- Domestic and international economic indicators of Mexico.
Mexico is now the 5th largest emerging market behind China, Brazil, Russia and
India. With the continuous economic reforms of the national government during the early 1990s up to the present, Mexico’s economy remains bullish despite the effects of domestic economic crisis of 1994 and the global financial crisis in 2008. The adoption of the Import Substitution Industrialization (ISI) between the periods 1930-1970 paved the way for the strengthening of local industries. It was further reinforced by the nationalization of oil and railroad companies, the free land distribution under the concept of Ejido and the upgrading of the infrastructure. This period was dubbed by economic historian as “Mexican Miracle” (Economy of Mexico, Wikipedia, the Free Encyclopedia).
It has gained its advantage over international trade when it signed the General Agreement on Tariffs and Trade (GATT) in 1986. The Agreement was instrumental in converting state-owned companies as private companies. This made the economic transaction in the country more efficient. Further, its regional integration with the economies of Canada and the US through the North American Free Trade (NAFTA) in 1992 had tremendously transformed the Mexican Economy with its oil, industrial exports, manufactured goods, electronics and heavy industry, automobiles among others dominating the regional market. It now serves as the 3rd largest source of imports of the US. To date, Mexico is now under free trade agreement with over 50 countries including European Free Trade Area and Japan (Central Intelligence Website).
Mexico has an autonomous Central Bank (Banko de Mexico) functioning as the fiscal agent of the country. Like any other economies, the Central Bank of Mexico regulates money supply and foreign exchange rate, enforces credit control, set reserve requirements, responsible in issuing the local currency (Mexican Peso) among others (Country Studies Webiste). Though the country was massively affected by the global financial crisis in 2008, based from the study of the International Monetary Fund (IMF), the financial system of Mexican economy remains strong and resilient with the aid of good macroeconomic policy.
- Comparison with US Economy
Mexico served as the major trade partner of US. As shown in the data below, Mexico remains as one among the major markets of US goods and also the major source of import goods of the country. To date, Mexico serves as the 2nd largest export market of the US and its
3rd largest source of imported goods (Central Intelligence Website).
Source: United States Census Bureau
Though Mexico still lagged behind US in terms of Comparative Advantage in trade, its continuous efforts to device trade agreements with other countries position itself to a better place with oil as its main export good. Further, though it experiences huge fiscal debt, its financial system remains sound based from the study done by the IMF which gives Mexico the opportunity to seize more markets and develop advance technologies that could help it attain economic sustainability.
REFERENCES:
Central Intelligence Agency. The World Factbook. Retrieved from https://www.cia.gov/library/publications/the-world-factbook/geos/mx.html
Financial System. Retrieved from http://countrystudies.us/mexico/68.htm
International Monetary Fund. 2006. Mexico: Financial System Stability Assessment Update,including Summary Assessments on the Observance of Financial Sector Standardsand Codes on the following topics: The Basel Core Principles for Effective BankingSupervision, and the IOSCO Objectives and Principles of Securities Regulation. Retrieved from http://www.imf.org/external/pubs/ft/scr/2006/cr06350.pdf
United States Census Bureau. Foreign Trade. Retrieved from http://www.census.gov/foreign-trade/balance/c2010.html
Wikipedia, the Free Encyclopedia. Economy of Mexico. Retrieved from http://en.wikipedia.org/wiki/Economy_of_Mexico
