Frequently in the globalization debate, the state of Mexico’s economy is talked about. Those who are pro-globalization say NAFTA has made things better in Mexico. More jobs, etc. Anti-globalizaiton movements say that the middle class has shrunk considerably. Other sources I read say Mexico has been in a recession for quite a while now.
Is there any hard data saying how Mexico’s economy is doing? Not only that, but how has NAFTA affected the economy (this probably is much harder to say). I don’t want to turn this into a Great Debate, I just want what should be a fairly apolitical economic analysis.
Gosh, I don’t have any really hard data to offer, but I do have some first-hand observations:
NAFTA allows companies such as GM, Ford, Chrysler, and so on, to build plants in Mexico. This upsets a lot of Americans who allegedly would want those jobs here. This isn’t really the case, since if the plant were opened in the USA, more automation (robots, machinery) would be used, only really providing a small number of jobs. In Mexico, hand-labor is used instead of automation, and this provides a LOT more jobs than the same plant state-side. The workers are exceptionally well paid, too (well, I can only vouch for GM). When GM put a plant into Silao, MX, they attempted to pay too much such that the government requested salaries be lowered so as not to upset the economy with the huge influx of “new rich.”
I would be tempted to generalize that the case is probably pretty similar with other large, U.S. corporations.
NAFTA’s been a big boon to the country, but at the same time has created a larger dependency upon the United States. Mexico is currently in a recession, due to decreased demand from mostly U.S. customers. A “slight” lack-of-growth in the U.S. equals a big decline in Mexico. My in-laws from Mexico are calling it a crisis, but I don’t see that yet.
I wish I had the numbers to prove it, but the middle class in Mexico is GROWING. This comes from increased education in certain, non-PRI (party of revolutionary ickiness) states, as well as increased opportunities offered by NAFTA.
02-July-2000 saw the election of the first-ever opposition party president in the country (and many argue the first true, honest, democratic election). The election of Vicente Fox of the PAN–National Action Party–threw out a government of 71 years! This is the entire history of the modern Mexican government following their 1910 revolution. To contrast this change, consider the PRI to be like Democrats (only worse) and the PAN to be like Republicans. The country NEEDS business, investment, and education. The fight over Democrat cradle-to-grave stuff can wait until Mexico has the economy to potentially support it.
As Fox privatizes industry and encourages investment and industrialization, NAFTA will only make Mexico that much better. The best fight against undesirable immigration (as opposed to bona fide legal immigration) is removing the conditions that make people want to leave in the first place.
The only thing we’re missing is a way to convince Mexico to leave OPEC and strike an exclusive deal with us (us being the U.S.).
Was Mexico ever in OPEC? Venezuela is the only Latin American member I know, after Ecuador withdrew.
But OPEC still has a big influence on Mexico’s crude oil prices.
What they should do is privatise PEMEX a to some extent, but that;s not likely to happen soon.
The CIA’s World Fact Book pegs Mexico’s real national economic growth rate for 2000 at 7%. That’s considerably better than the US (5%) or Canada (4.3%). Though starting from a much lower base, of course.
The Big 3 American car companies all had plants here before NAFTA. That was one of the requirements to sell vehicles in Mexico. Nissan and Volkswagon have had plants here for a long time and Japan and Germany aren’t NAFTA signees.
There aren’t too many state owned industries left to privatize. Salinas and Zedillo got rid of most. The oil and petro-chemical industries remain in gov’t hands but Fox probably won’t be able to touch these symbols of Mexican nationalism.
Oops, regarding OPEC: my bad! I know better than that… I guess I had the middle east on the brain for some reason or another…
Actually, the Big 3 have had plants there long before NAFTA. But, NAFTA is encouraging new and more productive plants, since importing the vehicles is that much easier. This equates to more high-paying (relatively) jobs in Mexico. It works the other way around to: it allows U.S. plants to very easily supply parts to the plants in Mexico (my company here in the USA is a “supplier” to the same company in Mexico).
For the longest time, Datsun/Nissan and Volkwagen were the king of Mexican car sales, because they’ve been in the country much longer. This doesn’t account for the chocolates (smuggled-in) cars, though (there are a LOT). I know GM was proud of the fact when they finally pulled ahead of Nissan for Mexican sales not all that many years ago.
Yeah, PEMEX would be interesting to see denationalized, at least on the distribution and service end. On the other hand, that’d probably mean the end of full-service gas stations, which would be a sad thing . But divestiture of the supply-side would be something left for Carlos Medinas to take care of when he becomes President, mostly due to nationalism, as CBEscapee said. CBEscapee, where you at down there?
Pemex gas stations are privately owned franchises and are money making machines. Many were awarded to influential PRI faithful in the past. They will have a lot to say about opening up retail gasoline sales to competition.
. But divestiture of the supply-side would be something left for Carlos Medinas to take care of when he becomes President, mostly due to nationalism, as CBEscapee said. CBEscapee, where you at down there?