Sep 232016
 

A study just released by the World Bank and the International Finance Corporation, Doing Business en México 2016, compares Mexico’s 32 states for the paperwork, time and costs associated with four major indicators: opening a new business, obtaining construction permits, registering industrial property rights and the resolution of commercial disputes.

The report concludes that the seven best states in which to do business are Aguascalientes, the State of Mexico, Colima, Puebla, Sinaloa, Guanajuato and Durango, all of which offer a better performance than the average for OECD high income countries.

doing-business-2016-fig-1-2

Overall ranking for Doing Business in Mexico 2016 (Source: Fig 1-2 of World Bank Report)

The three states that have advanced the most towards implementing international best practices since 2014 are Puebla, Jalisco and the State of México.

The map shows the rank order of states for doing business, from green (the best) to red (the lowest ranking). Unlike many maps of state-by-state performance, this map does not show any evidence for the north-south divide we have repeatedly commented on in the past.

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Aug 112016
 

The map shows the percentage change in each state’s GDP during 2015. (Data from the National Statistics Agency, INEGI).

Change in GDP, by state, 2014-2015. Data: INEGI. Cartography: Tony Burton / Geo-Mexico

Change in GDP, by state, 2014-2015. Data: INEGI. Cartography: Tony Burton / Geo-Mexico

The fastest growing states in 2015 were Hidalgo (6.3%), Chihuahua (6.2%) and Nuevo León (5.9%).

While the economy of most northern Mexico states grew at a respectable rate during 2015, the economies of three Gulf coast states actually shrank last year, mainly owing to the drop in oil prices. GDP fell in three oil-rich states: Campeche (- 8.2%), Veracruz (- 2.3%) and Tabasco (- 0.2%).

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Mar 072016
 

Tourism accounts for about 9% of Mexico’s GNI and provides almost 4 million direct jobs. In 2015, Mexico welcomed a record 32.1 million international tourists, making it the 10th most popular international destination in the world. They spent a combined $17.5 billion in the country. Almost 50% of these overseas visitors arrived by air; they accounted for 80% of total foreign tourist expenditures.

Mexico_Tourism

This year, tourism officials are predicting that 35 million international foreign visitors will holiday in Mexico, with total spending of 19 billion dollars. Officials believe, probably optimistically, that Mexico can attract 40 million tourists in 2018 and 50 million by 2030. They stress the need for policies that will result in more hotels, additional air routes, new attractions, and packages designed for niche markets including health, religion, and seniors-based tourism.

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Jul 092015
 

The Jalisco state government has released an informative 5-minute video highlighting some of the reasons why Jalisco is one of the best locations in Mexico for farming, business and tourism.

The video can be viewed on Facebook: Esto es Jalisco. This is Jalisco.

Following opening shots showing some of the diverse landscapes of the state, including the Piedrotas at Tapalpa, the majestic Volcán de Colima (whose summit is actually in Jalisco, not Colima) and the Horseshoe Falls near the Dr. Atl park on the northern edge of Guadalajara, the video’s subtitles (in English) turn to techno0logy and innovation. Jalisco is the first state in Mexico to have a Ministry of Innovation, Science and Technology. The state capitol Guadalajara is the center for MIND (Mexican Innovation and Design Center) and was chosen by MIT for the establishment of a Creative Digital City.

Map of Jalisco state

Map of Jalisco. Copyright 2010 Tony Burton. All rights reserved.

The city also has major cultural and sporting attractions, from libraries to golf courses to hosting international events in the Expo Guadalajara to concerts and its own international film festival. It also hosts the world’s second largest book fair (after Hamburg). Its industrial activity ranges from agro-processing (including tequila) to pharmaceuticals, information technology, automotive and aerospace firms to renewable energy enterprises.

Foreign investment in Jalisco has risen by an average of 17% a year for the past decade, with foreign firms finding the state’s geographic position advantageous for serving central Mexico and with excellent trade links to Asia and the U.S.

The state’s leading coastal resort is Puerto Vallarta, but tourism is also important in the state’s interior. Jalisco has five places with Magic Town status: Lagos de Moreno, San  Sebastian del Oeste, Tapalpa, Mazamitla and Tequila.

Jalisco currently accounts for 6.6% of national GDP and the state government clearly expects this contribution to grow in coming years. This professionally-produced video is an excellent visual introduction to one of Mexico’s most important states.

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May 282015
 

Remittances sent home by Mexican migrants (almost all of them residing in the USA) rose to $2.26 billion in March 2015, 7.6% higher than the same month a year earlier. This was the highest monthly figure since May 2012, and the highest ever figure for March.

The average remittance sent to Mexico in March 2015 was $311.30, the highest figure since July 2012, and the number of transfers was 7.25 million.

The March figure brought the total remittances for the first quarter of this year to $5.7 billion, 4.9% higher than the same period in 2014.

Workers in California sent remittances worth $1.59 billion home during the first three months of this year, more than the workers in any other state. Texas came in second place with $763.9 million and Illinois placed third at $199.3 million.

The three main receiving states in Mexico were:

  • Michoacán – $603 million
  • Jalisco – $539 million
  • Guanajuato – $509 million

For an introduction to the topic of remittances, with links to some of the key posts on this blog, see

A comprehensive index page listing all the posts oon Geo-Mexico related to migration and remittances can be found at Migration and remittances: an index page.

Mexico attracting significant inflows of FDI

 Mexico's geography in the Press, Updates to Geo-Mexico  Comments Off on Mexico attracting significant inflows of FDI
May 212015
 

According to the 2015 Direct Foreign Investment Confidence Index of consultancy A.T. Kearney, Mexico is currently the ninth most attractive country worldwide for FDI (Foreign Direct Investment). Mexico has risen 3 places in the rankings since the 2014 Index was released.

The report highlights the improving business climate in Mexico following the implementation of the government’s reform agenda, and says that “investors continue to be drawn to opportunities in many sectors, including manufacturing, energy, and telecoms”.

The top 10 countries in the overall FDI rankings (see graph) are U.S., China, U.K., Canada, Germany, Brazil, Japan, France, Mexico and Australia.

FDI-COnfidence-Index2015

The report says,

Mexico gains three spots to reach 9th, as President Enrique Peña Nieto’s reform agenda continues to improve Mexico’s business climate. Its 2013 FDI levels of $38 billion were an all-time high, with the majority of investment targeted at Mexico’s growing manufacturing sector, including high-value-added electronics. Mexico’s Economy Ministry has reported that flows fell to $22.6 billion in 2014, with inflows of $33.9 billion offset by $11.4 billion in outflows. Significant reforms in the energy sector will occur this year to allow foreign private investment.

As a result of the telecom reforms that targeted Carlos Slim’s América Móvil, which controls 70 percent of the market, customer prices fell nearly 17 percent between February 2013 and January 2015. In response to the policy changes, AT&T made a $5 billion divestment in América Móvil and subsequently acquired Grupo Iusacell SA, Mexico’s third-largest wireless operator, for $1.7 billion. Going forward, these reforms are expected to open up growth opportunities for smaller competitors.

In November 2014, the American chemicals maker PPG Industries acquired paints maker Consorcio Comex for $2.3 billion. This followed the rejection by the Mexican federal competition authority of the sale to Sherwin-Williams for a proposed $2.34 billion on the grounds that it would create unfair market conditions.

According to this recent press report, Mexico’s FDI during the first three months of 2015 totaled $7.573 billion, an all-time record for the first quarter. The figure comes from 1357 separate investments originating from the USA (59.4%), Spain (14.3%), Japan (8.2%), South Korea (4.8%), France (2.9%), and the Netherlands (2.3%), with the remaining 8.1% coming from 48 other nations.

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Feb 232015
 

Consultancy PwC, the world’s second largest multinational professional services network has published an updated edition of The World in 2050. In the latest edition, The World in 2050: Will the shift in global economic power continue?, the authors present economic growth projections for 32 of the largest economies in the world, accounting for around 84% of global GDP.

world-2050-updated-version

“We project the world economy to grow at an average of just over 3% per annum in the period 2014 – 50, doubling in size by 2037 and nearly tripling by 2050.

But we expect a slowdown in global growth after 2020, as the rate of expansion in China and some other major emerging economies moderates to a more sustainable long-term rate, and as working age population growth slows in many large economies.

The global economic power shift away from the established advanced economies in North America, Western Europe and Japan will continue over the next 35 years. China has already overtaken the US in 2014 to become the largest economy in purchasing power parity (PPP) terms. In market exchange rate (MER) terms, we project China to overtake the US in 2028 despite its projected growth slowdown.

We project new emerging economies like Mexico and Indonesia to be larger than the UK and France by 2030 (in PPP terms) while Turkey could become larger than Italy. Nigeria and Vietnam could be the fast growing large economies over the period to 2050.”

A summary table in the PwC report shows the firm’s predictions for major economies in 2050 have Mexico continuing to progress up the world ladder, with its economy reaching world rank #6 by 2050, ahead of Japan, Russia, Nigeria and Germany.

Will the PwC forecasts turn out to be accurate? If this blog is still going strong in 2050, we promise to include an update…

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The geography of Mexico’s beer industry

 Maps, Other  Comments Off on The geography of Mexico’s beer industry
Jan 292015
 

In a previous post – The emergence of two major beer-makers in Mexico – we looked at how Mexico’s beer industry came to be dominated by two large players: Femsa and Modelo, both now owned by foreign corporations.

The map below shows the location and date of inauguration of all major breweries in Mexico.

The location and inauguration dates of Femsa and Modelo breweries in Mexico

The location and inauguration dates of Femsa and Modelo breweries in Mexico

How large is Mexico’s market for beer?

A 2010 report from the national beer industry claims that the average annual consumption of beer in Mexico is 60 liters per adult, a figure that has not changed significantly in the last 20 years. The equivalent figure in Germany is 120 liters a person, so there is still considerable potential for growth. Mexico’s breweries provide about 80,000 jobs directly and a further 800,000 indirectly.

Total beer sales each year are worth as much as 20 billion dollars. The value of sales has risen sharply, at about 5% a year, due mainly to higher exports. Mexico has become the world’s second largest beer exporter, after the Netherlands, and is the world’s sixth largest producer and consumer of beer, brewing over 8.6 billion liters a year.

The USA is the main export market. Five of the 25 most popular brands in the USA are Grupo Modelo beers: Corona, Modelo Especial, Corona Light, Pacífico and Negra Modelo. This has helped Grupo Modelo, Mexico’s leading brewer, become the world’s sixth largest brewer. Modelo’s Corona beer has been the #1 imported beer in the USA since 1997. It is one of the world’s top five beers in terms of sales, even though it is not especially popular in Mexico!

One of Modelo’s fastest growing export markets is China, where it has rapidly become the second most popular imported beer. In Mexico’s domestic beer market, Modelo and Femsa face increased competition from imported beers such as Budweiser, Miller and Heineken.

There are several other smaller breweries in addition to those owned by Femsa and Modelo. One significant trend, echoing other regions in North America, has been a marked upswing in the number of small, specialist, boutique breweries, such as Cervecería San Angel and the Santa Fe Beer Company in Mexico City and Minerva Brewery in Guadalajara. Other popular brands of craft beer include Perro Negro from Guadalajara, Insurgente from Tijuana, Libertadores from Michoacán and the varied products of the Baja Brewing Company from Los Cabos.

These smaller “craft” breweries produced 10.5 million liters of beer in 2014, according to the Mexican Beer Makers Association (Asociación de Cerveceros de la República Mexicana, Acermex), and account for only 0.16% of the total market, but their share of the market is growing at more than 40% a year. The association hopes that smaller breweries can enjoy as much as 1% of the market by 2016.

The rise of craft beers has seen a corresponding proliferation of specialist pubs that stock pale ales, pilsners, porters, stouts and wheat beers in the trendier districts of all the major cities, including Mexico City, Guadalajara, Monterrey and Querétaro.

In Guadalajara, in 2008, two local craft breweries – Cerveceria Minerva and  Cerveceria Revolución – co-founded the Guadalajara Beer Festival to showcase Mexican their products and introduce previously unavailable European import brands. The festival is now a three day event that attracts as many as 30,000 visitors a year; it claims to be Latin America’s largest beer festival.

Mexico’s economic geography is analyzed in chapters 14–20 of Geo-Mexico: the geography and dynamics of modern Mexico. Buy your copy of this invaluable reference guide today!

Which states in Mexico are the most competitive?

 Maps, Mexico's geography in the Press  Comments Off on Which states in Mexico are the most competitive?
Dec 032014
 

The Mexican Institute for Competitiveness (Instituto Mexicano para la Competitividad AC, IMCO) has published its annual analysis of the competitiveness of Mexico’s states. The report provides some interesting insights into which areas of Mexico are “most competitive” in business terms, defined as their capacity to attract and retain investments and a talented workforce.

This suggests a business environment that maximizes the socio-economic potential of both the business entities and individuals residing in a a specific area. It also suggests that any improved well-being (economic and social) will be maintained (sustained).

The index is based on 89 indicators in 10 sub-indices. The 10 major factors include the reliability and objectivity of the legal system, the sustainable management of the natural environment, the stability of macroeconomic policies, the degree to which society is non-divisive, educated and healthy, and the stability and functioning of the political system.

The latest report relies on 2012 data. Mexico’s basic pattern of competitiveness at the state level is shown in the map.

Mexico, 2014. Map: Tony Burton; all rights reserved

Competitiveness in Mexico, 2014. Map: Tony Burton; all rights reserved

The five most competitive states in Mexico are:

  • Federal District (Mexico D.F.)
  • Baja California Sur
  • Aguascalientes
  • Nuevo León
  • Querétaro

While a full analysis of why some states are more competitive than others is beyond the scope of this post, the single most striking aspect of this map is the persistent low degree of competitiveness of several of Mexico’s poorest states, such as Guerrero, Oaxaca and Chiapas.

In general, states in Northern Mexico are noticeably more competitive than those in Southern Mexico. Two areas on opposite coasts where tourism is extremely important to the local and national economy – Baja California Sur and Quintana Roo – are both very competitive.

Mexico’s economy and workforce are analyzed in chapters 14 to 20 of Geo-Mexico: the geography and dynamics of modern Mexico. Ask your library to buy a copy of this handy reference guide to all aspects of Mexico’s geography today! Better yet, order your own copy, which will still arrive in time for Christmas…

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Oct 202014
 

Which of Mexico’s states have the fastest growing economies? The map below, based on INEGI data, shows each state’s percentage change in GDP for the three year period from 31 March 2011 to 31 March 2014.

Change in GDP by state, 2011-2014. Data: INEGI. Credit: Geo-Mexico

Change in GDP by state, 2011-2014. Data: INEGI. Credit: Geo-Mexico

Only one state – Campeche – registered “negative growth” over the period. In Campeche, production from the oil fields that have long been a mainstay of the local economy has been gradually declining.

Besides Campeche, six states grew far slower than the average for Mexico: Durango, Veracruz, Tabasco, Chiapas and Guerrero. Not entirely coincidentally, several of these states are among the poorest in the nation, so their failure to grow as quickly as the average leaves them further behind, increasing the economic inequalities that plague Mexico’s development.

At the other end of the spectrum, the economic growth of six states – Sonora, Chihuahua, Aguascalientes, Guanajuato, Michoacán and Querétaro – easily outpaced the average for the country. Sonora, Chihuahua, Guanjuato, Querétaro, and to a lesser extent Aguascalientes, all benefited from foreign direct investments and new industries, such as those involved in  the vehicle manufacturing and aeronautical sectors.

The case of Michoacán is something of an anomaly, since that state’s economy is still heavily dependent on primary products such as avocados and iron ore. The positive growth in that state may prove to be mainly due to its negative growth in the preceding three years (2008-2011), which meant that it started the three year period shown on the map at an unusually low level. Perhaps more importantly, given the state’s recent political upheavals and gang-related violence, it is highly unlikely that Michoacán will continue to grow anywhere as quickly over the next three years.

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