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Mexico
Business in Hispanic America
Prof. Dr. Joachim Bach
Tran, Dang Khoa
Nguyen, Phuoc Bao Anh
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Content

01 03 05 07
Overview Society, Politics Position in economy Discussion
of Hispanic America

02 04 06
History Major Future
Economic Assumption
Indicators
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Overview
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Overview: Mexico

Total area Population Capital Official

Language
1,964,380 km² 127.5 million Mexico City Spanish

Located in the continent of North America, the 14th largest

nation in the world

It is a federal republic based on presidential democracy

Among the world's 15 largest economies and the second

largest economy in Latin America

Source: https://import-export.societegenerale.fr/en/country/mexico/economy-country-risk
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History
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History of Mexico

Pre- 1519-1810 1910-1994

Columbian Mexican War of Contemporary
Mexico Independence Mexico

Spanish conquest Mexican revolution

and one-party rule
250-1519 1810-1910 1994-Now

Source: BBC and Wikipedia

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History of Mexico

Pre-Columbian Mexico Spanish conquest

o Home of many great civilizations

including the Olmec, the Maya, the
Zapotec, and the Aztec

o In 1521, Hernan Cortes conquered

the Aztecs and Mexico became a
Spanish colony
o For 300 years Spain ruled the land
The great ancient city of Teotihuacan until the early 1800s 
o The Catholic Church’s in 1523
Source: BBC and Wikipedia
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History of Mexico

Mexican War of Independence

o Inspired by the American and French Revolutions,

The local Mexicans revolted against Spanish rule
o In 1821 - Mexico gained full independence

o 1824 - Mexico becomes a federal republic

o 1855-1872 - "La Reforma" period, limiting the

power and landholdings of the Catholic Church
o 1876-1911 - Porfirio Diaz's dictatorship brings
stability, modernization and economic growth, but
at the price of political repression
Source: BBC and Wikipedia
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History of Mexico

Revolution and one-party rule

o NAFTA in 1994 increased Mexico’s
financial ties to the United States and
o People initiated the Mexican Revolution,
Canada
establishes constitutional government
o Growing problem of drug trafficking
o In 1929, Institutional Revolutionary Party
o End of PRI rule in 2000 - lost a
(PRI)
presidential election
o In 1934, reestablished the ejido system
o Andrés Manuel López Obrador won the
o Between 1940 and 1980, substantial
2018 presidential election
economic growth - "Mexican miracle” Contemporary Mexico

Source: BBC and Wikipedia

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Politics - Society
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Politics

A democratic republic - based on

1 Federal Presidential Representatives

Multi-parties system
2

 National Action Party (PAN)

Alternation in power between the
 Institutional Revolutionary Party (PRI) 3 leading parties is routine

 Party of the Democratic Revolution (PRD)

Source: https://freedomhouse.org/report/freedom-world/2018/mexico
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Politics
Governance challenges

• The country suffers from severe rule-of-law deficits that limit full citizen
enjoyment of political rights and civil liberties

Violence perpetrated by Corruption among government

organized criminals officials

Human rights abuses by both

state and nonstate actors Rapidly rising violence

Source: https://freedomhouse.org/report/freedom-world/2018/mexico
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Society

A diverse range of
ethnic groups,
regional identities

Great disparities in wealth,

access to education, and social
status
The family unit is central
to Mexican society

 Very religious and

predominantly Roman-
Catholic
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Society
Cultural Dimensions – Hofstede

97

81 82

69

30 24

     
High power Individualism Masculinity Uncertainty Long-term Indulgence
Distance Avoidance Orientation

Source: https://www.hofstede-insights.com/country-comparison/mexico/
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Major Economic
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Major Economic Indicators

e
at
tr
en

n
tio
l
ta

m
oy

fla
pi
ca

pl

In
em

I
FD
r
pe

Un
P
GD

GDP per capital Unemployment rate FDI Inward flow Inflation

10,021 USD in 3.6% in 2017 29,695 mil. USD in 3.8% in 2017
2017 2017

Source: IMF – World Economic Outlook Database - Latest available data

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Major Economic Indicators

Economic Resilience

 Domestic demands support economy

performance

 Depreciation of the peso increases the

competitiveness of Mexican non-oil
exports

Fig: Selected contributions to GDP growth

Source: OECD Economic Outlook 100, Banco of Mexico, and INEGI

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Major Economic Indicators

Economic Resilience

 Structural reforms support a low

inflation environment and expansion
of credit

 The depreciation of the peso support

foreign trade

 Low exposure to foreign currency debt

Fig: Unemployment and Inflation

Source: OECD Economic Outlook 100, Banco of Mexico, and INEGI

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Major Economic Indicators
Trade - Export
TOTAL: $394B

Source: OEC - Available at: http://atlas.media.mit.edu/en/visualize/tree_map/hs92/export/mex/show/all/2016/

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Major Economic Indicators

Trade – Export products

Source: OEC - Available at: http://atlas.media.mit.edu/en/visualize/tree_map/hs92/export/mex/all/show/2016/

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Major Economic Indicators

Trade – Import
TOTAL: $369B

Source: OEC - Available at: http://atlas.media.mit.edu/en/visualize/tree_map/hs92/import/mex/show/all/2016/

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Major Economic Indicators

Trade – Import products

Source: OEC - Available at: http://atlas.media.mit.edu/en/visualize/tree_map/hs92/import/mex/all/show/2016/

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Major Economic Indicators

Investment

16 th
The world’s
largest FDI
recipient

Source: Ministry of Economy (in Spanish) - Latest available data.

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Major Economic Indicators

Investment – Strong points
Special Economic Zones Tourist Destination
Companies will receive various incentives, The 8th biggest tourist destination in
trade facilities, duty-free customs benefits, the world and has in parallel a large
infrastructure development prerogatives and and important industrial base.
easier regulatory processes.

Labor Cost Natural Resources

The cost of labour (a young and A wide variety of natural resources
abundant labour force) is not very high allows the development of all types of
and is relatively well qualified. industries at very competitive prices.

Free Trade Member Geographic Location

A member of NAFTA, OECD, G20 and A strategic geographic location and
the Pacific Alliance, etc. acts as a transit platform to North
America and Latin America.

Source: Banco Santander TradePortal, S.A - 2018

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Major Economic Indicators

Investment – Weak points
High Corruption

Vulnerable to fluctuations in
Relies heavily on its partnership
the oil prices
with the United States

Risk of Expropriation Structural problems

(economic and social)
Ineffective
Infrastructure and
Education system
Source: Banco Santander TradePortal, S.A - 2018
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Position in the economy of

Hispanic America
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Position in economy of Hispanic America

The second
largest economy
in Latin
America

The most open

Highest per capita country in Latin
income in Latin America
America
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Position in economy of Hispanic America

  
….. ….. …..

  
…. …. ……
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Future Assumptions
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Future Assumption
Increase spending while ensuring fiscal sustainability
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Future Assumption

SCENARIO 1:HIGHER OIL PRICE

Public debt would fall below 35% of GDP
before 2030.
SCENARIO 2: LOW GROWTH
Real GDP would grow at lower level put
the debt-to-GDP ratio on an upward trend.
SCENARIO 3: RECESSION
Without additional consolidation measures
would raise the debt-to GDP ratio to almost
60% of GDP in 2018.
SCENARIO 4: RAISING SOCIAL SPENDING
Government increases tax ratio and social
spending will have a positive effect on growth.

Source: OECD Economic Surveys, Mexico 2017

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