Economy of Mexico

Economy of Mexico

United Mexican States are located in southern North America. This is a developing country with the absolute volume of GDP of about $ 800 billion and per capita GDP of more than 8 thousand dollars (PPP). Mexico is a party to NAFTA and the first among Latin American nations joined the elite OECD.
Mexico - a federal republic consisting of 29 states, the Federal District and two outlying areas. The Mexican nation is formed by mixing Indian and Spanish settlers. The country has lived nearly 100 million people. Modern Ethnic groups: Mestizo - 60%, Indians - 30% of Europeans - 10%. Official language - Spanish. Entrails of the country rich in oil, natural gas, silver and polymetallic ores.

Mexico - a country with a diversified economic structure. In industry, traditional industries are mining (oil, natural gas, polymetallic). They are the traditional source of foreign exchange earnings. Rapidly developing manufacturing industries - engineering, metallurgy, petrochemistry, and the decisive role in their development are foreign, mainly American, companies. Thus, over 90% of cars produced in the country are made in factories subsidiaries of American corporations, Ford, General motorc and Chrysler.

National monopoly groups are specialized mainly in traditional industries, construction, transport and communications, where until recently the involvement of foreign firms are not allowed. An example is the Mexican company Vitro, which acts a monopolist in the production of flat and container glass bottle in the country, controlling more than 90% of its production.

Agricultural production is about 5% of GDP, although there until recently was occupied by the 1 / 3 of the active population. The reasons for such low efficiency of agriculture are rooted in failed government policies and conservative forms of land tenure and land use. On the 90 th years. they become a brake on development. As a result of the agrarian reform after the revolution of 1910-1917 years. land alienated from the landlords and foreign owners, moved to the state, which transferred its peasant communities (ehidos). Since then, the state exercised control over the development of agriculture, is regularly allocated to it grants, which are due to bloated management staff and corruption rarely came to manufacturers. In agriculture, because of the backward culture of productivity was extremely low.
In the second half of the 90-ies. in agriculture was carried out a new policy, which is based on privatization ehidos and deregulation.

Country's economy in recent decades is uncertain. Until the early 80's. Mexico policy was aimed at expanding production and export of minerals with a wide attraction for the foreign creditors. The result of such policies have relatively high output growth at the expense of the extractive industries (up to 8% per annum) and high external debt (second place in the world after Brazil).
In the early 80's. it became apparent that the strategy focused on the regular receipt of foreign loans in the calculation to cover their income from exports of raw materials, especially oil, has not justified itself, moreover, in this period in global financial markets were growing interest on loans. In August 1982, the Mexican Government has declared the failure to make payments on foreign debt in full. The country has undertaken a course of austerity, aimed at limiting domestic demand. Almost all private banks were nationalized, and foreign investors do not have the right to participate in the equity of Mexican banks.

Trade surplus was used mainly for the repayment of external debt, which in turn blocked the possibility of investment in the development of national economy. As a result, average annual GDP growth in the 80-ies. amounted to 2,5%, that is, the economy did not develop much faster than population growth (2,3% - in the 80 and 1,8% - in the 90-ies.), and Mexico worked exclusively on servicing external debt - related costs in 1986 reached 44% of the value of exports of goods and services (in 1993 - 24%).
The sharp decline in earnings in the economy required new foreign loans. To rescue the Mexican economy IMF proposed creditor banks to provide it with additional credits. As a result, Mexico's foreign debt rose to the mid 90's. Approximately three times compared with the beginning of the last decades of the century, reaching about $ 160 billion, while the ratio of external debt to GDP increased from 24% in 1980 to 42% in 1989 and 44% in 1996.

Rethinking the economic strategy based on the ideas of neo-liberalism has begun already in 1985, when the program was announced reorganization of the public sector, liberalization and privatization, the object which at first became unprofitable and marginal enterprises had overdue foreign debt. Widespread in the sale of assets of the public sector were the deal "swap" - the exchange of debt for shares of privatized enterprises.

The peak came in the privatization of 1990-1992. In the privatization program included the largest enterprises of mining industry, ferrous metallurgy, aviation transportation, communications, major banks. In the auctions of state assets widely accepted as part of national financial and industrial groups and foreign companies and banks. The Government of Mexico has received from the privatization of $ 22 billion.

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