite index of life expectancy, education (mean years of schooling completed and expected years of schooling upon entering the education system), and per capita income indicators, w ...
was reported at 0.829 in 2008, pp. 229–32 (comprising a life expectancy index of 0.84, an education index of 0.86 and a GDP index of 0.77), ranking 52 in the world within the group of high-development.
Development
The following table shows the main economic indicators in 1980–2021(with IMF staff stimtates in 2022-2027). Inflation below 5% is in green.
Poverty
Poverty in Mexico is measured under parameters such as nutrition
Nutrition is the biochemical and physiological process by which an organism uses food to support its life. It provides organisms with nutrients, which can be metabolized to create energy and chemical structures. Failure to obtain sufficient ...
, clean water
Drinking water is water that is used in drink or food preparation; potable water is water that is safe to be used as drinking water. The amount of drinking water required to maintain good health varies, and depends on physical activity level, ...
, shelter, education
Education is a purposeful activity directed at achieving certain aims, such as transmitting knowledge or fostering skills and character traits. These aims may include the development of understanding, rationality, kindness, and honesty ...
, health care
Health care or healthcare is the improvement of health via the prevention, diagnosis, treatment, amelioration or cure of disease, illness, injury, and other physical and mental impairments in people. Health care is delivered by health pr ...
, social security
Welfare, or commonly social welfare, is a type of government support intended to ensure that members of a society can meet basic human needs such as food and shelter. Social security may either be synonymous with welfare, or refer specifical ...
, quality and basic services in the household, income
Income is the consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms. Income is difficult to define conceptually and the definition may be different across fields. Fo ...
and social cohesion
Group cohesiveness (also called group cohesion and social cohesion) arises when bonds link members of a social group to one another and to the group as a whole. Although cohesion is a multi-faceted process, it can be broken down into four main co ...
as defined by social development Social development can refer to:
* Psychosocial development
* Social change
* Social development theory
* Social Development (journal)
* Social emotional development
* Social progress or social regress
The word decadence, which at first meant ...
laws in the country. It is divided in two categories: Moderate poverty and Extreme poverty.
While less than 2% of Mexico's population lives below the international poverty line
The poverty threshold, poverty limit, poverty line or breadline is the minimum level of income deemed adequate in a particular country. The poverty line is usually calculated by estimating the total cost of one year's worth of necessities for t ...
set by the World Bank
The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
, as of 2013, Mexico's government estimates that 33% of Mexico's population lives in moderate poverty and 9% lives in extreme poverty
Extreme poverty, deep poverty, abject poverty, absolute poverty, destitution, or penury, is the most severe type of poverty, defined by the United Nations (UN) as "a condition characterized by severe deprivation of basic human needs, includi ...
, which leads to 42% of Mexico's total population living below the national poverty line. The gap might be explained by the government's adopting the multidimensional poverty method as a way to measure poverty, so a person who has an income higher than the "international poverty line" or "well being income line" set by the Mexican government might fall in the "moderate poverty" category if he or she has one or more deficiencies related to social rights such as education (did not complete studies), nutrition (malnutrition or obesity), or living standards (including elemental, such as water or electricity, and secondary domestic assets, such as refrigerators). Extreme poverty is defined by the Mexican government as persons who have deficiencies in both social rights and an income lower than the "well being income line". Additional figures from SEDESOL (Mexico's social development agency) estimates that 6% (7.4 million people) live in extreme poverty and suffer from food insecurity
Food security speaks to the availability of food in a country (or geography) and the ability of individuals within that country (geography) to access, afford, and source adequate foodstuffs. According to the United Nations' Committee on World ...
.
Recently, extensive changes in government economic policy and attempts at reducing government interference through privatization of several sectors, for better or worse, allowed Mexico to remain the biggest economy in Latin America, until 2005 when it became the second-largest; and a so-called " trillion dollar club" member. Despite these changes, Mexico continues to suffer great social inequality and lack of opportunities. The Peña Nieto's administration made an attempt at reducing poverty in the country, to provide more opportunities to its citizens such as jobs, education, and the installation of universal healthcare.
Income inequality
A single person in Mexico, Carlos Slim
Carlos Slim Helú (; born 28 January 1940) is a Mexican business magnate, investor, and philanthropist. From 2010 to 2013, Slim was ranked as the richest person in the world by the '' Forbes'' business magazine. He derived his fortune from h ...
, has a net worth equal to six percent of GDP. Additionally, only ten percent of Mexicans represent 25% of Mexican GDP. A smaller group, 3.5%, represent 12.5% of Mexican GDP.
According to the OECD
The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate ...
, Mexico is the country with the second highest degree of economic disparity between the extremely poor and extremely rich, after Chile
Chile, officially the Republic of Chile, is a country in the western part of South America. It is the southernmost country in the world, and the closest to Antarctica, occupying a long and narrow strip of land between the Andes to the eas ...
– although this gap has been diminishing over the last decade. The bottom ten percent on the income rung disposes of 1.36% of the country's resources, whereas the upper 10% dispose of almost 36%. OECD also notes that Mexico's budgeted expenses for poverty alleviation and social development is only about a third of the OECD average – both in absolute and relative numbers.Perspectivas OCDE: México Reformas para el Cambi"Si bien la pobreza había venido disminuyendo a lo largo de los últimos decenios, en fechas recientes ha vuelto a aumentar. Entre 2004 y 2008 la proporción de personas que vivían con menos del 50% del ingreso medio aumentó del 18.4% al 21%. También se registró un crecimiento considerable en las últimas estadísticas oficiales sobre la pobreza absoluta, que tienen en cuenta el acceso a alimentos, salud, educación, vivienda y otros factores. De acuerdo con datos recientes del Consejo Nacional de Evaluación de la Política de Desarrollo Social (CONEVAL), entre 2006 y 2010, la proporción de personas que vivían en la pobreza (extrema y moderada) aumentó del 35% al 46% (lo que equivale a 52 millones de personas). El alto nivel de pobreza absoluta se refleja también en otros indicadores relativos a las condiciones de vida: por ejemplo, la mortalidad infantil, que es tres veces superior al promedio de la OCDE, y la tasa de analfabetismo, que supera a la media del conjunto de la Organización. México es el segundo país con las desigualdades más grandes entre los países de la OCDE, después de Chile, si bien la tendencia ha sido descendente en la última década. Las estadísticas más recientes de la OCDE, que figuran en el informe Divided We Stand (diciembre de 2011), señalan que el 10% más pobre de la población de México percibe alrededor del 1.3% del ingreso total disponible, mientras que el 10% más rico recibe casi el 36%. Aunque México es uno de los pocos países de la OCDE donde las desigualdades han disminuido en las últimas décadas, éstas siguen siendo altas y se han convertido en un obstáculo para el crecimiento y el desarrollo." According to the World Bank, in 2004, 17.6% of Mexico's population lived in extreme poverty, while 21% lived in moderated poverty.
Remittances
Mexico was the fourth largest receiver of remittances in the world in 2017.Remittance
A remittance is a non-commercial transfer of money by a foreign worker, a member of a diaspora community, or a citizen with familial ties abroad, for household income in their home country or homeland. Money sent home by migrants competes wi ...
s, or contributions sent by Mexicans living abroad, mostly in the United States, to their families at home in Mexico comprised $28.5 billion in 2017. In 2015, remittances overtook oil to become the single largest foreign source of income for Mexico, larger than any other sector.
The growth of remittances have more than doubled since 1997. Recorded remittance transactions exceeded 41 million in 2003, of which 86 percent were made by electronic transfer.
The Mexican government, cognizant of the needs of migrant workers, began issuing an upgraded version of the ''Matrícula Consular de Alta Seguridad'' (MACS, High Security Consular Identification), an identity document issued at Mexican consulates abroad. This document is now accepted as a valid identity card in 32 US states, as well as thousands of police agencies, hundreds of cities and counties, as well as banking institutions.
The main states receiving remittances in 2014 were Michoacán
Michoacán, formally Michoacán de Ocampo (; Purépecha: ), officially the Free and Sovereign State of Michoacán de Ocampo ( es, Estado Libre y Soberano de Michoacán de Ocampo), is one of the 32 states which comprise the Federal Entities of ...
, Guanajuato
Guanajuato (), officially the Free and Sovereign State of Guanajuato ( es, Estado Libre y Soberano de Guanajuato), is one of the 32 states that make up the Federal Entities of Mexico. It is divided into 46 municipalities and its capital city i ...
, Jalisco
Jalisco (, , ; Nahuatl: Xalixco), officially the Free and Sovereign State of Jalisco ( es, Estado Libre y Soberano de Jalisco ; Nahuatl: Tlahtohcayotl Xalixco), is one of the 31 states which, along with Mexico City, comprise the 32 Federal ...
, the State of Mexico
The State of Mexico ( es, Estado de México; ), officially just Mexico ( es, México), is one of the 32 federal entities of the United Mexican States. Commonly known as Edomex (from ) to distinguish it from the name of the whole country, it is ...
and Puebla
Puebla ( en, colony, settlement), officially Free and Sovereign State of Puebla ( es, Estado Libre y Soberano de Puebla), is one of the 32 states which comprise the Federal Entities of Mexico. It is divided into 217 municipalities and its cap ...
, which jointly captured 45% of total remittances in that year. Several state governments, with the support of the federal government, have implemented programs to use part of the remittances to finance public works. This program, called ''Dos por Uno'' (Two for every one) is designed in a way that for each peso contributed by migrants from their remittances, the state and the federal governments will invest two pesos in building infrastructure at their home communities.
Regional economies
Regional disparities and income inequality are a feature of the Mexican economy. While all constituent states of the federation have a Human Development Index
The Human Development Index (HDI) is a statistic composite index of life expectancy, education (mean years of schooling completed and expected years of schooling upon entering the education system), and per capita income indicators, w ...
(HDI) higher than 0.70 (medium to high development), the northern and central states have higher levels of HDI than the southern states. Nuevo León
Nuevo León () is a state in the northeast region of Mexico. The state was named after the New Kingdom of León, an administrative territory from the Viceroyalty of New Spain, itself was named after the historic Spanish Kingdom of León. Wit ...
, Jalisco
Jalisco (, , ; Nahuatl: Xalixco), officially the Free and Sovereign State of Jalisco ( es, Estado Libre y Soberano de Jalisco ; Nahuatl: Tlahtohcayotl Xalixco), is one of the 31 states which, along with Mexico City, comprise the 32 Federal ...
and the Federal District
A federal district is a type of administrative division of a federation, usually under the direct control of a federal government and organized sometimes with a single municipal body. Federal districts often include capital districts, and they ...
have HDI levels similar to European countries, whereas that of Oaxaca
Oaxaca ( , also , , from nci, Huāxyacac ), officially the Free and Sovereign State of Oaxaca ( es, Estado Libre y Soberano de Oaxaca), is one of the 32 states that compose the Federative Entities of Mexico. It is divided into 570 municipaliti ...
and Chiapas
Chiapas (; Tzotzil and Tzeltal: ''Chyapas'' ), officially the Free and Sovereign State of Chiapas ( es, Estado Libre y Soberano de Chiapas), is one of the states that make up the 32 federal entities of Mexico. It comprises 124 municipalities ...
is similar to that of China or Vietnam.
At the municipal level, economic disparities are even greater: Benito Juárez borough in Mexico City has an HDI similar to that of Germany or New Zealand, whereas, Metlatónoc in Guerrero
Guerrero is one of the 32 states that comprise the 32 Federal Entities of Mexico. It is divided in 81 municipalities and its capital city is Chilpancingo and its largest city is Acapulcocopied from article, GuerreroAs of 2020, Guerrero the pop ...
, would have an HDI similar to that of Malawi. The majority of the federal entities in the north have a high development (higher than 0.80), as well as the entities Colima, Jalisco, Aguascalientes
Aguascalientes (; ), officially the Free and Sovereign State of Aguascalientes ( es, Estado Libre y Soberano de Aguascalientes), is one of the 32 states which comprise the Federal Entities of Mexico. At 22°N and with an average altitude of a ...
, the Federal District, Querétaro
Querétaro (), officially the Free and Sovereign State of Querétaro ( es, Estado Libre y Soberano de Querétaro, links=no; Otomi: ''Hyodi Ndämxei''), is one of the 32 federal entities of Mexico. It is divided into 18 municipalities. Its cap ...
and the southeastern states of Quintana Roo
Quintana Roo ( , ), officially the Free and Sovereign State of Quintana Roo ( es, Estado Libre y Soberano de Quintana Roo), is one of the 31 states which, with Mexico City, constitute the 32 federal entities of Mexico. It is divided into 11 mu ...
and Campeche
Campeche (; yua, Kaampech ), officially the Free and Sovereign State of Campeche ( es, Estado Libre y Soberano de Campeche), is one of the 31 states which make up the 32 Federal Entities of Mexico. Located in southeast Mexico, it is bordered by ...
). The less developed states (with medium development in terms of HDI, higher than 0.70) are located along the southern Pacific coast.
In terms of share of the GDP by economic sector (in 2004), the largest contributors in agriculture are Jalisco (9.7%), Sinaloa
Sinaloa (), officially the Estado Libre y Soberano de Sinaloa ( en, Free and Sovereign State of Sinaloa), is one of the 31 states which, along with Mexico City, comprise the Federal Entities of Mexico. It is divided into 18 municipalities and ...
(7.7%) and Veracruz (7.6%); the greatest contributors in industrial production are the Federal District (15.8%), State of México (11.8%) and Nuevo León (7.9%); the greatest contributors in the service sector are also the Federal District (25.3%), State of México (8.9%) and Nuevo León (7.5%).
Since the 1980s, the economy has slowly become less centralized; the annual rate of GDP growth of the Federal District from 2003 to 2004 was the smallest of all federal entities at 0.2%, with drastic drops in the agriculture and industrial sectors. Nonetheless, it still accounts for 21.8% of the nation's GDP. The states with the highest GDP growth rates are Quintana Roo (9.0%), Baja California
Baja California (; 'Lower California'), officially the Free and Sovereign State of Baja California ( es, Estado Libre y Soberano de Baja California), is a state in Mexico. It is the northernmost and westernmost of the 32 federal entities of Mex ...
(8.9%), and San Luis Potosí
San Luis Potosí (), officially the Free and Sovereign State of San Luis Potosí ( es, Estado Libre y Soberano de San Luis Potosí), is one of the 32 states which compose the Federal Entities of Mexico. It is divided in 58 municipalities and i ...
(8.2%). In 2000, the federal entities with the highest GDP per capita in Mexico were the Federal District (US$26,320), Campeche (US$18,900) and Nuevo León (US$30,250); the states with the lowest GDP per capita were Chiapas (US$3,302), Oaxaca (US$4,100) and Guerrero (US$6,800).
Economic sectors
Gross Domestic Product (GDP) in purchasing power parity
Purchasing power parity (PPP) is the measurement of prices in different countries that uses the prices of specific goods to compare the absolute purchasing power of the countries' currencies. PPP is effectively the ratio of the price of a bask ...
(PPP) in 2022 was estimated at US$2,89 trillion, and GDP per capita in PPP at US$22,216. The service sector is the largest component of GDP at 70.5%, followed by the industrial sector at 25.7% (2006 est.). Agriculture represents only 3.9% of GDP (2006 est.). Mexican labor force is estimated at 38 million of which 18% is occupied in agriculture, 24% in the industry sector and 58% in the service sector (2003 est.). Mexico's largest source of foreign income is remittances.
Agriculture
Agriculture as a percentage of total GDP has been steadily declining, and now resembles that of developed nations in that it plays a smaller role in the economy. In 2006, agriculture accounted for 3.9% of GDP, down from 7% in 1990, and 25% in 1970. Given the historic structure of ''ejidos'', it employs a considerably high percentage of the work force: 18% in 2003, mostly of which grows basic crops for subsistence, compared to 2–5% in developed nations in which production is highly mechanized.History
After theMexican Revolution
The Mexican Revolution ( es, Revolución Mexicana) was an extended sequence of armed regional conflicts in Mexico from approximately 1910 to 1920. It has been called "the defining event of modern Mexican history". It resulted in the destruction ...
Mexico began an agrarian reform Agrarian reform can refer either, narrowly, to government-initiated or government-backed redistribution of agricultural land (see land reform) or, broadly, to an overall redirection of the agrarian system of the country, which often includes land ...
, based on the 27th article of the Mexican Constitution than included transfer of land and/or free land distribution to peasant
A peasant is a pre-industrial agricultural laborer or a farmer with limited land-ownership, especially one living in the Middle Ages under feudalism and paying rent, tax, fees, or services to a landlord. In Europe, three classes of peasa ...
s and small farmers under the concept of the '' ejido''. This program was further extended during President Cárdenas' administration during the 1930s and continued into the 1960s at varying rates. The cooperative agrarian reform, which guaranteed small farmers a means of subsistence livelihood, also caused land fragmentation and lack of capital investment, since commonly held land could not be used as collateral. In an effort to raise rural productivity and living standards, this constitutional article was amended in 1992 to allow for the transfer of property rights of the communal lands to farmers cultivating it. With the ability to rent or sell it, a way was open for the creation of larger farms and the advantages of economies of scale. Large mechanized farms are now operating in some northwestern states (mainly in Sinaloa
Sinaloa (), officially the Estado Libre y Soberano de Sinaloa ( en, Free and Sovereign State of Sinaloa), is one of the 31 states which, along with Mexico City, comprise the Federal Entities of Mexico. It is divided into 18 municipalities and ...
). However, privatization of ''ejidos'' continues to be very slow in the central and southern states where the great majority of peasants produce only for subsistence.
Until the 1980s, the government encouraged the production of basic crops (mainly corn
Maize ( ; ''Zea mays'' subsp. ''mays'', from es, maíz after tnq, mahiz), also known as corn (North American and Australian English), is a cereal grain first domesticated by indigenous peoples in southern Mexico about 10,000 years ago. The ...
and beans) by maintaining support prices and controlling imports through the National Company for Popular Subsistence (CONASUPO). With trade liberalization, however, CONASUPO was gradually dismantled and two new mechanisms were implemented: Alianza and Procampo. Alianza provides income payments and incentives for mechanization and advanced irrigation systems. Procampo is an income transfer subsidy to farmers. This support program provides 3.5 million farmers who produce basic commodities (mostly corn), and which represent 64% of all farmers, with a fixed income transfer payment per unit of area of cropland. This subsidy increased substantially during president Fox's administration, mainly to white corn producers in order to reduce imports from the United States. This program has been successful, and in 2004, roughly only 15% of corn imports are white corn –the one used for human consumption and the type that is mostly grown in Mexico– as opposed to 85% of yellow and crashed corn –the one use for feeding livestock, and which is barely produced in Mexico.
Crops
In spite of being a staple in the Mexican diet, Mexico's comparative advantage in agriculture is not incorn
Maize ( ; ''Zea mays'' subsp. ''mays'', from es, maíz after tnq, mahiz), also known as corn (North American and Australian English), is a cereal grain first domesticated by indigenous peoples in southern Mexico about 10,000 years ago. The ...
, but in horticulture, tropical fruits, and vegetables. Negotiators of NAFTA expected that through liberalization and mechanization of agriculture two-thirds of Mexican corn producers would naturally shift from corn production to horticultural and other labor-intensive crops such as fruits, nuts, vegetables, coffee and sugar cane
Sugarcane or sugar cane is a species of (often hybrid) tall, perennial grass (in the genus '' Saccharum'', tribe Andropogoneae) that is used for sugar production. The plants are 2–6 m (6–20 ft) tall with stout, jointed, fibrous stalk ...
. While horticultural trade has drastically increased due to NAFTA, it has not absorbed displaced workers from corn production (estimated at around 600,000). Corn production has remained stable (at 20 million metric ton
The tonne ( or ; symbol: t) is a unit of mass equal to 1000 kilograms. It is a non-SI unit accepted for use with SI. It is also referred to as a metric ton to distinguish it from the non-metric units of the short ton (United States ...
s), arguably, as a result of income support to farmers, or a reluctance to abandon a millenarian tradition in Mexico: not only have peasants grown corn for millennia, corn originated in Mexico. Mexico is the seventh largest corn producer in the world.
= Potatoes
= The area dedicated to potatoes has changed little since 1980 and average yields have almost tripled since 1961. Production reached a record 1.7 million tonnes in 2003. Per capita consumption of potato in Mexico stands at 17 kg a year, very low compared to its maize intake of 400 kg. On average, potato farms in Mexico are larger than those devoted to more basic food crops. Potato production in Mexico is mostly for commercial purposes; the production for household consumption is very small.= Avocado
=
Mexico is by far the world's largest avocado
The avocado (''Persea americana'') is a medium-sized, evergreen tree in the laurel family ( Lauraceae). It is native to the Americas and was first domesticated by Mesoamerican tribes more than 5,000 years ago. Then as now it was prized for ...
growing country, producing several times more than the second largest producer. In 2013, the total area dedicated to avocado production was 188,723 hectares (415,520 acres), and the harvest was 2.03 million tonnes in 2017. The states that produce the most are México, Morelos, Nayarit, Puebla, and Michoacan, accounting for 86% of the total.
= Sugar cane
= Approximately 160,000 medium-sized farmers grow sugar cane in 15 Mexican states; currently there are 54 sugar mills around the country that produced 4.96 million tons of sugar in the 2010 crop, compared to 5.8 million tons in 2001. Mexico's sugar industry is characterized by high production costs and lack of investment. Mexico produces more sugar than it consumes. Sugar cane is grown on 700,000 farms in Mexico with a yield of 72 metric tons per farm.Mining
In 2019, the country was the world's largest producer ofsilver
Silver is a chemical element with the symbol Ag (from the Latin ', derived from the Proto-Indo-European ''h₂erǵ'': "shiny" or "white") and atomic number 47. A soft, white, lustrous transition metal, it exhibits the highest electrical ...
9th largest producer of gold
Gold is a chemical element with the symbol Au (from la, aurum) and atomic number 79. This makes it one of the higher atomic number elements that occur naturally. It is a bright, slightly orange-yellow, dense, soft, malleable, and ductile ...
, the 8th largest producer of copper
Copper is a chemical element with the symbol Cu (from la, cuprum) and atomic number 29. It is a soft, malleable, and ductile metal with very high thermal and electrical conductivity. A freshly exposed surface of pure copper has a pink ...
, the world's 5th largest producer of lead
Lead is a chemical element with the symbol Pb (from the Latin ) and atomic number 82. It is a heavy metal that is denser than most common materials. Lead is soft and malleable, and also has a relatively low melting point. When freshly cut, ...
, the world's 6th largest producer of zinc
Zinc is a chemical element with the symbol Zn and atomic number 30. Zinc is a slightly brittle metal at room temperature and has a shiny-greyish appearance when oxidation is removed. It is the first element in group 12 (IIB) of the periodi ...
, the world's 5th largest producer of molybdenum
Molybdenum is a chemical element with the symbol Mo and atomic number 42 which is located in period 5 and group 6. The name is from Neo-Latin ''molybdaenum'', which is based on Ancient Greek ', meaning lead, since its ores were confused with lead ...
, the world's 3rd largest producer of mercury, the world's 5th largest producer of bismuth
Bismuth is a chemical element with the symbol Bi and atomic number 83. It is a post-transition metal and one of the pnictogens, with chemical properties resembling its lighter group 15 siblings arsenic and antimony. Elemental bismuth occurs ...
, the world's 13th largest producer of manganese
Manganese is a chemical element with the Symbol (chemistry), symbol Mn and atomic number 25. It is a hard, brittle, silvery metal, often found in minerals in combination with iron. Manganese is a transition metal with a multifaceted array of ...
and the 23rd largest world producer of phosphate
In chemistry, a phosphate is an anion, salt, functional group or ester derived from a phosphoric acid. It most commonly means orthophosphate, a derivative of orthophosphoric acid .
The phosphate or orthophosphate ion is derived from phosph ...
. It is also the 8th largest world producer of salt
Salt is a mineral composed primarily of sodium chloride (NaCl), a chemical compound belonging to the larger class of salts; salt in the form of a natural crystalline mineral is known as rock salt or halite. Salt is present in vast quant ...
.
In April 2022, the Senate passed a law that nationalizes
Nationalization (nationalisation in British English) is the process of transforming privately-owned assets into public assets by bringing them under the public ownership of a national government or state. Nationalization usually refers to pri ...
the lithium mining
Lithium (from el, λίθος, lithos, lit=stone) is a chemical element with the symbol Li and atomic number 3. It is a soft, silvery-white alkali metal. Under standard conditions, it is the least dense metal and the least dense solid el ...
industry in the country. The federal government will have a monopoly on all new lithium mines in the country, but existing operations will be allowed to continue in private hands. Critics of the move argue that the constitution already does this and that the government lacks the technical capacity to mine the major reserves, which are mostly in clay
Clay is a type of fine-grained natural soil material containing clay minerals (hydrous aluminium phyllosilicates, e.g. kaolin, Al2 Si2 O5( OH)4).
Clays develop plasticity when wet, due to a molecular film of water surrounding the clay pa ...
deposits that are difficult to mine. The government made a similar failed attempt to nationalize uranium mining
Uranium mining is the process of extraction of uranium ore from the ground. Over 50 thousand tons of uranium were produced in 2019. Kazakhstan, Canada, and Australia were the top three uranium producers, respectively, and together account f ...
in the 1980s.
Industry
The industrial sector as a whole has benefited from trade liberalization; in 2000 it accounted for almost 50% of all export earnings.
Among the most important industrial manufacturers in Mexico is the automotive industry, whose standards of quality are internationally recognized. The automobile sector in Mexico differs from that in other Latin American countries and developing nations in that it does not function as a mere assembly manufacturer. The industry produces technologically complex components and engages in some research and development activities, an example of that is the new Volkswagen Jetta model with up to 70% of parts designed in Mexico.
The "Big Three" (General Motors
The General Motors Company (GM) is an American Multinational corporation, multinational Automotive industry, automotive manufacturing company headquartered in Detroit, Michigan, United States. It is the largest automaker in the United States and ...
, Ford and Chrysler
Stellantis North America (officially FCA US and formerly Chrysler ()) is one of the " Big Three" automobile manufacturers in the United States, headquartered in Auburn Hills, Michigan. It is the American subsidiary of the multinational automotiv ...
) have been operating in Mexico since the 1930s, while Volkswagen
Volkswagen (),English: , . abbreviated as VW (), is a German Automotive industry, motor vehicle manufacturer headquartered in Wolfsburg, Lower Saxony, Germany. Founded in 1937 by the German Labour Front under the Nazi Party and revived into a ...
and Nissan
, trading as Nissan Motor Corporation and often shortened to Nissan, is a Japanese multinational automobile manufacturer headquartered in Nishi-ku, Yokohama, Japan. The company sells its vehicles under the Nissan, Infiniti, and Datsun bra ...
built their plants in the 1960s. Later, Toyota
is a Japanese multinational automotive manufacturer headquartered in Toyota City, Aichi, Japan. It was founded by Kiichiro Toyoda and incorporated on . Toyota is one of the largest automobile manufacturers in the world, producing about 10 ...
, Honda
is a Japanese public multinational conglomerate manufacturer of automobiles, motorcycles, and power equipment, headquartered in Minato, Tokyo, Japan.
Honda has been the world's largest motorcycle manufacturer since 1959, reaching a producti ...
, BMW, and Mercedes-Benz
Mercedes-Benz (), commonly referred to as Mercedes and sometimes as Benz, is a German luxury and commercial vehicle automotive brand established in 1926. Mercedes-Benz AG (a Mercedes-Benz Group subsidiary established in 2019) is headquarte ...
have also participated. Given the high requirements of North American components in the industry, many European and Asian parts suppliers have also moved to Mexico: in Puebla
Puebla ( en, colony, settlement), officially Free and Sovereign State of Puebla ( es, Estado Libre y Soberano de Puebla), is one of the 32 states which comprise the Federal Entities of Mexico. It is divided into 217 municipalities and its cap ...
alone, 70 industrial part-makers cluster around Volkswagen.
The relatively small domestic car industry is represented by DINA Camiones, a manufacturer of trucks, busses and military vehicles, which through domestic production and purchases of foreign bus manufacturers has become the largest bus manufacturer in the world; Vehizero that builds hybrid trucks and the new car companies Mastretta design that builds the Mastretta MXT sports car and Autobuses King that plans to build 10000 microbuses by 2015, nevertheless new car companies are emerging among them CIMEX that has developed a sport utility truck, the Conin, and it is to be released in September 2010 in Mexico's national auto show, And the new electric car maker Grupo Electrico Motorizado. Some large industries of Mexico include Cemex, the world's largest construction company and the third largest cement producer the alcohol beverage industries, including world-renowned players like Grupo Modelo
Grupo Modelo is a large brewery in Mexico that exports beer to most countries of the world. Its export brands include ''Corona'', ''Modelo'', and '' Pacífico''. Grupo Modelo also brews brands that are intended solely for the domestic Mexican ...
; conglomerates like FEMSA
Fomento Económico Mexicano, S.A.B. de C.V., doing business as FEMSA, is a Mexican multinational beverage and retail company headquartered in Monterrey, Mexico. It operates the largest independent Coca-Cola bottling group in the world and the ...
, which apart from being the largest single producer of alcoholic beverages and owning multiple commercial interests such OXXO convenience store chain, is also the second-largest Coca-Cola
Coca-Cola, or Coke, is a carbonated soft drink manufactured by the Coca-Cola Company. Originally marketed as a temperance bar, temperance drink and intended as a patent medicine, it was invented in the late 19th century by John Stith Pembe ...
bottler in the world; Gruma
Gruma, S.A.B. de C.V., known as Gruma, is a Mexican multinational corn flour (masa) and tortilla manufacturing company headquartered in San Pedro, near Monterrey, Nuevo León, Mexico. It is the largest corn flour and tortilla manufacturer in t ...
, the largest producer of corn flour and tortillas in the world; and Grupo Bimbo
Grupo Bimbo, S.A.B. de C.V. (also known simply as Bimbo) is a Mexican multinational company with a presence in over 33 countries located in the Americas, Europe, Asia, and Africa. It has an annual sales volume of 15 billion dollars and is currentl ...
, Telmex
Telmex is a Mexican telecommunications company headquartered in Mexico City that provides telecommunications products and services in Mexico. Telmex is still the dominant fixed-line phone carrier in Mexico. In addition to traditional fixed-lin ...
, Televisa
Grupo Televisa is a Mexican multimedia mass media company. A major Latin American mass media corporation, it often presents itself as the largest producer of Spanish-language content.
In April 2021, Televisa and Univision Communications announce ...
, among many others. In 2005, according to the World Bank, high-tech industrial production represented 19.6% of total exports.
Maquiladora
A (), or (), is a word that refers to factories that are largely duty free and tariff-free. These factories take raw materials and assemble, manufacture, or process them and export the finished product. These factories and systems are present t ...
s (manufacturing plants that take in imported raw materials and produce goods for domestic consumption and export on behalf of foreign companies) have become the landmark of trade in Mexico. This sector has benefited from NAFTA, in that real income in the maquiladora sector has increased 15.5% since 1994, though from the non-maquiladora sector has grown much faster. Contrary to popular belief, this should be no surprise since maquiladora's products could enter the US duty-free since a 1960s industry agreement. Other sectors now benefit from the free trade agreement, and the share of exports from non-border states has increased in the last 5 years while the share of exports from maquiladora-border states has decreased.
Currently Mexico is focusing in developing an aerospace industry and the assembly of helicopter and regional jet aircraft fuselages is taking place. Foreign firms such as MD Helicopters, Bell, Cessna and Bombardier build helicopter, aircraft and regional jets fuselages in Mexico. Although the Mexican aircraft industry is mostly foreign, as is its car industry, Mexican firms have been founded such as Aeromarmi, which builds light propeller airplanes, and Hydra Technologies, which builds Unmanned Aerial Vehicle
An unmanned aerial vehicle (UAV), commonly known as a drone, is an aircraft without any human pilot, crew, or passengers on board. UAVs are a component of an unmanned aircraft system (UAS), which includes adding a ground-based controll ...
s such as the S4 Ehécatl, other important companies are Frisa Aerospace that manufactures jet engine parts for the new Mitsubishi Regional jet and supplies Prat&whittney and Rolls-Royce jet engine manufacturers of casings for jet engines and Kuo Aerospace that builds parts for aircraft landing gear and Supplies bombardier plant in Querétaro.
As compared with the United States or countries in Western Europe a larger sector of Mexico's industrial economy is food manufacturing which includes several world class companies but the regional industry is undeveloped. There are national brands that have become international and local Mom and Pop producers but little manufacturing in between.
Electronics
The electronics industry of Mexico has grown enormously within the last decade. Mexico has the sixth largest electronics industry in the world after China
China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's List of countries and dependencies by population, most populous country, with a Population of China, population exceeding 1.4 billion, slig ...
, United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...
, Japan
Japan ( ja, 日本, or , and formally , ''Nihonkoku'') is an island country in East Asia. It is situated in the northwest Pacific Ocean, and is bordered on the west by the Sea of Japan, while extending from the Sea of Okhotsk in the n ...
, South Korea
South Korea, officially the Republic of Korea (ROK), is a country in East Asia, constituting the southern part of the Korea, Korean Peninsula and sharing a Korean Demilitarized Zone, land border with North Korea. Its western border is formed ...
, and Taiwan
Taiwan, officially the Republic of China (ROC), is a country in East Asia, at the junction of the East and South China Seas in the northwestern Pacific Ocean, with the People's Republic of China (PRC) to the northwest, Japan to the no ...
. Mexico is the second largest exporter of electronics to the United States where it exported $71.4 billion worth of electronics in 2011. The Mexican electronics industry is dominated by the manufacture and OEM design of televisions, displays, computers, mobile phones, circuit boards, semiconductors, electronic appliances, communications equipment and LCD modules. The Mexican electronics industry grew 20% between 2010 and 2011, up from its constant growth rate of 17% between 2003 and 2009. Currently electronics represent 30% of Mexico's exports.
Televisions
The design and manufacture of flat panel plasma, LCD and LED televisions is the single largest sector of the Mexican electronics industry, representing 25% of Mexico's electronics export revenue. In 2009 Mexico surpassed South Korea and China as the largest manufacturer of televisions,Inicio. Promexico.gob.mx. Retrieved on 2010-08-14. with
Sony
, commonly stylized as SONY, is a Japanese multinational conglomerate corporation headquartered in Minato, Tokyo, Japan. As a major technology company, it operates as one of the world's largest manufacturers of consumer and professional ...
, Toshiba
, commonly known as Toshiba and stylized as TOSHIBA, is a Japanese multinational conglomerate corporation headquartered in Minato, Tokyo, Japan. Its diversified products and services include power, industrial and social infrastructure systems, ...
, Samsung
The Samsung Group (or simply Samsung) ( ko, 삼성 ) is a South Korean multinational manufacturing conglomerate headquartered in Samsung Town, Seoul, South Korea. It comprises numerous affiliated businesses, most of them united under the ...
, Sharp
Sharp or SHARP may refer to:
Acronyms
* SHARP (helmet ratings) (Safety Helmet Assessment and Rating Programme), a British motorcycle helmet safety rating scheme
* Self Help Addiction Recovery Program, a charitable organisation founded in 199 ...
(through Semex
Semex, full name Sharp Electrónica Mexico S.A. de C.V., is the semi-independent Mexican division of Japanese Sharp electronics corporation. It is responsible for the manufacture of all Sharp printed circuitboards, LED, LCD and plasma panels, modu ...
), Zenith
The zenith (, ) is an imaginary point directly "above" a particular location, on the celestial sphere. "Above" means in the vertical direction ( plumb line) opposite to the gravity direction at that location ( nadir). The zenith is the "high ...
LG, Lanix, TCL, RCA, Phillips, Elcoteq, Tatung, Panasonic
formerly between 1935 and 2008 and the first incarnation of between 2008 and 2022, is a major Japanese multinational conglomerate corporation, headquartered in Kadoma, Osaka. It was founded by Kōnosuke Matsushita in 1918 as a lightbulb ...
, and Vizio manufacturing CRT, LCD, LED and Plasma televisions in Mexico. Due to Mexico's position as the largest manufacturer of television it is known as the television capital of the world in the electronics industry.
Computers
Mexico is the third largest manufacturers of computers in the world with both domestic companies such as Lanix,Texa
Texa (Scottish Gaelic: Teacsa) is a small island directly south of Islay, in the Inner Hebrides, Scotland. It reaches a height of at its highest point, Ceann Garbh. It is part of the parish of Kildalton on Islay. The distilleries of Laphroa ...
, Meebox
Meebox, (also stylized as Meeb ) was a Mexican company specializing in the design and manufacturing of computers and other consumer electronics. Meebox has operations in Latin America and the United States. It was the first Mexican company to m ...
, Spaceit, Kyoto
Kyoto (; Japanese: , ''Kyōto'' ), officially , is the capital city of Kyoto Prefecture in Japan. Located in the Kansai region on the island of Honshu, Kyoto forms a part of the Keihanshin metropolitan area along with Osaka and Kobe. , the c ...
and foreign companies such as Dell
Dell is an American based technology company. It develops, sells, repairs, and supports computers and related products and services. Dell is owned by its parent company, Dell Technologies.
Dell sells personal computers (PCs), servers, data ...
, Sony
, commonly stylized as SONY, is a Japanese multinational conglomerate corporation headquartered in Minato, Tokyo, Japan. As a major technology company, it operates as one of the world's largest manufacturers of consumer and professional ...
, HP, Acer Compaq
Compaq Computer Corporation (sometimes abbreviated to CQ prior to a 2007 rebranding) was an American information technology company founded in 1982 that developed, sold, and supported computers and related products and services. Compaq produced ...
, Samsung
The Samsung Group (or simply Samsung) ( ko, 삼성 ) is a South Korean multinational manufacturing conglomerate headquartered in Samsung Town, Seoul, South Korea. It comprises numerous affiliated businesses, most of them united under the ...
and Lenovo
Lenovo Group Limited, often shortened to Lenovo ( , ), is a Chinese multinational technology company specializing in designing, manufacturing, and marketing consumer electronics, personal computers, software, business solutions, and related se ...
manufacturing various types of computers across the country. Most of the computers manufactured in Mexico are from foreign companies. Mexico is Latin America's largest producer of electronics and appliances made by domestic companies.
OEM and ODM manufacturing
Mexico is also home to a large number of OEM and ODM manufactures both foreign and domestic. Among them include Foxconn
Hon Hai Precision Industry Co., Ltd., trading as Hon Hai Technology Group in China and Taiwan and Foxconn internationally, is a Taiwanese multinational electronics contract manufacturer established in 1974 with headquarters in Tucheng, New ...
, Celestica, Sanmina-SCI, Jabil, Elcoteq, Falco, Kimball International
Kimball International consists of furniture brands: Kimball, National, Interwoven, Etc., Poppin, D'Style and Kimball Hospitality. It is the successor to W.W. Kimball and Company, the world's largest piano and organ manufacturer at certain times in ...
, Compal, Benchmark Electronics
Benchmark Electronics Inc is an EMS, ODM, and OEM company based in Tempe, Arizona in the Phoenix metropolitan area.Worldwide Locations > The Americas > New Hampshire Benchmark Electronics Official Site Singapore; Suzhou, China.;
, Plexus
In neuroanatomy, a plexus (from the Latin term for "braid") is a branching network of vessels or nerves. The vessels may be blood vessels (veins, capillaries) or lymphatic vessels. The nerves are typically axons outside the central nervous system ...
, Lanix and Flextronics. These companies assemble finished electronics or design and manufacture electronic components on behalf of larger companies such as Sony
, commonly stylized as SONY, is a Japanese multinational conglomerate corporation headquartered in Minato, Tokyo, Japan. As a major technology company, it operates as one of the world's largest manufacturers of consumer and professional ...
or Microsoft
Microsoft Corporation is an American multinational technology corporation producing computer software, consumer electronics, personal computers, and related services headquartered at the Microsoft Redmond campus located in Redmond, Washi ...
using locally sourced components, for example the ODM, Flextronics manufactures Xbox video games systems in Guadalajara
Guadalajara ( , ) is a metropolis in western Mexico and the capital of the state of Jalisco. According to the 2020 census, the city has a population of 1,385,629 people, making it the 7th largest city by population in Mexico, while the Guadalaj ...
, Mexico for Microsoft
Microsoft Corporation is an American multinational technology corporation producing computer software, consumer electronics, personal computers, and related services headquartered at the Microsoft Redmond campus located in Redmond, Washi ...
using components such as power systems and printed circuit boards from a local company, Falco Electronics
Falco Electronics is a multinational Mexican electronics corporation founded in 1991, in Mérida, Yucatán, México. The company sells products under its own name and also acts as an ODM, OEM
An original equipment manufacturer (OEM) is gene ...
which acts as the OEM.
Engineering and design
The success and rapid growth of the Mexican electronics sector is driven primarily by the relatively low cost of manufacturing and design in Mexico; its strategic position as a major consumer electronics market coupled with its proximity to both the large North American and South American markets whom Mexico shares free trade agreements with; government support in the form of low business taxes, simplified access to loans and capital for both foreign multinational and domestic startup tech-based firms; and a very large pool of highly skilled, educated labor across all sectors of the tech industry. For example, German multinational engineering and electronics conglomerateSiemens
Siemens AG ( ) is a German multinational conglomerate corporation and the largest industrial manufacturing company in Europe headquartered in Munich with branch offices abroad.
The principal divisions of the corporation are ''Industry'', ''E ...
has a significant Mexican base, which also serves as its business and strategy hub for Central America
Central America ( es, América Central or ) is a subregion of the Americas. Its boundaries are defined as bordering the United States to the north, Colombia to the south, the Caribbean Sea to the east, and the Pacific Ocean to the west. ...
n countries and the Caribbean
The Caribbean (, ) ( es, El Caribe; french: la Caraïbe; ht, Karayib; nl, De Caraïben) is a region of the Americas that consists of the Caribbean Sea, its islands (some surrounded by the Caribbean Sea and some bordering both the Caribbean ...
region.
There are almost half a million (451,000) students enrolled in electronics engineering programs with an additional 114,000 electronics engineers entering the Mexican workforce each year and Mexico had over half a million (580,000) certified electronic engineering professionals employed in 2007. From the late 1990s, the Mexican electronics industry began to shift away from simple line assembly to more advanced work such as research, design, and the manufacture of advanced electronics systems such as LCD panels, semiconductors, printed circuit boards, microelectronics, microprocessors, chipsets and heavy electronic industrial equipment and in 2006 the number of certified engineers being graduated annually in Mexico surpassed that of the United States. Many Korean, Japanese and American appliances sold in the US are actually of Mexican design and origin but sold under the OEM's client names. In 2008 one out of every four consumer appliances sold in the United States was of Mexican design.
Joint production
While many foreign companies like Phillips, Vizio and LG simply install wholly owned factories in Mexico; a number of foreign companies have set up semi-independent joint venture companies with Mexican businesses to manufacture and design components in Mexico. These companies are independently operated from their foreign parent companies and are registered in Mexico. These local companies function under Mexican law and retain a sizable portion of the revenue. These companies typically function dually as in-company OEM development and design facilities and manufacturing centers and usually produce most components needed to manufacture the finished products. An example would by Sharp which has formedSemex
Semex, full name Sharp Electrónica Mexico S.A. de C.V., is the semi-independent Mexican division of Japanese Sharp electronics corporation. It is responsible for the manufacture of all Sharp printed circuitboards, LED, LCD and plasma panels, modu ...
.
Semex was founded as a joint venture between Sharp
Sharp or SHARP may refer to:
Acronyms
* SHARP (helmet ratings) (Safety Helmet Assessment and Rating Programme), a British motorcycle helmet safety rating scheme
* Self Help Addiction Recovery Program, a charitable organisation founded in 199 ...
and Mexican investors which acts as an autonomous independent company which Sharp only maintains partial control over. The company manufactures whole products such televisions and designs individual components on behalf of Sharp such as LCD modules and in return Semex
Semex, full name Sharp Electrónica Mexico S.A. de C.V., is the semi-independent Mexican division of Japanese Sharp electronics corporation. It is responsible for the manufacture of all Sharp printed circuitboards, LED, LCD and plasma panels, modu ...
is granted access to Sharp capital, technology, research capacity and branding. Notable foreign companies which have set up joint venture entities in Mexico include Samsung which formed Samex, a local designer and manufacturer of finished televisions, white goods and individual electronic components like printed circuit boards, LCD panels and semiconductors, Toshiba
, commonly known as Toshiba and stylized as TOSHIBA, is a Japanese multinational conglomerate corporation headquartered in Minato, Tokyo, Japan. Its diversified products and services include power, industrial and social infrastructure systems, ...
, who formed Toshiba de México, S.A. de C.V., an administratively autonomous subsidiary which produces electronics parts, televisions and heavy industrial equipment.
Some of these subsidiaries have grown to expand into multiple branches effectively becoming autonomous conglomerates within their own parent companies. Sony
, commonly stylized as SONY, is a Japanese multinational conglomerate corporation headquartered in Minato, Tokyo, Japan. As a major technology company, it operates as one of the world's largest manufacturers of consumer and professional ...
for example started operations in Mexico in 1976 with a group of Mexican investors, and founded the joint venture, Sony de Mexico which produces LED panels, LCD modules, automotive electronics, appliances and printed circuit boards amongst other products for its Japanese parent company, Sony KG. Sony de Mexico has research facilities in Monterrey
Monterrey ( , ) is the capital and largest city of the northeastern state of Nuevo León, Mexico, and the third largest city in Mexico behind Guadalajara and Mexico City. Located at the foothills of the Sierra Madre Oriental, the city is ancho ...
and Mexico City
Mexico City ( es, link=no, Ciudad de México, ; abbr.: CDMX; Nahuatl: ''Altepetl Mexico'') is the capital and largest city of Mexico, and the most populous city in North America. One of the world's alpha cities, it is located in the Valley o ...
, designs many of the Sony products manufactured in Mexico and has now expanded to create its own finance, music and entertainment subsidiaries which are Mexican registered and independent of their Japanese parent corporation.
Domestic industry
Although much of Mexico's electronics industry is driven by foreign companies, Mexico also has a sizeable domestic electronics industry and a number of electronics companies including Mabe, a major appliance manufacturer and OEM which has been functioning since the nineteen fifties and has expanded into the global market, Meebox
Meebox, (also stylized as Meeb ) was a Mexican company specializing in the design and manufacturing of computers and other consumer electronics. Meebox has operations in Latin America and the United States. It was the first Mexican company to m ...
, a designer and manufacturer desktop and tablet computers, solar power panels and electronics components, Texa, which manufactures computers laptops and servers, Falco, a major international manufacturer of electronic components such as printed circuitboards, power systems, semiconductors, gate drives and which has production facilities in Mexico, India and China, and Lanix, Mexico's largest electronics company which manufactures products such as computers, laptops, smartphones
A smartphone is a portable computer device that combines mobile telephone and computing functions into one unit. They are distinguished from feature phones by their stronger hardware capabilities and extensive mobile operating systems, whic ...
, LED and LCDs, flash memory
Flash memory is an electronic non-volatile computer memory storage medium that can be electrically erased and reprogrammed. The two main types of flash memory, NOR flash and NAND flash, are named for the NOR and NAND logic gates. Both use ...
, tablets, servers, hard drives
A hard disk drive (HDD), hard disk, hard drive, or fixed disk is an electro-mechanical data storage device that stores and retrieves digital data using magnetic storage with one or more rigid rapidly rotating platters coated with magn ...
, RAM, optical disk drives, and printed circuitboards and employs over 11,000 people in Mexico and Chile and distributes its products throughout Latin America. Another area being currently developed in Mexico is Robotics, Mexico's new Mexone robot has been designed with the idea that in future years develop a commercial application for such advanced robots
Oil
Mineral resources are public property by constitution. As such, the energy sector is administered by the government with varying degrees of private investment. Mexico is the fourteenth-largest oil producer in the world, with . Pemex
Pemex (a portmanteau of Petróleos Mexicanos, which translates to ''Mexican Petroleum'' in English; ) is the Mexican state-owned petroleum company managed and operated by the Mexican government. It was formed in 1938 by nationalization and expr ...
, the state-owned company in charge of administering research, exploration and sales of oil, is the largest company in Mexico
Mexico (Spanish language, Spanish: México), officially the United Mexican States, is a List of sovereign states, country in the southern portion of North America. It is borders of Mexico, bordered to the north by the United States; to the so ...
, and the second largest in Latin America after Brazil's Petrobras
Petróleo Brasileiro S.A., better known by the portmanteau Petrobras (), is a state-owned Brazilian multinational corporation in the petroleum industry headquartered in Rio de Janeiro, Brazil. The company's name translates to Brazilian Petrole ...
. Pemex is heavily taxed of almost 62 per cent of the company's sales, a significant source of revenue for the government.
Without enough money to continue investing in finding new sources or upgrading infrastructure, and being protected constitutionally from private and foreign investment, some have predicted the company may face institutional collapse. While the oil industry is still relevant for the government's budget, its importance in GDP and exports has steadily fallen since the 1980s. In 1980 oil exports accounted for 61.6% of total exports; by 2000 it was only 7.3%.
Energy
Mexico's installed electricity capacity in 2008 was 58 GW. Of the installed capacity, 75% is thermal, 19% hydro, 2% nuclear and 3% renewable other than hydro.SENER 2009 The general trend in thermal generation is a decline in petroleum-based fuels and a growth in natural gas and coal. Since Mexico is a net importer of natural gas, higher levels of natural gas consumption (i.e. for power generation) will likely depend upon higher imports from either the United States or via liquefied natural gas (LNG).EIAManufacturing
Manufacturing in Mexico grew rapidly in the late 1960s with the end of the US farm labor agreement known as the bracero program. This sent many farm laborers back into the Northern border region with no source of income. As a result, the US and Mexican governments agreed to The Border Industrialization Program, which permitted US companies to assemble products in Mexico using raw materials and components from the US with reduced duties. The Border Industrialization Program became known popularly as The Maquiladora Program or shortened to The Maquila Program.
Over the years, simple assembly operations in Mexico have evolved into complex manufacturing operations including televisions, automobiles, industrial and personal products. While inexpensive commodity manufacturing has flown to China, Mexico attracts U.S. manufacturers that need low-cost solutions near-by for higher value end products and just-in-time components.
Automobiles
The automotive sector accounts for 17.6% of Mexico's manufacturing sector. General Motors
The General Motors Company (GM) is an American Multinational corporation, multinational Automotive industry, automotive manufacturing company headquartered in Detroit, Michigan, United States. It is the largest automaker in the United States and ...
, Chrysler
Stellantis North America (officially FCA US and formerly Chrysler ()) is one of the " Big Three" automobile manufacturers in the United States, headquartered in Auburn Hills, Michigan. It is the American subsidiary of the multinational automotiv ...
, Ford Motor Company
Ford Motor Company (commonly known as Ford) is an American multinational automobile manufacturer headquartered in Dearborn, Michigan, United States. It was founded by Henry Ford and incorporated on June 16, 1903. The company sells automobi ...
, Nissan
, trading as Nissan Motor Corporation and often shortened to Nissan, is a Japanese multinational automobile manufacturer headquartered in Nishi-ku, Yokohama, Japan. The company sells its vehicles under the Nissan, Infiniti, and Datsun bra ...
, Fiat
Fiat Automobiles S.p.A. (, , ; originally FIAT, it, Fabbrica Italiana Automobili di Torino, lit=Italian Automobiles Factory of Turin) is an Italian automobile manufacturer, formerly part of Fiat Chrysler Automobiles, and since 2021 a subsidiar ...
, Renault
Groupe Renault ( , , , also known as the Renault Group in English; legally Renault S.A.) is a French multinational automobile manufacturer established in 1899. The company produces a range of cars and vans, and in the past has manufactured ...
, Honda
is a Japanese public multinational conglomerate manufacturer of automobiles, motorcycles, and power equipment, headquartered in Minato, Tokyo, Japan.
Honda has been the world's largest motorcycle manufacturer since 1959, reaching a producti ...
, Toyota
is a Japanese multinational automotive manufacturer headquartered in Toyota City, Aichi, Japan. It was founded by Kiichiro Toyoda and incorporated on . Toyota is one of the largest automobile manufacturers in the world, producing about 10 ...
, and Volkswagen
Volkswagen (),English: , . abbreviated as VW (), is a German Automotive industry, motor vehicle manufacturer headquartered in Wolfsburg, Lower Saxony, Germany. Founded in 1937 by the German Labour Front under the Nazi Party and revived into a ...
produce 2.8 million vehicles annually at 20 plants across the country, mostly in Puebla
Puebla ( en, colony, settlement), officially Free and Sovereign State of Puebla ( es, Estado Libre y Soberano de Puebla), is one of the 32 states which comprise the Federal Entities of Mexico. It is divided into 217 municipalities and its cap ...
. Mexico manufactures more automobiles of
any North American nation. The industry produces technologically complex components and engages in research and development.
The "Big Three" (General Motors
The General Motors Company (GM) is an American Multinational corporation, multinational Automotive industry, automotive manufacturing company headquartered in Detroit, Michigan, United States. It is the largest automaker in the United States and ...
, Ford and Chrysler
Stellantis North America (officially FCA US and formerly Chrysler ()) is one of the " Big Three" automobile manufacturers in the United States, headquartered in Auburn Hills, Michigan. It is the American subsidiary of the multinational automotiv ...
) have been operating in Mexico since the 1930s, while Volkswagen
Volkswagen (),English: , . abbreviated as VW (), is a German Automotive industry, motor vehicle manufacturer headquartered in Wolfsburg, Lower Saxony, Germany. Founded in 1937 by the German Labour Front under the Nazi Party and revived into a ...
and Nissan
, trading as Nissan Motor Corporation and often shortened to Nissan, is a Japanese multinational automobile manufacturer headquartered in Nishi-ku, Yokohama, Japan. The company sells its vehicles under the Nissan, Infiniti, and Datsun bra ...
built their plants in the 1960s. In Puebla 70 industrial part-makers cluster around Volkswagen. In the 2010s expansion of the sector was surging. In 2014 more than $10 billion in investment was committed in the first few months of the year. Kia Motors
Kia Corporation, commonly known as Kia (, ; formerly known as Kyungsung Precision Industry and Kia Motors Corporation), is a South Korean multinational automobile manufacturer headquartered in Seoul, South Korea. It is South Korea's second lar ...
in August 2014 announced plans for a $1 billion factory in Nuevo León
Nuevo León () is a state in the northeast region of Mexico. The state was named after the New Kingdom of León, an administrative territory from the Viceroyalty of New Spain, itself was named after the historic Spanish Kingdom of León. Wit ...
. At the time Mercedes-Benz
Mercedes-Benz (), commonly referred to as Mercedes and sometimes as Benz, is a German luxury and commercial vehicle automotive brand established in 1926. Mercedes-Benz AG (a Mercedes-Benz Group subsidiary established in 2019) is headquarte ...
and Nissan
, trading as Nissan Motor Corporation and often shortened to Nissan, is a Japanese multinational automobile manufacturer headquartered in Nishi-ku, Yokohama, Japan. The company sells its vehicles under the Nissan, Infiniti, and Datsun bra ...
were already building a $1.4 billion plant near Aguascalientes, while BMW was planning a $1-billion assembly plant in San Luis Potosí
San Luis Potosí (), officially the Free and Sovereign State of San Luis Potosí ( es, Estado Libre y Soberano de San Luis Potosí), is one of the 32 states which compose the Federal Entities of Mexico. It is divided in 58 municipalities and i ...
. Additionally, Audi
Audi AG () is a German automotive manufacturer of luxury vehicles headquartered in Ingolstadt, Bavaria, Germany. As a subsidiary of its parent company, the Volkswagen Group, Audi produces vehicles in nine production facilities worldwide.
...
began building a $1.3 billion factory at San José Chiapa near Puebla in 2013.
Retailing
Mexico has a MXN 4.027 trillion retail sector (2013, about US$300 billion at the 2013 exchange rate) including an estimated US$12 billion (2015) in e-commerce
E-commerce (electronic commerce) is the activity of electronically buying or selling of products on online services or over the Internet. E-commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain manag ...
. The largest retailer is Walmart
Walmart Inc. (; formerly Wal-Mart Stores, Inc.) is an American multinational retail corporation that operates a chain of hypermarkets (also called supercenters), discount department stores, and grocery stores from the United States, headquarter ...
, while the largest Mexico-based retailers are Soriana super/hypermarkets, FEMSA
Fomento Económico Mexicano, S.A.B. de C.V., doing business as FEMSA, is a Mexican multinational beverage and retail company headquartered in Monterrey, Mexico. It operates the largest independent Coca-Cola bottling group in the world and the ...
incl. its OXXO convenience stores, Coppel (department store)
Coppel is a nationwide department store in Mexico based in Culiacán, Sinaloa and founded in 1941. It is noted for extending easy credit and for enabling payment of purchases via twice-monthly installments.Jesús Remedios Vega, De persona a pers ...
, Liverpool
Liverpool is a City status in the United Kingdom, city and metropolitan borough in Merseyside, England. With a population of in 2019, it is the List of English districts by population, 10th largest English district by population and its E ...
department stores, Chedraui
Chedraui is a publicly traded Mexican grocery store and department store chain which also operates stores in the U.S. in the states of California, Arizona, New Mexico, and Nevada under the name El Super. It is traded on the Mexican Stock Exc ...
super/hypermarkets, and Comercial Mexicana
Tiendas Comercial Mexicana S.A. de C.V., colloquially known as La Comercial and La Comer, was a Mexican hypermarket group that operated mainly in Mexico City and Central Mexico. It was founded in 1930 and operated by Controladora Comercial Mex ...
super/hypermarkets.
Services
In 2013 the tertiary sector was estimated to account for 59.8% of Mexico's GDP. In 2011 services employed 61.9% of the working population. This section includes transportation, commerce, warehousing, restaurant and hotels, arts and entertainment, health, education, financial and banking services, telecommunications as well as public administration and defense. Mexico's service sector is strong, and in 2001 replaced Brazil
Brazil ( pt, Brasil; ), officially the Federative Republic of Brazil (Portuguese: ), is the largest country in both South America and Latin America. At and with over 217 million people, Brazil is the world's fifth-largest country by area ...
's as the largest service sector in Latin America in dollar terms.
Tourism
Tourism is one of the most important industries in Mexico. It is the fourth largest source of foreign exchange for the country. Mexico is the eighth most visited country in the world (with over 20 million tourists a year).
Finance
Banking system
According to the IMF
The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster glob ...
the Mexican banking system is strong, in which private banks are profitable and well-capitalized. The financial and banking sector is increasingly dominated by foreign companies or mergers of foreign and Mexican companies with the notable exception of Banorte. The acquisition of Banamex, one of the oldest surviving financial institutions in Mexico, by Citigroup
Citigroup Inc. or Citi ( stylized as citi) is an American multinational investment bank and financial services corporation headquartered in New York City. The company was formed by the merger of banking giant Citicorp and financial conglomera ...
was the largest US-Mexico corporate merger, at US$12.5 billion. The largest financial institution in Mexico is Bancomer associated to the Spanish BBVA.
The process of institution building in the financial sector in Mexico has evolved hand in hand with the efforts of financial liberalization and of inserting the economy more fully into world markets. Over the recent years, there has been a wave of acquisitions by foreign institutions such as US-based Citigroup, Spain's BBVA and the UK's HSBC
HSBC Holdings plc is a British multinational universal bank and financial services holding company. It is the largest bank in Europe by total assets ahead of BNP Paribas, with US$2.953 trillion as of December 2021. In 2021, HSBC had $10.8 tr ...
. Their presence, along with a better regulatory framework, has allowed Mexico's banking system to recover from the 1994–95 peso crisis. Lending to the public and private sector is increasing and so is activity in the areas of insurance, leasing and mortgages. However, bank credit accounts for only 22% of GDP, which is significantly low compared to 70% in Chile. Credit to the Agricultural sector has fallen 45.5% in six years (2001 to 2007), and now represents about 1% of total bank loans. Other important institutions include savings and loans, credit unions (known as "cajas populares"), government development banks, “non-bank banks”, bonded warehouse
A bonded warehouse, or bond, is a building or other secured area in which dutiable goods may be stored, manipulated, or undergo manufacturing operations without payment of duty. It may be managed by the state or by private enterprise. In the ...
s, bonding companies and foreign-exchange firms.
A wave of acquisitions has left Mexico's financial sector in foreign hands. Their foreign-run affiliates compete with independent financial firms operating as commercial banks, brokerage and securities houses, insurance companies, retirement-fund administrators, mutual funds, and leasing companies.
Securities market
Mexico has a single securities market, the Mexican Stock Exchange
The Mexican Stock Exchange ( es, Bolsa Mexicana de Valores), commonly known as Mexican Bolsa, Mexbol, or BMV, is one of two stock exchanges in Mexico, the other being BIVA - Bolsa Institucional de Valores. It is the second largest stock exchange ...
(Bolsa Mexicana de Valores, known as the Bolsa). The market has grown steadily, with its main indices increasing by more than 600% in the last decade. It is Latin America's second largest exchange, after Brazil's. The total value of the domestic market capitalization
Market capitalization, sometimes referred to as market cap, is the total value of a publicly traded company's outstanding common shares owned by stockholders.
Market capitalization is equal to the market price per common share multiplied by ...
of the BMV was calculated at US$409 billion at the end of 2011, and raised to US$451 billion by the end of February this year.
The Indice de Precios y Cotizaciones
The Índice de Precios y Cotizaciones (IPC) is the weighted measurement index of 35 stocks traded on the Bolsa Mexicana de Valores
The Mexican Stock Exchange ( es, Bolsa Mexicana de Valores), commonly known as Mexican Bolsa, Mexbol, or BMV, is o ...
(IPC, the general equities index) is the benchmark stock index on the Bolsa. In 2005 the IPC surged 37.8%, to 17,802.71 from 12,917.88, backed by a stronger Mexican economy and lower interest rates. It continued its steep rise through the beginning of 2006, reaching 19,272.63 points at end-March 2006. The stockmarket also posted a record low vacancy rate, according to the central bank. Local stockmarket capitalisation totalled US$236bn at end-2005, up from US$170 bn at end-2004. As of March 2006 there were 135 listed companies, down from 153 a year earlier. Only a handful of the listed companies are foreign. Most are from Mexico City
Mexico City ( es, link=no, Ciudad de México, ; abbr.: CDMX; Nahuatl: ''Altepetl Mexico'') is the capital and largest city of Mexico, and the most populous city in North America. One of the world's alpha cities, it is located in the Valley o ...
or Monterrey
Monterrey ( , ) is the capital and largest city of the northeastern state of Nuevo León, Mexico, and the third largest city in Mexico behind Guadalajara and Mexico City. Located at the foothills of the Sierra Madre Oriental, the city is ancho ...
; companies from these two cities compose 67% of the total listed companies.
The IPC consists of a sample of 35 shares weighted according to their market capitalisation. The largest companies include America Telecom, the holding company that manages Latin America's largest mobile company, América Móvil
América Móvil is a Mexican telecommunications corporation headquartered in Mexico City, Mexico. It is the 7th largest mobile network operator in terms of equity subscribers and one of the largest corporations in the world. América Móvil is a ...
; Telmex
Telmex is a Mexican telecommunications company headquartered in Mexico City that provides telecommunications products and services in Mexico. Telmex is still the dominant fixed-line phone carrier in Mexico. In addition to traditional fixed-lin ...
, Mexico's largest telephone company; Grupo Bimbo
Grupo Bimbo, S.A.B. de C.V. (also known simply as Bimbo) is a Mexican multinational company with a presence in over 33 countries located in the Americas, Europe, Asia, and Africa. It has an annual sales volume of 15 billion dollars and is currentl ...
, world's biggest baker; and Wal-Mart de México, a subsidiary of the US retail company. The makeup of the IPC is adjusted every six months, with selection aimed at including the most liquid shares in terms of value, volume and number of trades.
Mexico's stock market is closely linked to developments in the US. Thus, volatility in the New York
New York most commonly refers to:
* New York City, the most populous city in the United States, located in the state of New York
* New York (state), a state in the northeastern United States
New York may also refer to:
Film and television
* '' ...
and Nasdaq
The Nasdaq Stock Market () (National Association of Securities Dealers Automated Quotations Stock Market) is an American stock exchange based in New York City. It is the most active stock trading venue in the US by volume, and ranked second ...
stock exchanges, as well as interest-rate changes and economic expectations in the US, can steer the performance of Mexican equities. This is both because of Mexico's economic dependence on the US and the high volume of trading in Mexican equities through American Depositary Receipts (ADRs). Currently, the decline in the value of the dollar is making non-US markets, including Mexico's, more attractive.
Despite the recent gains, investors remain wary of making placements in second-tier initial public offerings (IPOs). Purchasers of new issues were disappointed after prices fell in numerous medium-sized companies that made offerings in 1996 and 1997. IPO activity in Mexico remains tepid and the market for second-tier IPOs is barely visible. There were three IPOs in 2005.
Government
Monetary and financial system and regulation
Banco de México
Banco de México
The Bank of Mexico ( es, Banco de México), abbreviated ''BdeM'' or ''Banxico,'' is Mexico's central bank, monetary authority and lender of last resort. The Bank of Mexico is autonomous in exercising its functions, and its main objective is to ac ...
is Mexico's central bank
A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union,
and oversees their commercial banking system. In contrast to a commercial bank, a centra ...
, an internally autonomous public institution whose governor is appointed by the president
President most commonly refers to:
*President (corporate title)
* President (education), a leader of a college or university
* President (government title)
President may also refer to:
Automobiles
* Nissan President, a 1966–2010 Japanese ...
and approved by the legislature to which it is fully responsible. Banco de México's functions are outlined in the 28th article of the constitution
A constitution is the aggregate of fundamental principles or established precedents that constitute the legal basis of a polity, organisation or other type of entity and commonly determine how that entity is to be governed.
When these pr ...
and further expanded in the Monetary Law of the United Mexican States. Banco de México's main objective is to achieve stability in the purchasing power of the national currency. It is also the lender of last resort.
Currency policy
Mexico has a floating exchange rate
In macroeconomics and economic policy, a floating exchange rate (also known as a fluctuating or flexible exchange rate) is a type of exchange rate regime in which a currency's value is allowed to fluctuate in response to foreign exchange ma ...
regime.
The floating exchange originated with reforms initiated after the December 1994 peso crash which had followed an unsustainable adherence to a short band. Under the new system, Banco de México now makes no commitment to the level of the peso exchange rate, although it does employ an automatic mechanism to accumulate foreign reserves. It also possesses tools aimed at smoothing out volatility. The Exchange Rate Commission sets policy; it is made up of six members—three each from the Ministry of Finance and Public Credit (Secretaría de Hacienda y Crédito Publico—SHCP) and the central bank, with the SHCP holding the deciding vote.
In August 1996, Banco de México initiated a mechanism to acquire foreign reserves when the peso is strong, without giving the market signals about a target range for the exchange rate. The resulting high levels of reserves, mostly from petroleum revenues, have helped to improve the terms and conditions on debt Mexico places on foreign markets. However, there is concern that the government relies too heavily on oil income in order to build a healthy base of reserves. According to the central bank, international reserves stood at US$75.8 billion in 2007. In May 2003, Banco de México launched a program that sells U.S. dollars via a monthly auction, with the goal of maintaining a stable, but moderate, level of reserves.
From April 1, 1998, through April 1, 2008, the Peso traded around a range varying from $8.46 MXN per US$1.00 on April 21, 1998, to $11.69 MXN per US$1.00 on May 11, 2004, a 10-year peak depreciation of 38.18% between the two reference date extremes before recovering.
After the onset of the US credit crisis that accelerated in October 2008, the Peso had an exchange rate during October 1, 2008, through April 1, 2009 fluctuating from lowest to highest between $10.96 MXN per US$1.00 on October 1, 2008, to $15.42 MXN per US$1.00 on March 9, 2009, a peak depreciation ytd of 28.92% during those six months between the two reference date extremes before recovering.
From the $11.69 rate during 2004's low to the $15.42 rate during 2009's low, the peso depreciated 31.91% in that span covering the US recession coinciding Iraq War
{{Infobox military conflict
, conflict = Iraq War {{Nobold, {{lang, ar, حرب العراق (Arabic) {{Nobold, {{lang, ku, شەڕی عێراق (Kurdish languages, Kurdish)
, partof = the Iraq conflict (2003–present), I ...
of 2003 and 2004 to the US & Global Credit Crisis of 2008.
Some experts including analysts at Goldman Sachs who coined the term BRIC in reference to the growing economies of Brazil, Russia, India, and China for marketing purposes believe that Mexico
Mexico (Spanish language, Spanish: México), officially the United Mexican States, is a List of sovereign states, country in the southern portion of North America. It is borders of Mexico, bordered to the north by the United States; to the so ...
is going to be the 5th or 6th biggest economy in the world by the year 2050, behind China
China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's List of countries and dependencies by population, most populous country, with a Population of China, population exceeding 1.4 billion, slig ...
, United States, India
India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the List of countries and dependencies by area, seventh-largest country by area, the List of countries and dependencies by population, second-most populous ...
, Brazil, and possibly Russia
Russia (, , ), or the Russian Federation, is a transcontinental country spanning Eastern Europe and Northern Asia. It is the largest country in the world, with its internationally recognised territory covering , and encompassing one-ei ...
.
Monetary system
Mexico's monetary policy was revised following the 1994–95 financial crisis, when officials decided that maintaining general price stability was the best way to contribute to the sustained growth of employment and economic activity. As a result, Banco de México has as its primary objective maintaining stability in the purchasing power of the peso. It sets an inflation target, which requires it to establish corresponding quantitative targets for the growth of the monetary base and for the expansion of net domestic credit.
The central bank also monitors the evolution of several economic indicators, such as the exchange rate, differences between observed and projected inflation, the results of surveys on the public and specialists’ inflation expectations, revisions on collective employment contracts, producer prices, and the balances of the current and capital accounts.
A debate continues over whether Mexico should switch to a US-style interest rate-targeting system. Government officials in favor of a change say that the new system would give them more control over interest rates, which are becoming more important as consumer credit levels rise.
Until 2008, Mexico used a unique system, amongst the OECD countries, to control inflation in a mechanism known as the ''corto'' (lit. "shortage") a mechanism that allowed the central bank to influence market interest rates by leaving the banking system short of its daily demand for money by a predetermined amount. If the central bank wanted to push interest rates higher, it increased the ''corto''. If it wished to lower interest rates, it decreased the ''corto''. In April 2004, the Central Bank began setting a referential overnight interest rate as its monetary policy.
Business regulation
Corruption
Petty corruption based on exercise of administrative discretion in matters of zoning and business permits is endemic in Mexico adding about 10% to the cost of consumer goods and services. An April 2012 article in ''The New York Times
''The New York Times'' (''the Times'', ''NYT'', or the Gray Lady) is a daily newspaper based in New York City with a worldwide readership reported in 2020 to comprise a declining 840,000 paid print subscribers, and a growing 6 million paid ...
'' reporting payment of bribes to officials throughout Mexico in order to obtain construction permits, information, and other favorsBarstow, David"Vast Mexican Bribery Case Hushed Up by Wal-Mart After High-Level Struggle"
''
The New York Times
''The New York Times'' (''the Times'', ''NYT'', or the Gray Lady) is a daily newspaper based in New York City with a worldwide readership reported in 2020 to comprise a declining 840,000 paid print subscribers, and a growing 6 million paid ...
''. April 21, 2012. Retrieved April 22, 2012. resulted in investigations in both the United States and Mexico.
Using relatively recent night light data and electricity consumption in comparison with Gross County Product, the informal sector of the local economy in Veracruz state is shown to have grown during the period of the Fox Administration though the regional government remained PRI. The assumption that the informal economy of Mexico is a constant 30% of total economic activity is not supported at the local level. The small amount of local spatial autocorrelation that was found suggests a few clusters of high and low literacy rates amongst municipios in Veracruz but not enough to warrant including an I-statistic as a regressor. Global spatial autocorrelation is found especially literacy at the macro-regional level which is an area for further research beyond this study.Brock, Gregory, Jie Tan and Robert Yarbrough, “The Informal Economy of Veracruz State during the Fox Administration,”
Journal of Developing Areas, Vol. 48, No. 2, 2014, pp. 153–68. muse.jhu.edu/journals/journal_of_developing_areas
Improved literacy bolsters both the informal and formal economies in Veracruz indicating policies designed to further literacy are vital for growing the regional economy. While indigenous people are relatively poor, little evidence was found that the informal economy is a higher percentage of total economic activity in a municipio with a high share of indigenous people. While the formal economy might have been expanding relative to the informal economy in 2000, by 2006 this process had been reversed with growing informality. While rural municipios have smaller economies, they are not different than urban municipios in the share of the economy that is informal. Programs in the past that might move economic activity from the informal to the formal sector have not succeeded, suggesting public finance issues such as tax evasion will continue to plague the state with low government revenues.
Trade
Mexico is a trade-oriented economy, with imports and exports totaling a 78% share of the GDP in 2019. It is an important trade power as measured by the value of merchandise traded, and the country with the greatest number of free trade agreements. In 2020, Mexico was the world's eleventh largest merchandise exporter and thirteenth largest merchandise importer, representing 2.4% and 2.2% of world trade, respectively (and those rankings increased to 7th and 9th if the EU is considered a single trading entity). From 1991 to 2005, Mexican trade increased fivefold. Mexico is the biggest exporter and importer in Latin America; in 2020, Mexico alone exported US$417.7 billion, roughly equivalent to the sum of the exports of the next 5 largest exporters (Brazil, Chile, Argentina, Peru, and Colombia).
Mexican trade is fully integrated with that of its North American partners: , approximately 80% of Mexican exports and 50% of its imports were traded with the United States and Canada. Nonetheless, NAFTA has not produced trade diversion. While trade with the United States increased 183% from 1993 to 2002, and that with Canada 165%, other trade agreements have shown even more impressive results: trade with Chile increased 285%, with Costa Rica 528% and Honduras 420%. Trade with the European Union increased 105% over the same time period.
Free trade agreements
Mexico joined theGeneral Agreement on Tariffs and Trade
The General Agreement on Tariffs and Trade (GATT) is a legal agreement between many countries, whose overall purpose was to promote international trade by reducing or eliminating trade barriers such as tariffs or quotas. According to its pr ...
(GATT) in 1986, and today is an active and constructive participant of the World Trade Organization
The World Trade Organization (WTO) is an intergovernmental organization that regulates and facilitates international trade. With effective cooperation
in the United Nations System, governments use the organization to establish, revise, and ...
. Fox's administration promoted the establishment of a Free Trade Area of the Americas; Puebla
Puebla ( en, colony, settlement), officially Free and Sovereign State of Puebla ( es, Estado Libre y Soberano de Puebla), is one of the 32 states which comprise the Federal Entities of Mexico. It is divided into 217 municipalities and its cap ...
served as temporary headquarters for the negotiations, and several other cities are now candidates for its permanent headquarters if the agreement is reached and implemented.
Mexico has signed 12 free trade agreements
A free-trade agreement (FTA) or treaty is an agreement according to international law to form a free-trade area between the cooperating states. There are two types of trade agreements: bilateral and multilateral. Bilateral trade agreements occu ...
with 44 countries:
* The North American Free Trade Agreement
The North American Free Trade Agreement (NAFTA ; es, Tratado de Libre Comercio de América del Norte, TLCAN; french: Accord de libre-échange nord-américain, ALÉNA) was an agreement signed by Canada, Mexico, and the United States that crea ...
(NAFTA) (1992) later United States–Mexico–Canada Agreement
The Agreement between the United States of America, the United Mexican States, and Canada (USMCA) Commonly known as the United States–Mexico–Canada Agreement (USMCA) in the United States and the Canada–United States–Mexico Agreement (CU ...
(USMCA) (2019) with the United States and Canada;
* Grupo de los tres, ''Group of the three ountries', or G-3 (1994) with Colombia
Colombia (, ; ), officially the Republic of Colombia, is a country in South America with insular regions in North America—near Nicaragua's Caribbean coast—as well as in the Pacific Ocean. The Colombian mainland is bordered by the ...
and Venezuela
Venezuela (; ), officially the Bolivarian Republic of Venezuela ( es, link=no, República Bolivariana de Venezuela), is a country on the northern coast of South America, consisting of a continental landmass and many islands and islets in th ...
; the latter decided to terminate the agreement in 2006;
* Free Trade Agreement with Costa Rica
Costa Rica (, ; ; literally "Rich Coast"), officially the Republic of Costa Rica ( es, República de Costa Rica), is a country in the Central American region of North America, bordered by Nicaragua to the north, the Caribbean Sea to the no ...
(1994); superseded by the 2011 integrated Free Trade Agreement with the Central American countries;
* Free Trade Agreement with Bolivia
, image_flag = Bandera de Bolivia (Estado).svg
, flag_alt = Horizontal tricolor (red, yellow, and green from top to bottom) with the coat of arms of Bolivia in the center
, flag_alt2 = 7 × 7 square p ...
(1994); terminated in 2010;
* Free Trade Agreement with Nicaragua
Nicaragua (; ), officially the Republic of Nicaragua (), is the largest country in Central America, bordered by Honduras to the north, the Caribbean to the east, Costa Rica to the south, and the Pacific Ocean to the west. Managua is the coun ...
(1997); superseded by the 2011 integrated Free Trade Agreement with the Central American countries;
* Free Trade Agreement with Chile
Chile, officially the Republic of Chile, is a country in the western part of South America. It is the southernmost country in the world, and the closest to Antarctica, occupying a long and narrow strip of land between the Andes to the eas ...
(1998);
* Free Trade Agreement with the European Union
The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are located primarily in Europe, Europe. The union has a total area of ...
(2000);
* Free Trade Agreement with Israel
Israel (; he, יִשְׂרָאֵל, ; ar, إِسْرَائِيل, ), officially the State of Israel ( he, מְדִינַת יִשְׂרָאֵל, label=none, translit=Medīnat Yīsrāʾēl; ), is a country in Western Asia. It is situated ...
(2000);
* Northern Triangle Free Trade Agreement (2000), with Guatemala
Guatemala ( ; ), officially the Republic of Guatemala ( es, República de Guatemala, links=no), is a country in Central America. It is bordered to the north and west by Mexico; to the northeast by Belize and the Caribbean; to the east by Hon ...
, El Salvador
El Salvador (; , meaning " The Saviour"), officially the Republic of El Salvador ( es, República de El Salvador), is a country in Central America. It is bordered on the northeast by Honduras, on the northwest by Guatemala, and on the south ...
and Honduras
Honduras, officially the Republic of Honduras, is a country in Central America. The republic of Honduras is bordered to the west by Guatemala, to the southwest by El Salvador, to the southeast by Nicaragua, to the south by the Pacific Oce ...
; superseded by the 2011 integrated Free Trade Agreement with the Central American countries;
* Free Trade Agreement with the European Free Trade Association
The European Free Trade Association (EFTA) is a regional trade organization and free trade area consisting of four European states: Iceland, Liechtenstein, Norway and Switzerland. The organization operates in parallel with the European U ...
(EFTA), integrated by Iceland
Iceland ( is, Ísland; ) is a Nordic island country in the North Atlantic Ocean and in the Arctic Ocean. Iceland is the most sparsely populated country in Europe. Iceland's capital and largest city is Reykjavík, which (along with its ...
, Norway
Norway, officially the Kingdom of Norway, is a Nordic countries, Nordic country in Northern Europe, the mainland territory of which comprises the western and northernmost portion of the Scandinavian Peninsula. The remote Arctic island of ...
, Liechtenstein
Liechtenstein (), officially the Principality of Liechtenstein (german: link=no, Fürstentum Liechtenstein), is a German language, German-speaking microstate located in the Alps between Austria and Switzerland. Liechtenstein is a semi-constit ...
and Switzerland
). Swiss law does not designate a ''capital'' as such, but the federal parliament and government are installed in Bern, while other federal institutions, such as the federal courts, are in other cities (Bellinzona, Lausanne, Luzern, Neuchâtel ...
(2001);
* Free Trade Agreement with Uruguay
Uruguay (; ), officially the Oriental Republic of Uruguay ( es, República Oriental del Uruguay), is a country in South America. It shares borders with Argentina to its west and southwest and Brazil to its north and northeast; while bordering ...
(2003);
* Free Trade Agreement with Japan
Japan ( ja, 日本, or , and formally , ''Nihonkoku'') is an island country in East Asia. It is situated in the northwest Pacific Ocean, and is bordered on the west by the Sea of Japan, while extending from the Sea of Okhotsk in the n ...
(2004);
* Free Trade Agreement with Peru
, image_flag = Flag of Peru.svg
, image_coat = Escudo nacional del Perú.svg
, other_symbol = Great Seal of the State
, other_symbol_type = National seal
, national_motto = "Firm and Happy f ...
(2011);
* The integrated Free Trade Agreement with Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua (2011);
* Free Trade Agreement with Panama
Panama ( , ; es, link=no, Panamá ), officially the Republic of Panama ( es, República de Panamá), is a transcontinental country spanning the southern part of North America and the northern part of South America. It is bordered by Co ...
(2014); and
* The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) (2018).
Mexico has shown interest in becoming an associate member of Mercosur. The Mexican government has also started negotiations with South Korea, Singapore and Peru, and also wishes to start negotiations with Australia for a trade agreement between the two countries.
North American Trade Agreement and the USMCA Agreement
The 1994 North American Trade Agreement (NAFTA) is by far the most important Trade Agreement Mexico has signed both in the magnitude of reciprocal trade with its partners as well as in its scope. Unlike the rest of the Free Trade Agreements that Mexico has signed, NAFTA is more comprehensive in its scope and was complemented by the North American Agreement for Environmental Cooperation (NAAEC) and the North American Agreement on Labor Cooperation (NAALC). An updating of the 1994 NAFTA, the U.S., Mexico, Canada ( USMCA) is pending in early 2020, awaiting the ratification by Canada; the U.S. and Mexico have ratified it.
The NAAEC agreement was a response to environmentalists' concerns that companies would relocate to Mexico or the United States would lower its standards if the three countries did not achieve a unanimous regulation on the environment. The NAAEC, in an aim to be more than a set of environmental regulations, established the North American Commission for Environmental Cooperation (NACEC), a mechanism for addressing trade and environmental issues, the North American Development Bank (NADBank) for assisting and financing investments in pollution reduction and the Border Environmental Cooperation Commission (BECC). The NADBank and the BECC have provided economic benefits to Mexico by financing 36 projects, mostly in the water sector. By complementing NAFTA with the NAAEC, it has been labeled the "greenest" trade agreement.
The NAALC supplement to NAFTA aimed to create a foundation for cooperation among the three members for the resolution of labor problems, as well as to promote greater cooperation among trade unions and social organizations in all three countries, in order to fight for the improvement of labor conditions. Though most economists agree that it is difficult to assess the direct impact of the NAALC, it is agreed that there has been a convergence of labor standards in North America. Given its limitations, however, NAALC has not produced (and in fact was not intended to achieve) convergence in employment, productivity and salary trend in North America.
The agreement fell short in liberalizing movement of people across the three countries. In a limited way, however, immigration of skilled Mexican and Canadian workers to the United States was permitted under the TN status
TN status (or TN classification; "TN" from Trade NAFTA) is a special non-immigrant classification of foreign nationals in the United States, which offers expedited work authorization to a citizen of Canada or a national of Mexico. It was created ...
. NAFTA allows for a wide list of professions, most of which require at least a bachelor's degree, for which a Mexican or a Canadian citizen can request TN status and temporarily immigrate to the United States. Unlike the visas available to other countries, TN status requires no sponsorship, but simply a job offer letter.
The overall benefits of NAFTA have been quantified by several economists, whose findings have been reported in several publications like the World Bank
The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
's Lessons from NAFTA for Latin America and the Caribbean, NAFTA's Impact on North America, and NAFTA revisited by the Institute for International Economics. They assess that NAFTA has been positive for Mexico, whose poverty rates have fallen, and real income salaries have risen even after accounting for the 1994–1995 economic crisis. Nonetheless, they also state that it has not been enough, or fast enough, to produce an economic convergence nor to reduce the poverty rates substantially or to promote higher rates of growth. Beside this the textile industry gain hype with this agreement and the textile industry in Mexico gained open access to the American market, promoting exports to the United States. The value of Mexican cotton and apparel exports to the U.S. grew from $3 billion in 1995 to $8.4 billion in 2002, a record high of $9.4 billion in 2000. At the same time, the share of Mexico's cotton textile market the U.S. has increased from 8 percent in 1995 to 13 percent in 2002. Some have suggested that in order to fully benefit from the agreement Mexico should invest in education and promote innovation as well as in infrastructure and agriculture.
Contrary to popular belief, the maquiladora
A (), or (), is a word that refers to factories that are largely duty free and tariff-free. These factories take raw materials and assemble, manufacture, or process them and export the finished product. These factories and systems are present t ...
program existed far before NAFTA, dating to 1965. A maquiladora manufacturer operates by importing raw materials into Mexico either tariff free (NAFTA) or at a reduced rate on a temporary basis (18 months) and then using Mexico's relatively less expensive labor costs to produce finished goods for export. Prior to NAFTA maquiladora companies importing raw materials from anywhere in the world were given preferential tariff rates by the Mexican government so long as the finished good was for export. The US, prior to NAFTA, allowed Maquiladora manufactured goods to be imported into the US with the tariff rate only being applied to the value of non US raw materials used to produce the good, thus reducing the tariff relative to other countries. NAFTA has eliminated all tariffs on goods between the two countries, but for the maquiladora industry significantly increased the tariff rates for goods sourced outside of NAFTA.
Given the overall size of trade between Mexico and the United States, there are remarkably few trade disputes, involving relatively small dollar amounts. These disputes are generally settled in WTO or NAFTA panels or through negotiations between the two countries. The most significant areas of friction involve trucking, sugar, high-fructose corn syrup
High-fructose corn syrup (HFCS), also known as glucose–fructose, isoglucose and glucose–fructose syrup, is a sweetener made from corn starch. As in the production of conventional corn syrup, the starch is broken down into glucose by enzy ...
, and a number of other agricultural products.
Mexican trade facilitation and competitiveness
A 2008 research brief published by the World Bank
The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
"Trade Facilitation Reform Promises Large Gains to Trade in Mexico", John S. Wilson & Benjamin Taylor; Trade Facilitation Reform Research Brief, The World Bank. 2008. as part of it
Trade Costs and Facilitation Project
suggested that Mexico had the potential to substantially increase trade flows and economic growth through
trade facilitation
Trade facilitation looks at how procedures and controls governing the movement of goods across national borders can be improved to reduce associated cost burdens and maximise efficiency while safeguarding legitimate regulatory objectives. Bus ...
reform. The study examined the potential impacts of trade facilitation reforms in four areas: port efficiency, customs administration, information technology, and regulatory environment (including standards).
The study projected overall increments from domestic reforms to be on the order of $31.8 billion, equivalent to 22.4 percent of total Mexican manufacturing exports for 2000–03. On the imports side, the corresponding figures are $17.1 billion and 11.2 percent, respectively. Increases in exports, including textiles, would result primarily from improvements in port efficiency and the regulatory environment. Exports of transport equipment would be expected to increase by the greatest increment from improvements in port efficiency, whereas exports of food and machinery would largely be the result of improvements in the regulatory environment. On the imports side, Mexican improvements in port efficiency would appear to be the most important factor, although for imports of transport equipment, improvements in service sector infrastructure would also be of relative importance.
Major trade partners
The following table shows the largest trading partners for Mexico in 2021 by total trade value in billions of USD.See also
* Small and medium enterprises in Mexico *List of companies of Mexico
Mexico is a federal republic in the southern half of North America. Mexico has the fifteenth largest nominal GDP and the eleventh largest by purchasing power parity. The Mexican economy is strongly linked to those of its North American Fre ...
* List of largest Mexican companies
* List of hotels in Mexico
This is a list of notable hotels in Mexico.
Hotels in Mexico
* Baja Club (La Paz)
* Be Tulum
* Hotel Terrestre (Oaxaca)
* Paradero Todos Santos
* Coqui Coqui Papholchac (Coba)
* Octavia Casa (Mexico City)
* Casa Silencio (Oaxaca City)
* ...
* List of Mexican brands
This is a list of Mexican brands, which encompasses brand-name products and services produced by companies in Mexico.
Mexican brands
* Aeroméxico – flag carrier airline of Mexico based in Mexico City
* Ah Cacao Real Chocolate
* Alp ...
* Index of Mexico-related articles
* Mexico and the World Bank
* Poverty in Mexico
References
Further reading
* Merrill, Tim and Ramón Miró. ''Mexico: a country study'' (Library of Congress. Federal Research Division, 1996) US government document; not copyrighonline free
External links
*Mexican Council for Economic and Social Development
*
Mexico Development Gateway
Mexican Economy and the U.S.
from th
Dean Peter Krogh Foreign Affairs Digital Archives
OECD's Mexico country Web site
an
OECD Economic Survey of Mexico
Did NAFTA Help Mexico? An Update After 23 Years
from the
Center for Economic and Policy Research
The Center for Economic and Policy Research (CEPR) is a progressive American think tank that specializes in economic policy. Based in Washington, D.C. CEPR was co-founded by economists Dean Baker and Mark Weisbrot in 1999.
Considered a lef ...
, March 2017Comprehensive current and historical economic data
*Tariffs applied by Mexico as provided by ITC'
ITC Market Access Map
an online database of customs tariffs and market requirements {{DEFAULTSORT:Economy Of Mexico
Mexico
Mexico (Spanish language, Spanish: México), officially the United Mexican States, is a List of sovereign states, country in the southern portion of North America. It is borders of Mexico, bordered to the north by the United States; to the so ...
Mexico
Mexico (Spanish language, Spanish: México), officially the United Mexican States, is a List of sovereign states, country in the southern portion of North America. It is borders of Mexico, bordered to the north by the United States; to the so ...