Thursday, October 14, 2010

Courtesy: Wikipedia 

Economy of Mexico
Mexican Economy.png
Aspects of Mexican economy
Rank 11th
Currency Mexican peso (MXN, $)
Fiscal year calendar
Trade organizations APEC, CARICOM, NAFTA, OECD and WTO
GDP $1.563 Trillion[115] (2008)
GDP growth 4.8% (2009)
GDP per capita $14,932 (2009 est.)[116]
GDP by sector agriculture: 4%, industry: 26.6%, services: 69.5% (2007 est.)
Inflation (CPI) 2.88% (Central bank report for February 2009)
below poverty line
4.8% using food-based definition of poverty; asset based poverty amounted at approximately 15% (December 2008)
Labour force 45.38 million (2007 est.)
Labour force
by occupation
agriculture: 13%, industry: 29%, services: 58% (2003)
Unemployment 3.7% plus considerable underemployment(21%) (2007 est.)
Main industries Food and Beverages, Aerospace, Electronics, Tobacco, chemicals, Iron and Steel, Petroleum, Biotechnology, Mining, Shipbuilding, Electricity, Defense Products, Textiles, Clothing, Motor vehicles, Computers, consumer durables, Information Technologies, Tourism and Ecotourism
Exports $419.9 billion f.o.b. (2008 est.)
Export goods Manufactured goods, electronics, automobiles, oil and oil products, aircraft, silver, computers and servers, fruits, meats, consumer electronics, processed foods, vegetables, ships, coffee, LCD screens, electricity, biotechnology, cotton, rolling stock, automotive and aircraft enigines, cellular phones, metals, industrial equipment, granite and marble, lithium, batteries, firearms, aluminium, information technologies, foodstuffs, silicone, medical technology, gold, plastics, microproccesors,
Main export partners United States 49.2%, Germany 15%, South Korea 12.5% China 10.3% Chile 8.4% (2008)
Imports $283 billion f.o.b. (2007 est.)
Main import partners United States 44.3%,
Brazil 31.5%,
Chile 9.3%,
China 5.5%,
South Korea 5.3%,
Japan 4.1% (2008)
Public finances
Public debt $92.7 billion (October 2008)
Revenues $571.2 billion (2008)
Expenses $321.2 billion (2000 est.)
Economic aid $189.4 million (2008)
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars

Although the Mexican Peso has historically been a relatively unstable currency, it has in recent years become a secure stable currency and has maintained a low inflation rate becoming increasingly prominent on the international level.
The economy of Mexico is the 11th largest in the world. Since the 1994 crisis, administrations have improved the country's macroeconomic fundamentals. Mexico was not significantly influenced by the recent 2002 South American crisis, and has maintained positive rates of growth after a brief period of stagnation in 2001. Moody's (in March 2000) and Fitch IBCA (in January 2002) issued investment-grade ratings for Mexico's sovereign debt. In spite of its unprecedented macroeconomic stability, which has reduced inflation and interest rates to record lows and has increased per capita income, enormous gaps remain between the urban and the rural population, the northern, central, and southern states, and the rich and the poor although there has been a large growing middle class since the mid 1990's.[117] Some of the government's challenges include the upgrade of infrastructure, the modernization of the tax system and labor laws, and the reduction of income inequality.
The economy contains rapidly developing modern industrial and service sectors, with increasing private ownership. Recent administrations have expanded competition in ports, railroads, telecommunications, electricity generation, natural gas distribution and airports, with the aim of upgrading infrastructure. As an export-oriented economy, more than 90% of Mexican trade is under free trade agreements (FTAs) with more than 40 countries, including the European Union, Japan, Israel, and much of Central and South America.
The most influential FTA is the North American Free Trade Agreement (NAFTA), which came into effect in 1994, and was signed in 1992 by the governments of the United States, Canada and Mexico. In 2006, trade with Mexico's two northern partners accounted for almost 50% of its exports and 45% of its imports.[118] Recently, the Congress of the Union approved important tax, pension and judicial reforms, and reform to the oil industry is currently being debated. According to the Forbes Global 2000 list of the world's largest companies in 2008, Mexico had 16 companies in the list.[119]
Mexico has a free market mixed economy, and is firmly established as an upper middle-income country.[16] It is the 11th largest economy in the world as measured in gross domestic product in purchasing power parity.[120] According to the latest information available from the International Monetary Fund, Mexico had the second-highest Gross National Income per capita in Latin America in nominal terms, at $9,716 in 2007, and the highest in purchasing power parity (PPP), at $14,119 in 2007.[120]

Electronics now play an important role in the Mexican economy, with over 600 new electronics related companies formed since 2000.
After the 1994 economic debacle, Mexico has made an impressive recovery, building a modern and diversified economy.[16] Oil is Mexico's largest source of foreign income.[121] According to Goldman Sachs, BRIMC review of emerging economies, by 2050 the largest economies in the world will be as follows: China, India, United States, Brazil and Mexico.[122] Mexico is the largest North American auto producing nation, recently surpassing Canada and U.S.[123]
Mexico is the first and only Latin American country to be included in the World Government Bond Index or WGBI, which list the most important global economies that circulate government debt bonds.[124]
According to the director for Mexico at the World Bank, the population in poverty has decreased from 24.2% to 17.6% in the general population and from 42% to 27.9% in rural areas from 2000 to 2004.[125] As of January 2009 4.6% of the population is impoverished if measured by food based poverty and 15% of the population is considered to be impoverished by asset based measurments (living on less than $10,000 per year).
Nonetheless, income inequality remains a problem, and huge gaps remain not only between rich and poor but also between the north and the south, and between urban and rural areas. Sharp contrasts in income and Human Development are also a grave problem in Mexico. The 2004 United Nations Human Development Index report for Mexico states that Benito Juárez, a district of Mexico City, and San Pedro Garza García, in the State of Nuevo León, would have a similar level of economic, educational and life expectancy development to Germany or New Zealand. In contrast, Metlatonoc, in the state of Guerrero, would have an HDI similar to that of Syria.[126] According to a 2008 UN report the average income in a typical urbanized area of Mexico was $26,654 a rate higher than advanced nations like South Korea or Taiwan while the average income in rural areas (sometimes just miles away) was only $8,403, rate comparable to developing countries such as Russia or Turkey.[127]

An engineer oversees the manufacturing of a jet engine in an aircraft factory in Hermosillo, Sonora.
GDP annual average growth for the period of 1995–2002 was 5.1%.[58] The economic downturn in the United States also caused a similar pattern in Mexico, from which it rapidly recovered to grow 4.1% in 2005 and 3% in 2005. Inflation has reached a record low of 3.3% in 2005, and interest rates are low, which have spurred credit-consumption in the middle class. Mexico has experienced in the last decade monetary stability: the budget deficit was further reduced and foreign debt was decreased to less than 20% of GDP.[58] Along with Chile, Mexico has the highest rating of long-term sovereign credit in Latin America.
The remittances from Mexican citizens working in the United States account for only 0.2% of Mexico's GDP[128] which was equal to US$20 billion dollars per year in 2004 and is the tenth largest source of foreign income after oil, industrial exports, manufactured goods, electronics, heavy industry, automobiles, construction, food, banking and financial services.[129] According to Mexico's central bank, remittances fell 3.6% in 2008 to $25bn.[130]
Ongoing economic concerns include the commercial and financial dependence on the US,[131] low real wages, underemployment for a large segment of the population, inequitable income distribution (the top 32% of income earners account for 55% of income), and few advancement opportunities for the largely Mayan population in the southern states.
Hourly minimum wages are set annually by law and determined by zone; $57.46 Mexican pesos ($4.52 USD) in Zona A (Baja California, Federal District, State of Mexico, and large cities), $55.84 Mexican pesos ($4.39USD) in Zone B (Sonora, Nuevo León, Tamaulipas, Veracruz, and Jalisco), and $54.47 Mexican pesos ($4.29 USD)in Zone C (all other states)[132]


An automated Volkswagen factory in Puebla, Puebla.
Among the most important industrial manufacturers in Mexico is the automotive industry, whose standards of quality are internationally recognized. The automobile sector in Mexico differs from that in other Latin American countries and developing nations in that it does not function as a mere assembly manufacturer. In 2007 one out every seven cars sold was made in Mexico.[133] The industry produces technologically complex components and engages in some research and development activities.[134] The "Big Three" (General Motors, Ford and Chrysler) have been operating in Mexico since the 1930s, while Volkswagen and Nissan built their plants in the 1960s.[135]
Later, Toyota, Honda, BMW, and Mercedes-Benz established a presence. Given the high requirements of North American components in the industry, many European and Asian parts suppliers have also moved to Mexico: in Puebla alone, 70 industrial part-makers cluster around Volkswagen.[134] The relatively small domestic car industry is represented by DINA Camiones S.A. de C.V., which has built buses and trucks for almost half a century,[136] and the new Mastretta company that builds the high performance Mastretta MXT sports car.[137]
The electronics industry of Mexico has grown enormously within the last decade. In 2007 Mexico surpassed South Korea as the second largest manufacturer of televisions,[133] and in 2008 Mexico surpassed China, South Korea and Taiwan to become the largest producer of smartphones in the world.[133] There are almost half a million (451,000) students enrolled in electronics engineering programs[138] with an additional 90,000 students graduating from electronics engineering and technical programs each year and Mexico had over half a million (580,000) certified IT professionals employed in 2007.[133] In 2005, according to the World Bank, high-tech industrial production represented 19.6% of Mexico's economy.[139]
Some large industries of Mexico include Cemex, the third largest cement and construction conglomerate in the world;[140] the alcohol beverage industries, including world-renowned players like Grupo Modelo; conglomerates like FEMSA, which apart from owning breweries and the OXXO convenience store chain, is also the second-largest Coca-Cola bottler in the world; Gruma, the largest producer of corn flour and tortillas in the world; and Grupo Bimbo, Telmex, Televisa, among many others. Mexico is the second largest producer or silver and precious metals.[133]

Mexico is the worlds largest manufacturer of smartphones.

Construction in Mexico City. Mexico City is one of the most densely populated cities in the world.[141]
Maquiladoras (Mexican factories which take in imported raw materials and produce goods for export) have become the landmark of trade in Mexico. This sector has benefited from NAFTA, in that real income in the maquiladora sector has increased 15.5% since 1994, though from the non-maquiladora sector has grown much faster.[135] Contrary to popular belief, this should be no surprise since maquiladora's products could enter the US duty free since the 1960s industry agreement. Other sectors now benefit from the free trade agreement, and the share of exports from non-border states has increased in the last 5 years while the share of exports from maquiladora-border states has decreased. As a result of this process Mexico is the worlds third largest maker of refrigerators and white goods, after China and Brazil.[142]
Currently Mexico is focusing in developing an aerospace industry and the manufacture and design of helicopter and commercial jet aircraft is taking place.[143] Foreign firms such as MD Helicopters and Bombardier build helicopters and commercial jets respectively in Mexico.[144][145] Although the Mexican aircraft industry is mostly foreign, as is its car industry, Mexican firms have been founded such as Aeromarmi, which builds light propeller airplanes, and Hydra Technologies, which builds Unmanned Aerial Vehicles. More aircraft companies have operations in Mexico than any other country with a record breaking 214 full process aircraft corporations established in Mexico and Since 1990 Mexico has been the largest destination for foreign companies to design, manufacture, and service aircraft.[133]
As compared with the United States or countries in Western Europe, a larger sector of Mexico's industrial economy is food manufacturing, which includes several world class companies; but the regional industry is undeveloped. There are national brands that have become international, and local Mom and Pop producers, but little manufacturing in between.


Coastal skyline of Cancún, Quintana Roo
According to the World Tourism Organization, Mexico has one of the largest tourism industries in the world. In 2005 it was the seventh most popular. The most notable tourist draws are the ancient Mesoamerican ruins, and popular beach resorts. The coastal climate and unique culture – a fusion of European (particularly Spanish) and Mesoamerican cultures; also make Mexico attractive. The peak tourist seasons in Mexico are during December and during July and August, with brief surges during the week before Easter and during spring break at many of the beach resort sites which are popular among vacationing college students from the United States.[146]
Mexico is the twenty-third highest tourism spender in the world, and the highest in Latin America.[147]


See also: Electricity sector in Mexico
Energy production in Mexico is managed by state-owned companies: the Federal Commission of Electricity (Comisión Federal de Electricidad, CFE) and Pemex (Petróleos Mexicanos). The CFE is in charge of the operation of electricity-generating plants and its distribution all across the territory. Most of the electricity is generated in thermoelectrical plants, even though CFE operates several hydroelectric plants, as well as wind power, geothermal and nuclear generators.[148]
Natural resources are the "nation's property" (i.e. public property) by constitution. As such, the oil sector is administered by the government with varying degrees of private investment. Mexico is the sixth-largest oil producer in the world, with 3.7 million barrels per day.[149]
Pemex, the public company in charge of exploration, extraction, transportation and marketing of crude oil and natural gas, as well as the refining and distribution of petroleum products and petrochemicals, is one of the largest companies (oil or otherwise) in Latin America, making US $86 billion in sales a year,[150] a sum larger than the GDP of some countries. Nonetheless, the company is heavily taxed, a significant source of revenue for the government, of almost 62 per cent of the company's sales. In 1980 oil exports accounted for 61.6% of total exports; by 2000 it was only 7.3%.[134]


See also: List of Mexican Federal Highways and List of Mexican railroads

Much of Mexico's automotive traffic depends on the national highway system.
The paved-roadway network in Mexico is the most extensive in Latin America at 116,802 km (72,577 mi) in 2005; 10,474 km (6,508 mi) were multi-lane freeways or expressways,[151] most of which were tollways. Nonetheless, Mexico's diverse orography—most of the territory is crossed by high-altitude ranges of mountains—as well as economic challenges have led to difficulties in creating an integrated transportation network and even though the network has improved, it still cannot meet national needs adequately.[152]
Being one of the first Latin American countries to promote railway development,[152] the network, though extensive at 30,952 km (19,233 mi),[153] is still inefficient to meet the economic demands of transportation.[152] Most of the rail network is mainly used for merchandise or industrial freight and was mostly operated by National Railway of Mexico (Ferrocarriles Nacionales de México, FNM), privatized in 1997.
In 1999, Mexico had 1,806 airports, of which 233 had paved runways; of these, 35 carry 97% of the passenger traffic.[153] The Mexico City International Airport remains the largest in Latin America and the 44th largest in the world[154] transporting 21 million passengers a year.[155] There are more than 30 domestic airline companies of which only two are known internationally: Aeroméxico and Mexicana.
Mass transit in Mexico is modest. Most of the domestic passenger transport needs are served by an extensive bus network[153] with several dozen companies operating by regions. Train passenger transportation between cities is limited. Inner-city rail mass transit is available at Mexico City—with the operation of the metro, elevated and ground train, as well as a Suburban Train connecting the adjacent municipalities of Greater Mexico City—as well as at Guadalajara and Monterrey, the first served by a commuter rail and the second by an underground and elevated metro.


A Satmex communications satellite being deployed from its launch vehicle.
The telecommunications industry is mostly dominated by Telmex (Teléfonos de México), privatized in 1990. As of 2006, Telmex had expanded its operations to Colombia, Peru, Chile, Argentina, Brazil and Uruguay and the United States. Other players in the domestic industry are Axtel and Maxcom. Due to Mexican orography, providing landline telephone service at remote mountainous areas is expensive, and the penetration of line-phones per capita is low compared to other Latin American countries, at forty-percent, however 82% of Mexicans over the age of 15 own a mobile phone. Mobile telephony has the advantage of reaching all areas at a lower cost, and the total number of mobile lines is almost two times that of landlines, with an estimation of 63 million lines.[156] The telecommunication industry is regulated by the government through Cofetel (Comisión Federal de Telecomunicaciones).
The Mexican satellite system is domestic and operates 120 earth stations. There is also extensive microwave radio relay network and considerable use of fiber-optic and coaxial cable.[156] Mexican satellites are operated by Satélites Mexicanos (Satmex), a private company, leader in Latin America and servicing both North and South America.[157] It offers broadcast, telephone and telecommunication services to 37 countries in the Americas, from Canada to Argentina. Through business partnerships Satmex provides high-speed connectivity to ISPs and Digital Broadcast Services.[158] Satmex maintains its own satellite fleet with most of the fleet being Mexican designed and built.
Mexico has recently emerged as a major producer of communications technology. In 2008 Mexico manufactured over 130 million mobile phones making it the sixth largest producer of mobile phones.
Usage of radio, television, and Internet in Mexico is prevalent.[153] There are approximately 1,410 radio broadcast stations and 236 television stations (excluding repeaters).[156] Major players in the broadcasting industry are Televisa—the largest Spanish media company in the Spanish-speaking world[159]—and TV Azteca.