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Up until two decades ago, Mexico had been suffering economically, driving many among its population to seek opportunity North of the border. However, trends have changed with the arrival of the new millennium. as the growing foreign-born population between 2000 and 2010 demonstrates. One of the reasons behind this shift is that Mexico’s international trade is booming.
Why Mexico’s Trade is Thriving
The first reason behind Mexico’s successful international trade is China’s rising wages and higher transportation costs. Due to these, countries like the U.S. have decided to shift their operations there. In addition, the Mexican population now has more skilled laborers in its midst. Executives, filmmakers and entrepreneurs from Europe and North America are shifting to Mexico to speed up its growth and ultimately reap the benefits of their efforts. With skilled labor and cheap natural gas found in abundance, and Mexico’s 44 trade agreements in place as of February 2013, this growth was inevitable.
Due to these reasons and more, countries across the world have begun to acknowledge Mexico’s increasing attraction as an investment destination. One of the first to do so was China. Chinese president Xi Jinping has met three times with Mexican president Enrique Peña Nieto this year alone to ensure a cooperative relationship between the two countries. Underscoring their commitment to the relationship, China lifted a ban on some of Mexico’s most famous products such as blue agave tequila. The countries are also in discussions to establish a China-Mexican investment fund and build a China-Latin Cooperation Forum.
Is Mexico Going to Pull Through This Time?
Though many economists believe that Mexico’s growth isn’t going to decrease in the coming years, there are others who wonder if history will repeat itself. Mexico has failed to live up to its economic potential before, such as in 1994 when the currency hit its lowest ever after signing North American Free Trade Agreement (NAFTA).
However, even those skeptical about Mexico’s growth believe that it has another shot. Despite domestic political challenges, Peña Nieto has successfully spearheaded the country’s three major political parties signing of the Pact for Mexico, which enables them to reform the energy, telecom and teacher monopolies which have held the country back. In addition, with more foreigners and highly educated Mexicans joining the workforce, Mexico may easily grow to the same level as the U.S. and outgrow its third country status.
The Bottom Line
Mexico appears likely to be growing into an economic giant to rival other major national economies. With manufacturing moguls like China and the U.S. acknowledging by working to deepen ties with Mexico, there’s a good chance Mexico will not relapse and its economy will continue to grow strong enough to give first world countries a run for their money.
In addition, the sum of all reforms happening in Mexico, such as telecom, energy, education, tax, financial and others, could boost economy enough to keep Mexico attractive among global economies. Do you think that is accurate?