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

1. The National Flag of
MEXICO

3. GDP ranks 14th on a Global Scale

6. TRANSITION
First Major Transition:
Replacing a primarily agricultural
based economy to an industrial
based economy.

9. TRANSITION
Second Major Transition:
Shift from closed economy to an
open economy.

10. North America Free Trade Agreement

11. Energy
industry is
open to
foreign
investment.

12. TRANSITION
Third Major Transition:
Increasing private ownership and
reducing public ownership
throughout the economy.

16. International Economic Issues
1. Illegal Drug Trade
• Violence and Corruption
2. Illegal Immigration
• Tensions along borders
• Labor force issues

24. STATISTICS
•Economic Sectors:
– Agriculture, Industry and Service.
– Service sector makes up 60%
•Natural Resources
– Petroleum, Silver, Gold, Copper, Lead, Zinc,
Timber

25. STATISTICS
• Unemployment and Inflation
– Unemployment 5.18%
– Inflation 4.15%
• GDP
– 14th largest nominal GDP
– 1.26 Trillion Dollars
– Growing at around 1%

26. Unemployment

27. Inflation Rate

28. Mexico GDP

29. TRADE
• Trade is mostly done with the United States.
• Imports: Machines and Industrial
equipment.
• Exports: Agricultural and manufactured
goods
• FDI in telecommunication and energy.

30. International Trade Between
U.S. and Mexico
Trade in goods is eight times 1990 levels

31. International Trade Between
U.S. and Mexico

32. Trade Openness & Protectionism Today
• Experienced huge trade liberalization from 1989 to
2000
– Affected domestic process and labor income
differently both across income groups and
geographically diverse groups.
– Lowered relative process of non-animal
agricultural products and reduces households’
agricultural income.
• Widening the gap between rural and urban areas.

33. Daily Wages

34. Trade Openness & Protectionism Today
Additional Results:
–Had a diverse effect on wage rate
• Skilled workers have experienced an increase in
wages
• Wages of unskilled workers have decreased
• States closer to the United States border gaining
threefold more than the lesser developed states in the
south.
–Poverty
• Reduced poverty by about 3%; bringing 3 million
individuals out of poverty.

39. FDI and Migration Policies
• One of Mexico’s main points in writing the
NAFTA agreement is that an increase of FDI
will decrease Mexican immigration to other
countries.
• On average doubling of FDI will lead to
1.5 – 2% decrease in migration.
• Mexico doubled FDI from 2012 to 2013 with
nearly 35.2 Billion.

42. Changes in Mexico’s Trade and FDI
Past
•Agrarian Society
– Population devoted to the
production and exportation
of agriculture
– In 1970, agriculture
accounted for 25% of
Mexico’s GDP
•Dominated by state owned
enterprises
– Managed by the Mexican
elites
•Closed economy
Present
•Industrialized
– Strong producer of
electronics and
automobiles
– Is now considered the 16th
largest exporter in the
world
•Agriculture now accounts for only
3.9% of Mexico GDP
•Has joined the ranks of other
modern economic powers
– Canada, South Korea and
Australia.

47. CAUSATION
• Market Structures
– Liberalization and privatization of various industries
• Have partially privatized Mexico’s Oil industry to attract
FDI.
• Technologies
– Have improved infrastructure immensely over the past 20
years
• Has allowed more efficient migration of domestic labor
• Political Factors
– Cartels have distorted the influence of their judicial system
– Limited foreign investment

54. International Engagement
• 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.
– 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 Mexican
manufacturing rose 80% in the early 1990s
– At the cost of increased trade, domestic firms and
investment decreased
• Domestics firms could not compete against
subsidized US imports