Thursday, Mar 28, 2024
logo
Update At 14:00    USD/EUR 0,92  ↑+0.0003        USD/JPY 151,36  ↑+0.109        USD/KRW 1.344,08  ↓-3.35        EUR/JPY 163,77  ↑+0.084        Crude Oil 86,32  ↑+0.23        Asia Dow 3.851,93  ↑+13.1        TSE 1.821,50  ↓-10        Japan: Nikkei 225 40.261,70  ↓-501.03        S. Korea: KOSPI 2.755,09  ↓-0.02        China: Shanghai Composite 3.025,89  ↑+32.752        Hong Kong: Hang Seng 16.660,76  ↑+267.92        Singapore: Straits Times 3,25  ↑+0.002        DJIA 22,75  ↑+0.17        Nasdaq Composite 16.399,52  ↑+83.823        S&P 500 5.248,49  ↑+44.91        Russell 2000 2.114,35  ↑+44.186        Stoxx Euro 50 5.081,74  ↑+17.56        Stoxx Europe 600 511,75  ↑+0.66        Germany: DAX 18.477,09  ↑+92.74        UK: FTSE 100 7.931,98  ↑+1.02        Spain: IBEX 35 11.111,30  ↑+119.8        France: CAC 40 8.204,81  ↑+20.06        

MEXICO. The rising economic power in America's backyard

Article - May 23, 2012
Whoever wins the elections on July 1 will take over a vibrant country on course to become one of the world's top ten economies

Washington will take a keen interest when Mexicans go the polls to elect a successor to President Felipe Calderon on July 1. The relationship between the U.S. and its southern neighbor is of huge importance to both nations, which along with a 2,000-mile border share increasingly intertwined and mutually beneficial economic ties.

A double-digit lead in the polls puts the charismatic Enrique Peña Nieto of the centrist PRI (Partido Revolucionario Institucional), who has been likened to a modern-day JFK for Mexico, firmly in front. 

Second-favorite Josefina Vazquez Mota of the ruling conservative PAN (Partido Accion Nacional) was the campaign manager for President Felipe Calderon’s winning bid in 2006. She has a reputation as a strong motivational speaker, and her experience dealing with Mexico’s major social issues have buoyed her 2012 candidacy.

Andres Manuel Lopez Obrador – also known by his initials AMLO – of the leftist PRD (Partido de la Revolucion Democratica) came extremely close to victory last time around in 2006, when the popular former mayor of Mexico City just missed out to Mr. Calderon by less than one percentage point.

Arguing that teachers should be at the forefront of Mexico’s educational reform, Gabriel Quadri de la Torre of the Nueva Alianza (PANAL) party is the least favored to win.

Judging by popular opinion, this year’s elections look set to make history, either returning Mexico’s long-time ruling PRI – which held the presidency for 71 years until 2000 – to office after 12 years in opposition, or by keeping the incumbent conservative PAN in power for a record third term and ushering in North America’s first ever female president.

Either way, the winning candidate will contribute significantly to a much-needed rebranding of Mexico, for whichever fresh face takes the helm of the country’s political system will also be handed the unique opportunity of changing misconceptions about Mexico and present an updated image of the country internationally.

THE BIGGER PICTURE

Mexico has the second largest economy in Latin America and one of the top 12 in the world, despite the backdrop of the global financial crisis. Last year its GDP topped US$1 trillion. Inflation remains under control at around 3.5%, and total public-sector debt is forecast to fall from 37.7% of GDP in 2011 to just 30.9% in 2016. The country also enjoys a strong BBB credit rating with a stable outlook from Standard & Poor’s – assurances similarly echoed by both Fitch and Moody’s. 

“Over the last two decades the United States and Mexico have forged an economic partnership that benefits consumers, workers, farmers, and businessmen from both countries.”

Anthony Wayne,
U.S. Ambassador to Mexico

Mexico was the second-favorite destination in the region for foreign direct investment (FDI) last year, attracting US$19.4 billion. It is also the third largest Latin American foreign investor in other countries.

One of the world’s top 10 auto-manufacturing nations, Audi, Nissan and Honda have each recently announced plans to build new plants in the country, while the three biggest car exporters from Mexico last year were U.S. giants Ford and General Motors.

Furthermore, Mexico is the third largest U.S. trading partner after Canada and China. It is a hugely important market for U.S. companies, which sell more goods and services to Mexico than to the rest of Latin America, the four BRIC nations (Brazil, Russia, India and China) combined, or the emerging Asian economies. Its expanding, majority middle class, comprising at least 60 million people, represents a fertile market for U.S. products.

“Over the last two decades the United States and Mexico have forged an economic partnership that benefits consumers, workers, farmers, and businessmen from both countries,” says Anthony Wayne, the U.S. Ambassador to Mexico. He describes the two nations as “indispensably interconnected”, and agrees with a recent report by the Mexico Institute that the relationship is one of the most important that the United States has any place in the world.

MORE COMPETITIVE

The 2012 WEF Global Competitiveness Report ranks Mexico in 58th position this year, a rise of eight places and one of the highest improvements in the regional rankings.

The country’s efforts to boost competition and its regulatory improvements that facilitate entrepreneurial dynamism by reducing the number of procedures and the time required to start a business seem to be paying off, contributing to an improvement of the overall business environment.

This development, coupled with the country’s traditional competitive strengths such as its large internal market size, comparatively good transport infrastructure, sound macroeconomic policies, and strong levels of technological adoption have led Mexico to improve its competitive edge.

Homegrown entrepreneurism has also been given a boost with at least 445,000 small and medium-sized firms having been created since 2007, thanks to the government’s Small and Medium Business Fund.

HEALTHY PROGRESS

As a presidential candidate, Mr. Calderon drew up a plan of government based on the concept of sustainable human development. During his presidency, he has established free access to health services for the entire population – a landmark achievement. More than 3,000 clinics, hospitals and health centers have been built, expanded, equipped or remodeled since 2007. Also, every child now has a guaranteed place in the public education system.

In March, President Calderon said that his three core strategies in the fight against organized crime are already showing results, including the capture of 22 of the 37 most-wanted criminals in the country, the imprisonment of over 200 gang leaders and lieutenants, and the transformation of the country’s security forces, now that the federal police has 37,000 new officers, all university graduates.

IMAGE MAKEOVER

Progress and achievements in Mexico are generally overshadowed in the media by more attention-grabbing headlines focused on drugs and violence, which are actually confined only to certain pockets of a country almost three times the size of Texas and the 14th largest in the world by land area. An analysis of challenges facing Mexico’s international image by management consultancy Vianovo, which has offices in Austin, Dallas, Washington D.C. and Mexico City, observes: “You wouldn’t postpone a trip to New York City because of violence in St. Louis, right?”

Mexico’s ‘brand erosion’ has been attributed to negative media coverage. A recent study by the Mexico Institute at the Woodrow Wilson International Center for Scholars in Washington D.C. showed that coverage of Mexico has become increasingly negative over the past two decades. In the early 90s, only 1 in 10 New York Times articles on Mexico focused on crime, corruption and illegal immigration; today nearly 9 in 10 do. Even the Wall Street Journal, known for its business coverage, is about four times more likely to report on crime and border issues in Mexico than the country’s economy.

A regeneration project launched in 2003 has breathed new life to the capital, Mexico City. Regarded two decades ago as ‘the ultimate urban disaster,’ today the capital is a cosmopolitan hub of individualism, cultural diversity and contemporary consumerism far removed from its down-at-heel image often perceived overseas. Its main artery, Paseo de la Reforma, is a broad, monument-studded avenue that cuts diagonally across the city and reflects the political and economic reforms that have transformed it into a thriving, modern conurbation of opportunity.

G20 PRESIDENCY

Mexico currently holds the presidency of the Group of 20, and in June will host the G20 summit at Los Cabos, where world leaders will discuss global economic stability and structural reforms for growth and employment. At the simultaneously held Business 20 (B20) summit government representatives and the private sector will seek to hasten the global economic recovery.

The prospects for Mexico’s own future look bright. With its entrepreneurial culture, growing labor force, and close ties to the U.S. in its favor, economists say it should just be a matter of time before it becomes one of the world’s top 10 economies.

  0 COMMENTS