Mexico - Economy

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1. Three significant transition happened in Mexico I. Replacing a primarily agricultural based economy to an industrial based economy. II. Shift from closed economy to an open economy. III. Increasing private ownership and reducing public ownership throughout the economy. 2. Mexico Current Status I. Unemployment 5.18% II. Inflation 4.15% III. 14th largest nominal GDP 3. Trade I. Trade is mostly done with the United States. II. Imports: Machines and Industrial equipment. III. Exports: Agricultural and manufactured goods IV. FDI in telecommunication and energy. 4. Trade Openness and Protectionism Today I. Experienced huge trade liberalization from 1989 to 2000 a. Widening the gap between rural and urban area. b. Diverse effect on wage rate c. Reduced poverty by about 3%; bringing 3 million individuals out of poverty. 5. FDI and Migration Policies I. One of Mexico’s main points in writing the NAFTA agreement is that an increase of FDI will decrease Mexican immigration to other countries. II. On average doubling of FDI will lead to 1.5 – 2% decrease in migration. III. Mexico doubled FDI from 2012 to 2013 with nearly 35.2 Billion. 6. Changes in Mexico’s Trade and FDI I. Past II. Present 7. Causation I. Market Structures - Liberalization and privatization of various industries II. Technologies - Have improved infrastructure immensely over the past 20 years III. Political Factors - Cartels have distorted the influence of their judicial system. 8. International Engagement I. Free trade Agreements (FTA) have been one of the primary reasons behind Mexico’s recent economic growth and emergence as a low supplier of goods. II. NAFTA - Increase trade and FDI between Mexico and the US

Text of Mexico - Economy

  • 1. The National Flag ofMEXICO

2. GDP ranks 14th on a Global Scale 3. TRANSITIONFirst Major Transition:Replacing a primarily agriculturalbased economy to an industrialbased economy. 4. TRANSITIONSecond Major Transition:Shift from closed economy to anopen economy. 5. North America Free Trade Agreement 6. Energyindustry isopen toforeigninvestment. 7. TRANSITIONThird Major Transition:Increasing private ownership andreducing public ownershipthroughout the economy. 8. International Economic Issues1. Illegal Drug Trade Violence and Corruption2. Illegal Immigration Tensions along borders Labor force issues 9. STATISTICSEconomic Sectors: Agriculture, Industry and Service. Service sector makes up 60%Natural Resources Petroleum, Silver, Gold, Copper, Lead, Zinc,Timber 10. STATISTICS Unemployment and Inflation Unemployment 5.18% Inflation 4.15% GDP 14th largest nominal GDP 1.26 Trillion Dollars Growing at around 1% 11. Unemployment 12. Inflation Rate 13. Mexico GDP 14. TRADE Trade is mostly done with the United States. Imports: Machines and Industrialequipment. Exports: Agricultural and manufacturedgoods FDI in telecommunication and energy. 15. International Trade BetweenU.S. and MexicoTrade in goods is eight times 1990 levels 16. International Trade BetweenU.S. and Mexico 17. Trade Openness & Protectionism Today Experienced huge trade liberalization from 1989 to2000 Affected domestic process and labor incomedifferently both across income groups andgeographically diverse groups. Lowered relative process of non-animalagricultural products and reduces householdsagricultural income. Widening the gap between rural and urban areas. 18. Daily Wages 19. Trade Openness & Protectionism TodayAdditional Results:Had a diverse effect on wage rate Skilled workers have experienced an increase inwages Wages of unskilled workers have decreased States closer to the United States border gainingthreefold more than the lesser developed states in thesouth.Poverty Reduced poverty by about 3%; bringing 3 millionindividuals out of poverty. 20. FDI and Migration Policies One of Mexicos main points in writing theNAFTA agreement is that an increase of FDIwill decrease Mexican immigration to othercountries. On average doubling of FDI will lead to1.5 2% decrease in migration. Mexico doubled FDI from 2012 to 2013 withnearly 35.2 Billion. 21. Changes in Mexicos Trade and FDIPastAgrarian Society Population devoted to theproduction and exportationof agriculture In 1970, agricultureaccounted for 25% ofMexicos GDPDominated by state ownedenterprises Managed by the MexicanelitesClosed economyPresentIndustrialized Strong producer ofelectronics andautomobiles Is now considered the 16thlargest exporter in theworldAgriculture now accounts for only3.9% of Mexico GDPHas joined the ranks of othermodern economic powers Canada, South Korea andAustralia. 22. CAUSATION Market Structures Liberalization and privatization of various industries Have partially privatized Mexicos Oil industry to attractFDI. Technologies Have improved infrastructure immensely over the past 20years Has allowed more efficient migration of domestic labor Political Factors Cartels have distorted the influence of their judicial system Limited foreign investment 23. International Engagement Free trade Agreements (FTA) have been one of the primaryreasons behind Mexicos recent economic growth andemergence as a low supplier of goods. 12 free trade agreements among 40 countries Covers about 90% of their trade NAFTA Increase trade and FDI between Mexico and the US Exports and FDI tripled and productivity in Mexicanmanufacturing rose 80% in the early 1990s At the cost of increased trade, domestic firms andinvestment decreased Domestics firms could not compete againstsubsidized US imports

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