countries — Brazil, Russia, India, China South Africa, Mexico, Nigeria Turkey identify critically evaluate key economic, political technological factors conditions enabled a ‘Rapidly Developing Economy’ ‘Emerging Economy’.
Mexico as a rapidly developing economy
The economic sector of the modern day society reveals increasing levels of interdependence between countries, especially as the phenomena of globalization and market liberalization intensify. This virtually means that the stability and role of one country within the global market place spreads consequences and impacts for the other states as well.
In this dynamic and intertwined global economic context, the emergent countries come to play an increasing role due to their increasing economic sector, developing labor force and strengthening competitive position. Mexico is one such emergent country and the current project sets out to assess the features which contribute to the rapid development of the country.
Mexico is an intriguing country from a social and economic standpoint, being the home to the wealthiest man alive (Carlos Slim is even richer than Bill Gates or Warren Buffet), but also the country where more than half of the population live below the poverty line. This feature, alongside with numerous other traits, make Mexico an interesting state, worthwhile a more detailed analysis.
Throughout the analysis, emphasis would be placed on three distinctive dimensions, namely the economy of Mexico, its political environment and the level of technologic development in the country. Before launching the analysis however, the country would be briefly introduced from a generic point-of-view.
2. General information about Mexico
Mexico’s cultural heritage lays in the advanced Amerindian civilizations (including Mayan and Aztec), but also in the more recent colonization by Spain, which lasted from the 16th up to the 19th century. Today, Mexico still holds its cultural values, but is also modernizing. The country embraces liberalization and globalization in the form of international trade, as a source of prosperity.
Mexico has a total area of 1,964,375 square kilometers, being the 14th largest country of the globe. The climate in the state is tropical to desert and the terrain is formed from high and rugged mountains, low coastal plains, deserts and high plateaus; only 12 per cent of the country’s land is arable. Mexico’s most common natural resources include petroleum, silver, copper, lead, gold, zinc, timber and natural gas.
Mexico is exposed to natural hazards of tsunamis along the Pacific coast, volcanoes and earthquakes to the center and south of the country, and hurricanes on the coasts of the Pacific Ocean, the Caribbean and the Gulf of Mexico. Aside from the natural hazards, the country also faces numerous challenges at the level of environmental threats. Some of the more relevant examples in this sense include the following: lack of facilities to manage hazardous waste; high levels of migration from the rural areas to the urban areas; scarcity of the fresh water resources, combined with the high levels of pollution in the current sources; high levels of river pollution through the sewage systems; air pollution in the cities; deforestation, desertification and ongoing loss of the agricultural land (Central Intelligence Agency, 2012).
There are 114,975,406 million people living in Mexico currently, most of whom are mestizo (about 60 per cent), followed by Amerindian (30 per cent), while (9 per cent) and other ethnicities (1 per cent). People commonly speak Spanish and mostly belong to the Roman Catholic religion. The median age of the population is of 27 years and the life expectancy at birth is of 76 years. 86 per cent of the population can read and write and the unemployment rate among the young population (ages between 15 and 24) is of 10 per cent.
3. Economy of Mexico
The Mexican economy is a free and open economy, focused on massive exports as a source of national revenues. The country exports mainly manufactured goods, oil and oil products, fruit and vegetables, silver, coffee and cotton and the primary destination of these exports is represented by the United States, with nearly 80 per cent of Mexican exports going to the U.S.
The Mexican economy relies heavily on its exports and its industrial sectors are less developed. The country is as such the largest exporter in Latin America, but also the largest importer. The primary sources of Mexican imports are represented by the United States, China and Japan. Currently, Mexico’s balance of trade is a negative one, meaning that the imports exceed the exports. The country as such consumes more than it sells and this model is economically unsound. Furthermore, such an outcome has raised vast criticism against NAFTA, as a source of more imports than exports (Vaidya, 2006).
From a more factual standpoint, the Mexican economy is currently the 12th largest in the globe, registering a gross domestic product of $1.667 trillion. The GDP growth rate in 2011 was of 3.9 comparative to 5.6 in 2010 (Central Intelligence Agency, 2012). This growth in the gross domestic product is indicative of emergent economies.
In 2009, the country’s economy had been impacted by the economic crisis, which decreased the demand for Mexican exports. This impact was explained by the decreasing purchased powers on American consumers and investors, revealing Mexico’s dependence and sensitivity towards its international partners. Such low level of economic diversification and reliance on international partners is yet another sign of an emergent economy.
Despite the impressive GDP figures however, the living standards of the population remain low and the income per capita is only the 86th in the world, with $14,700 per individual. 51.3 per cent of the population lives below the poverty line and the unemployment rate in the country is of 5.2 per cent.
At an analytical level, this very low living standard among the Mexican population represents an important trait in the country’s rapid evolution. The most relevant example in this sense is represented by the low wages of the Mexican workers, and the possibility of foreign investors to use Mexican labor force and reduce personnel expenditures, to as such support the profitability objectives of the foreign investors.
Aside from the economic developments explaining the rapid development of Mexico, its status of emerging economy is also obvious in terms of the challenges still faced by the country. These include a poor infrastructure or a little trained and specialized labor force.
4. Political environment in Mexico
Mexico, by its official name of United Mexican States, is a federal republic with the capital in the Mexico City. It has declared its independence on the 16th of September 1810, but this was only recognized in 1821 by the Spanish occupants. The country is formed from 31 states and one federal district, and its constitution is based on the civil law system, heavily influenced by the constitution and legislation in the United States (Central Intelligence Agency, 2012).
Throughout the past recent decades, Mexican politics have focused around the opening of the country to international operations in an effort to stimulate trade. Today then, Mexico has free trade agreement with over 50 countries, including states such as Japan, Guatemala or countries in the European Free Trade Area. 90 per cent of the Mexican exports as such are delivered through these free trade agreements.
The most common free trade agreement signed by Mexico has been represented by NAFTA, or the North American Free Trade Agreement between the three partners, namely Mexico, the United States of America and Canada. NAFTA is however subjected to intense criticism as it is viewed as a mechanism by which the U.S. And Canada increased their share of exports into Mexico; in the aftermath of the treaty, U.S. exports into Mexico increased from 7 to 12 per cent, and the Canadian ones increased from 2.5 per cent to 5 per cent.
The focus of the Mexican government has nevertheless remained on the creation of a free economy that would welcome foreign investors. Emphasis has also fallen on increasing the competition in the Mexican fields of communications, seaports and others, as well as on the creation and implementation of reforms that create social and economic benefits for the Mexican population.
“Recent administrations have expanded competition in seaports, railroads, telecommunications, electricity generation, natural gas distribution, and airports. […] In 2007, during its first year in office, the Felipe CALDERON administration was able to garner support from the opposition to successfully pass pension and fiscal reforms. The administration passed an energy reform measure in 2008 and another fiscal reform in 2009” (Central Intelligence Agency, 2012).
Starting with 2011, a new political program was implemented by the Calderon administration and it seeks to address numerous social and economic problems in the country. In this order of ideas, the political focus would fall on the creation of new employment opportunities, the reduction of poverty, the provision of better health care, the stability of the financial system, the reformation of the energy sector, or the reformation of the regulatory system (Graybeal, 2011). The scope of the policies is to help the country overcome the recession, increase economic stability, as well as support the growth of the gross domestic product (Economy Watch, 2010).
Among the major challenges at the political level in Mexico, it is important to note the high levels of corruption among the Mexican politicians (Morris), as well as the still transitioning political system, which had yet to fully evolve into democracy. At this level, challenges are faced at the level of the relationship between the state and the people, including the state and the private investors (Selee and Peschard, 2010).
5. Technology in Mexico
From the technological standpoint, the emergent economy is characterized by a combination of new and modern technologies, as well as outdated machineries. The technological sector is as such in an ongoing process of development and modernization, which is mostly obvious among the manufacturing plants of the foreign investors. The focus of the Mexican authorities on technologic development is decreased and the support and investments towards technology generally come from the private sector, where emphasis is placed on operational efficiency.
At the overall level of the population, there are 19.684 million main telephone lines in use — the 14th largest number in the world, and 94.565 million mobile telephones in use — the 12th largest number on the globe. In terms of internet usage, this is characterized by 31.02 million users (12th largest number of internet users in the world) and 16.233 million internet hosts, the 9th largest number of internet hosts in the world (Central Intelligence Agency, 2012).
Mexico however remains in great need of sustained investments in science and technology and these investments are necessary not only at the level of infrastructure and actual technologies, but also in human resource development and specialization. Mexico now has the lowest concentration of researcher of all OECD countries and the country trains the lowest numbers of doctors.
Throughout the past two and a half decades, the investments in technology have fluctuated, on some years revealing increases or decreases by 50 per cent. These variations indicate an unstable technological domain, directly influenced by the state of the emergent economy (Website of the European Commission). Still, for the technological field, the fluctuations are harmful since they prevent the stability of technological research and developments, which in turn impeded adequate social development in Mexico.
Finally, a last issue to be mentioned is represented by the impressive difference in technologic development between the Mexico City and the rest of the country. Specifically, over 75 per cent of all new scientific degrees are obtained in the capital, and the technological resources and infrastructures are also concentrated in the area.
“Mexico City is poised to emerge as a major source of scientific and technological development. As a result of the city’s highly trained and educated workforce, world-class universities and research institutes and high-quality facilities, scientific and technological achievements are continuing to be made in Mexico City” (Mexico City Experience).
The situation virtually reveals a great potential for technologic development in the Mexican capital, which is necessary for the sustained development of the emergent economy. Still, it reveals high levels of discrepancy between the capital and the rest of the country, meaning that the technologic field in Mexico is still underdeveloped.
6. Recommendations for the future
As it has been mentioned throughout the previous sections, Mexico has evolved significantly in terms of its economy, policies and technologies and all these developments explain its rapid ascension. Nevertheless, the status of emerging economy is also revealed at the level of the challenges still faced by the Latin American country. The more notable of these challenges include:
Weak infrastructure
Negative trade balance
Reliance on international partners
Non-diversified economic sector
Corruption
Transition to democracy
Unskilled labor force
Discrepancies in technologic development.
At this level then, it is useful to promote a series of recommendations as to how the country could address these challenges so that it further consolidates its economic development. In terms of the poor infrastructure in the country, it would be useful to develop partnerships between the private and public sectors. The representatives of the public sector wish to create national infrastructure, but may not have the means, whereas the private players would enjoy the infrastructure to increase their operational efficiency. In such a setting then, the combination of the two fields would maximize the public and private resources and would unite the multiple resources under the umbrella of common goals.
At the level of the negative balance trade, addressing this issue would be part of a wider economic and political effort to increase the competitiveness of the Mexican exports within the global market place. Emphasis would as such be placed on increasing product quality, as well as retail prices. Also, the officials should stimulate the internal consumption of domestic products rather than foreign imports. These measures would simultaneously aim to increase export revenues and decrease import expenses, in an effort to create a positive balance of trade.
Mexico relies extensively on its international partners and this dependency has been best observed through 2009, when the economic crisis that hit the United States has resulted in decreased Mexican exports, and as such decreased revenues in the Latin American country. This virtually means that Mexico is not able to support its economic growth on its own and its future also depends on the ability of the U.S. To overcome the recession. In order to address this dependency on the international trade partners, it is recommended for Mexico to diversify its economic sector, leading as such to a discussion of the next challenge for the country.
The Mexican economy relies heavily on its export sector, meaning that when exports slow, so does the economic growth of the country. In order to address this issue, it is necessary for the Mexican economy to further develop and generate sustainable revenues from sectors other than exports. For instance, the country should focus on improving the living standards of the population so that it stimulates domestic demand. Furthermore, it is recommended for them to sustain the development of the agricultural sector. The Mexican climate and terrains are not always favorable for agriculture, yet the field has the capacity to increase the national output and even to positively influence inflation, and support stability in the emergent market. In such a setting then, it is recommended for the Mexican authorities to modernize the outdated agricultural sector.
Another problem faced by Mexico is revealed at the political level and it is one characteristic in most emergent economies, namely the high levels of corruption. These are linked to the still ongoing transition from an authoritarian model to a democratic one, a challenge which can only be resolved in time and through a change in the mentality of the population. Returning however to corruption, this should be addressed through the development and enforcement of clearer legislations that define, prevent and punish corruption. On occasions, it can happen so that corruption occurs in unclear circumstances and the provision of clearer laws could prevent corruption. Then, to discourage it, it is necessary for the authorities to enforce punishments through fully respected laws and regulations. When corruption is openly prohibited and punished, rather than accepted, it is less likely to occur.
At the specific technological level, the emergent country is characterized by two notable shortages. On the one hand, there are wide discrepancies between the technologic efforts, results and infrastructure between the Mexico City and the rest of the country. On the other hand, there exist few people with sufficient technical skills; this second shortage refers to both highly technical individuals, such as researchers, as well as staffs in organizations that would be able to operate the technologic additions.
In terms of the discrepancies in technologic development — common in emergent countries where development is not uniform — this issue should be addressed through the allocation of more funds from the state budgets. In essence, more funds should be allocated to the overall technologic field in Mexico in an effort to support the efforts of the sector. And furthermore, the investments should be generated by private-public partnerships, where the two sectors have common interests, yet complementary resources and capabilities. Still, the investments should also be redirected outside the Mexico City in order to stimulate technologic development throughout the rest of the country.
Last, at the level of the insufficiently skilled technical staffs, the efforts to addressing this shortage should be twofold. For once, the specific research process should be stimulated through the provision of more grants for research and development, PhD development and other such initiatives. The responsibility for this measure should be shared by the Mexican authorities and the Mexican state. Then, at the level of the insufficiently skilled labor force, this shortage should be addressed through the development and implementation of training programs. These programs would be delivered by employers, and would represent the responsibility of the private sector. On occasions, the state could provide support as needed by the employers.
Finally, more emphasis should be placed on the public education system, in the meaning that the teaching act should increase in quality. This increase should be obvious in terms of all subjects, but also in terms of technologic education. The public educational system then should become able to prepare the current students to become the skilled labor force of the future.
References:
Graybeal, M. (2011). Mexico’s economic policy and migration. Center for Strategic and International Studies. http://csis.org/files/publication/110509_Graybeal_MexicoEconPolicy_Web.pdf accessed on December 5, 2012
Morris, S.D. Mexico’s political culture: the unrule of law and corruption as a form of resistance. Universidad Nacional Autonoma de Mexico. http://www.ojs.unam.mx/index.php/mlr/article/viewFile/24988/23424 accessed on December 5, 2012
Qingfen, D. (2012). Bigger role for emerging economies. China Daily. http://www.chinadaily.com.cn/business/2012-04/11/content_15019204.htm accessed on December 5, 2012
Schachter, H. (2012). Innovation boomerang: the role of emerging markets. The Globe and Mail. http://www.theglobeandmail.com/report-on-business/careers/management/innovation-boomerang-the-role-of-emerging-markets/article4423190 / accessed on December 5, 2012
Selee, A. Peschard, J. (2010). Mexico’s democratic challenges. Stanford University Press.
Vaidya, A.K. (2006). Globalization: international blocs and organizations; other issues. ABC-CLIO.
(2010). Mexico economic policy. Economy Watch. http://www.economywatch.com/economic-policy/mexico.html accessed on December 5, 2012
(2012). The world factbook — Mexico. Central Intelligence Agency. https://www.cia.gov/library/publications/the-world-factbook/geos/mx.html accessed on December 5, 2012
(2012). Mexico: striving for sustainable growth. Thomas White. http://www.thomaswhite.com/explore-the-world/mexico.aspx accessed on December 5, 2012
Science and technology in Mexico. Website of the European Commission. http://ec.europa.eu/research/iscp/countries/mexico/mx-doc2.pdf accessed on December 5, 2012
Science and technology. Mexico City Experience. http://www.mexicocityexperience.com/knowledge_city/science_technology / accessed on December 5, 2012
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