Why Isn't Mexico Growing

Mexico Economy

Mexico is a major emerging country: its history, its size (110 million inhabitants, a GDP of nearly $ 900 billion), its potential (a diversified economy, abundant natural resources, large companies already internationalized, a strong banking sector and near the world's largest market). Yet it is losing ground to its competitors. The causes of this decline are many, but the main ones are probably the poor governance and weak rule. Due to political obstacles, Mexico seems incapable of reform. "Cohabitation" between the president and Congress an opposition fears additional thirty months of inactivity until the end of 2012. This carries two risks: first, a relative loss of interest in Mexico on the part of investors (which would be a mistake because the country's potential is still considerable) and, secondly, a social and political risk, the current pace of growth does not allow redistribution in highly unequal countries.

Mexico: Low Economic Growth and Risks in 2011

At the end of 2011 the Mexican economy be thirty years of economic stagnation, considering estimates of 5 percent annual growth for 2010 and 3.5 percent for 2011, the economy will have grown at an average annual rate of 2, 1 percent between 1981 and 2011. In addition to the above, during the given period, there have been at least five major economic crises (1982, 1986, 1995, 2001 and 2009).

Mexican economic growth has been volatile and insufficient to overcome the major problems of unemployment, marginalization and poverty. Moreover, the lack of economic growth has fueled the violence and insecurity (over 25 000 deaths from the fight against organized crime in the last 4 years). The poor economic performance are leading to the deterioration of one of the largest economies of Latin America, despite the size of its market, there are no conditions for the next ten years to overcome underdevelopment and economic power is much less.

The low economic growth in Mexico comes from endogenous and exogenous factors. Internally the main reason is an incomplete process of economic liberalization and the presence of many features of the authoritarian model that prevailed in the country for over fifty years. Four of them have been especially difficult to eradicate: the culture of corruption, paternalism, corporatism and societies for the rent-seeking.

In the early eighties opened the Mexican market to international trade, a process which was consolidated in the nineties with the signing of NAFTA, which promoted economic growth temporarily, because left pending a series of reforms. Among the reforms are postponed the Inland Revenue, the energy, the labor market, financial, pensioner, the competition and the State, to name the most important.

Macroeconomic policy in recent years has made clear dark on one side has established the stability of key variables such as inflation, control the public deficit, have increased international reserves (in excess of $ 100,000 million), Interest rates are relatively low and the current account deficit is at tolerable levels. On the other hand, the exchange rate to be handled at the discretion of the authorities, has ...