Economy Overview
Mexico is a free market economy that recently entered the trillion dollar class. It contains a mixture of modern and outmoded industry and agriculture, increasingly dominated by the private sector.

Mexico’s Silicon Valley

A large number of foreign corporations have set up business in Guadalajara, the 2nd largest city in Mexico, which in the last few years has become known as the ‘silicon valley’ of Mexico.

Recent administrations have expanded competition in seaports, railroads, telecommunications, electricity generation, natural gas distribution, and airports. Per capita income is one-fourth that of the U.S.; income distribution remains highly unequal.

NAFTA has tripled trade

Trade with the U.S. and Canada has tripled since the implementation of NAFTA in 1994. Mexico has 12 free trade agreements with over 40 countries including Guatemala, Honduras, El Salvador, the European Free Trade Area, and Japan, putting more than 90% of trade under free trade agreements.

The government is cognizant of the need to upgrade infrastructure, modernize the tax system and labor laws, and provide incentives to invest in the energy sector, but progress is slow.

However, progress has been made and macroeconomic stability has been preserved. Mexico now boasts:

  • Interest rates at historically low levels
  • Inflation remains low and stable
  • The external accounts are in order
  • Excellent access to international capital markets
  • Much improved fiscal discipline
  • A much improved structure and maturity of public debt
  • A stronger legal framework in the financial system
  • Economic and financial integration in North America

There are still challenges ahead for Mexico to increase the pace of economic growth and preserve its economic stability, especially with the growing competition from China (Mexico is not alone on this front).

During our conferences you’ll hear from one of our experts about the Mexican economy, the current political situation in Mexico, which by the way is extremely positive at the moment. In the election year 2000, the opposition party was successful in getting in. This is the first time in 71 years that a different party than the PRI was able to get ‘elected’. Finally Mexico is experiencing true democracy. This bodes well for the future of Mexico. People are feeling more and more confident about Mexico’s growing economy every year.
Mexico - Canada
Source:http://www.cancham.org.mx/economy_trade.asp
Introduction

Canada and Mexico share a close and deepening relationship. Since the signing of NAFTA, trade between our two countries has grown enormously and we are now major commercial and investment partners. Not just a commercial agreement, NAFTA has served to strengthen our relationship in other sectors, notably environment, health, transportation and education, to name a few. It is indeed true that NAFTA has made us more than just neighbors, but close friends. Following is a brief overview of each nation’s economy.

Mexican Economy

After experiencing many years of cyclical crisis, the Mexican economy has proven to be the most sound and reliable in Latin America. In spite of the world economic slowdown, inflation rates have been reduced to single digits and GDP growth has been constant.

Over the last 16 years, Mexico has made a dramatic transition from a relatively closed economy, to one of the most open countries in the world. Aside from implementing a series of domestic measures to deregulate business activity and encourage private investment, Mexico has embraced international free trade agreements as a means to promote industrial competitiveness and exports oriented growth.

Based on its preferential access in countries from regions such as Europe and Latin America, Mexico offers Canadian companies the opportunity to save a bundle on tariffs if they expand their operations to reach these markets from Mexico. By the end of 2003, 94% of the products exported by Mexico did not pay any export duties—the highest proportion of duty free exports in the world.

As you can see, the Mexican economy is developing quickly and now is the time to invest in this emerging global force.
Mexico - United States
Source: http://www.usmcoc.org/n5.html
Executive Summary

"NAFTA: Five Years Linking U.S. & Mexican Markets" focused on the successes, strategies and challenges of North American companies during the trade agreement's implementation.

The successes are impossible to ignore. U.S.-Mexico trade increased 113 percent from 1993, the year before NAFTA implementation began, through the end of 1998. Mexico has become the second-largest trading partner for the United States, surpassing Japan, and Mexico is the second-largest market for U.S. goods in the world. Canada is the United States largest trading partner. The results have paid off for North American corporations, workers and consumers as companies find a dynamic market for exports, as wages increase and unemployment falls, and as the cost of goods decreases while quality increases.

Corporate strategy has varied sector by sector. The conference highlighted how Mexican companies have been able to source materials in the United States "rather than Asia or Europe" because NAFTA makes U.S. products more competitive. In agriculture, U.S. farmers have been able to tap Mexico's strong demand for agro-industrial products, such as corn and livestock, while Mexico has had great success selling fresh vegetables and fruits to demanding U.S. consumers. Universities explained how they are preparing a North American workforce to compete with the rest of the world. U.S. and Mexican companies have helped to clean up North America's environment and fill a gap in health care needs. NAFTA has allowed manufacturers to rationalize operations for greater efficiency. Telecommunications firms have aggressively expanded in the Mexican market, realizing the benefits of deregulations and utilizing new technology to pursue the huge potential of the North American market. Transportation experts outline logistics, security and safety issues related to moving products across international borders.

While reflecting on the success of NAFTA, this conference also outlined challenges for the future. NAFTA is only one-third of the way through its implementation process and some portions of the agreement have already been snagged by non-trade considerations. North America's relationship with the rest of the Western Hemisphere, Europe and Asia is also crucial to the future of North America's firms, workers and consumers. NAFTA does not exist in a vacuum -- business leaders must consider the next steps for trade relations with the rest of the world.

The U.S.- Mexico Chamber of Commerce presents the following proceedings, representing the insight and experience of leading industry and government officials, to explain one of the most fruitful trade relationships in the world.
 
Understand the Economy in Mexico and the benefits for living and investing.