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Analyzing the Mexican Economy

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Analyzing the Mexican Economy

Strengths of the Mexican Economy

The economy of Mexico has been ranked as 11th across the world. It has a population of

about 130 million people, incorporated with its richness in the diversity and historical accounts

of its culture. It is also endowed with a variety of natural resources. It is also known for its

numerous business organizations and financial institutions which have helped open the country

to private investment and trade on both domestic and international levels (Barkin, pp. 71). The

policies for controlling money supply within the economy are remarkably stable thus creating an

opportunity for the country’s currency to be traded in by many other nation states. The country

has portrayed a drastic shift from agricultural activities to dealing in manufactured goods. This

has resulted in the country being ranked as one of the top exporter countries across the globe.

There has been a significant growth in the economic relations between Mexico and the

United States through an agreement known as NAFTA. Through this pact, economic progress

has been witnessed in both countries. For instance, the costs incurred in production by

manufactures in Mexico have been cut back by a remarkable 4% (Kehoe, pp. 62). Additionally,

trade has greatly been subsidized since goods can now be transported across the borders of the
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two countries without taxing the process. This, in turn has led to the production of cheaper

goods.

The country’s macroeconomic stability has helped it gain ground for undertaking

significant private investments. The country has also been able to manage its external debts at a

constant rate. Additionally, the country’s economy has been gaining a competitive advantage

over its rivals during the past years (Barkin, pp. 71). For instance, the continuous rise in the past

few years has driven their investors who are now being attracted by the cheaper labor costs in

Mexico. Numerous business entities are now being opened up in Mexico and this is greatly

boosting the country’s economy.

Weaknesses of the Mexican Economy

It is no doubt that Mexico has acheived a lot of success in some of its goals over the past

years. However, some key economic problems still remain. For instance, it registers low per

capita income with high rates of poverty in the OECD. Efforts towards eradicating the gap in

people’s living standards has been paced slowly over the past years due to a reduction in the

levels of productivity and cases of inequality (Ashby et al., pp. 32). The inequality in the income

of Mexicans is considerably large. The difference of incomes of rich and poor individuals is

more than 60%. The country also continues to face an upsurge in the rates of informal labor; a

condition which affects more than half of the population.

Nonetheless, Mexico faces unending health problems, marked by low healthcare

expenditures which result in high death rates and a decrease in people’s life expectancy.

Corruption has hugely contributed to such issues. Most public funds and resources are hugely

embezzled by influential individuals (Torres-Preciado, pp. 183). The President, who is famously
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known as AMLO, is believed to be the driving force for the high rates of corruption and lack of

democracy within the country. The increased rate of corruption within the country is driving out

investors. In addition to that, many people face unemployment and thus the decline in their living

standards. Furthermore, minor investments are being undertaken on the extraction of oil within

the country.
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Works Cited

Ashby, Nathan J., Avilia Bueno, and Deborah Martinez. "Economic freedom and economic

development in the Mexican states." Journal of Regional Analysis and Policy 43.1100-

2016-90108 (2015): 21-33.

Barkin, David. Distorted development: Mexico in the world economy. Routledge, 2019. 56-78

Kehoe, Timothy J., ed. Modeling North American Economic Integration. Vol. 31. Springer

Science & Business Media, 2012. 35-67

Torres-Preciado, Víctor Hugo, Mayrén Polanco-Gaytan, and Miguel Á. Tinoco-Zermeño.

"Technological innovation and regional economic growth in Mexico: a spatial

perspective." The Annals of Regional Science 52.1 (2014): 183-200.