Monday, November 1, 2010

Mexico's Economy

Mexican exports to the United States have been steadily increasing since the global recession hit. NAFTA allows Mexican exports to compete with China. Tariffs and the increase in the labor price in China makes its goods more expensive in the United States. The problem for Mexico lies in its ability to capitalize on the export dollar. The article says that this is due to "inefficient oligopolies" and recommends that Mexican government do a better job creating competition by enforcing competition regulations, attracting foreign suppliers, and increasing lending to domestic suppliers that are up and coming. However, I think the article might understate some of the problems that Mexico is facing as far as instability, especially after being hit by the recession.

2 comments:

Ben Wallingford said...

NAFTA has its negative consequences. The United States government invests (with good ol' taxpayer money) subsidies around $10 billion into the corn sector each year. These subsidies lead to dumping of extra corn crop into the Mexican economy at low prices, which causes problems for Mexican farms and Mexico's ability to grow their own food. Mexicans buy U.S. corn instead of their own (because it is so cheap), which causes unemployment and lack of income.

aewillia said...

agricultural subsidies in the United States affect many more countries than just Mexico. Agriculture is the easiest way for less developed countries to enter the market and America is the largest consumer...