economy – Page 2 – Geo-Mexico, the geography of Mexico

The GINI index: is inequality in Mexico increasing?

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Oct 012011

The GINI index, used to quantify the degree of inequality within a population or country (the higher the value, the more inequality), was introduced in a previous post. In this post we report on the change in GINI index for the member countries of the OECD (Organisation for Economic Cooperation and Development). The OECD regularly publishes updated GINI coefficients. Society at a Glance 2011 – OECD Social Indicators includes the following graph which gives a great view of changes in inequality between the mid 1980s and the late 2000s.

: GINI coefficients for OECD members (OECD, 2011) Click image to enlarge

It is no surprise to see that Mexico’s inequality is almost the highest of any OECD member country. However, the right hand side of the graph shows that the increase in inequality in Mexico over the period was actually smaller than the OECD average, and well below the change in the USA, Canada and several European countries. This suggests that Mexico’s economy is becoming increasingly resilient and economic downturns do not necessarily result in raising inequality in Mexico as much as elsewhere.

It will be interesting to see how Mexico’s GINI index changes in coming years. High levels of economic inequality remain one of Mexico’s most-pressing issues, and one which will be central to the upcoming 2012 elections.

Related posts:

Mexico City: attracting businesses from northern Mexico and revitalizing downtown core

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Sep 262011

Some businesses leaving northern Mexico and moving to Mexico City

According to Laura Velázquez, the Economic Development Secretary for the Federal District, the city has attracted 1650 firms from the north of Mexico in the first six months of 2011. The Federal District does offer some financial incentives for newly established companies, but the main reason is believed to be that the firms see Mexico City as having a higher level of public safety than some of the cities in states such as Nuevo León, Chihuahua, Coahuila, Durango and Sinaloa in northern Mexico,

A diverse range of businesses is involved; most are relocating in the northern and eastern sectors of Mexico City. The migration has boosted the number of available jobs in Mexico City and also led to an increase in foreign investment.

The continued face-lift of Mexico City’s historic downtown core

We introduced the on-going renovation project to beautify Mexico City’s Historic Center in The revitalization of Mexico City’s historic downtown core. The Trust Fund set up to rejuvenate Mexico City’s Historic Center repaired and cleaned more than 1000 facades between 2007 and 2010, with a total street frontage of 11.24 km. The work is part of the renovation of Mexico City’s Historic Center which now looks better than ever! Work continues on many other buildings that still require attention.

Cycle taxis becoming a popular means of transport in city center

Cycle taxis or pedicabs (bicitaxis) have become a much more common sight in downtown Mexico City. Less than three years after their introduction, they are now carrying about 180,000 passengers a year, according to an official of Mexico City’s Historic Center Trust Fund. The vehicles were introduced as part of the Trust Fund’s efforts to revitalize the historic downtown core of Mexico City. They help to reduce the city’s CO2 emissions. There are currently 132 licensed cycle taxis operating in the downtown area. They combine pedal power with small electric motors. Their “drivers” double as informal tour guides. Each cycle taxi is about 3 m (10 ft) long.

Other posts related to Mexico City

Mexico’s GDP/person reaches all-time high

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Jul 132011

According to the National Statistics agency (INEGI), Mexico’s GDP/person broke all records in the first quarter of 2011 to reach 9,985 dollars/person, 15% higher than the equivalent period of 2010. The rise is due to continuing economic growth, coupled with the strength of the Mexican peso against the US dollar and other major currencies.

Mexico maintains its position as the world’s 11th largest economy. Mexico’s total GDP reached 13.588 trillion pesos (about 1.680 trillion dollars) in the past 12 months, 62.2% of which came from the tertiary (services) sector, 35.9% from manufacturing and 3.7% from primary activities.

Trends in income distribution in Mexico: are the poor getting poorer?

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Feb 032011

Many proponents of the North American Free Trade Agreement (NAFTA) which came into effect in 1994 argued that it would stimulate Mexico’s economic development, leading to an increase in employment, and (in due course) higher wages. This would have a beneficial effect for the entire workforce but the effect would be most pronounced among the poorest 20%. It would help reduce the differential between their incomes and those of the middle income earners.

Opponents of NAFTA argued that free trade would have the opposite effect and would lead to a widening gap between the haves and the have-nots.

Which argument is right? Has the gap widened or narrowed?

Research addressing this question reveals the complexity of the issue. Complicating the situation is the economic instability which followed the passage of NAFTA as well as the significant urban–rural and regional inequality that persists in Mexico. Available data suggest that inequality increased during the 1980s and again slightly between 1996 and 1998 but inequality then declined until 2002. This decline appears to have continued. A chart published last year in The Economist (11 September 2010) shows a decline in Mexico’s Gini coefficient (ie a decline in inequality) of almost 1% between 2000 and 2006.

Researchers conclude that the giant gap between rich and poor will not decline naturally as the economy grows, but will require specific policy actions.

The overall impact from the global economic downturn which started in 2008 is not yet clear but past experience suggests that the gap tends to decline during economic hard times. Some economists argue that a trend of a widening gap between rich and poor was already evident in the years prior to NAFTA. If so, this suggests that globalization and Mexico’s support for free trade are not the only factors responsible for the apparently growing disparities of wealth in the country.

Even if the disparities are widening, it does not necessarily mean that the poor are getting poorer. It is perfectly possible that their real incomes (and standards of living) could increase, by say 10%, while those at the top increase by 15%. Both groups would therefore be getting richer, even though the gap between them widened. On the other hand, it is possible that both could be getting poorer, with the gap increasing or declining. Clearly, income data are difficult to analyze and we should be very cautious to avoid making any overly-simplistic statement about the poor getting poorer.

Mexico’s footwear industry: imports and exports

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Jan 102011

We saw in an earlier post – Mexico’s shoe (footwear) manufacturing industry: regional clustering – that Mexico’s shoe manufacturing is concentrated in three major areas: León (Guanajuato), Guadalajara (Jalisco) and in/around Mexico City.

Shoes are also an important international trade item. Latin America’s largest international footwear trade show is SAPICA (Salón de la Piel y el Calzado), which is held in León twice a year. Each time, it attracts 12,000 buyers from the USA, Canada, Europe, Japan, and Central and South America.

Mexico exports: shoes

Exports

Export volume: 15 million pairs/yr
Value of exports: $250 million (dollars). Exports have risen steadily since 2006, despite the global economic difficulties.
Export destinations, by volume: USA 82%, Brazil 5%, Guatemala 2%, Japan 2% and Canada 2%.
Export destinations, by value: USA 84%, Japan 4%, Canada 2%, France 1% and Brazil 1%.

Imports

Import volume: 45 million pairs/yr
Value of imports: $450 million; this figure is rising at 15-20%/yr
Sources of imports, by volume: Vietnam 39%, Indonesia 21%, China 11%, Brazil 7%, Malaysia 5% and Thailand 5%.
Sources of imports, by value: Vietnam 43%, Indonesia 16%, China 14%, Italy 7% and Spain 6%.

Q. What can you deduce about Mexico’s international shoe imports and exports by comparing the percentages for trade by volume and trade by value? (eg. which countries supply more expensive shoes?)

The threat from China

At first sight, these figures do not suggest that Mexican manufacturers have much to worry about from Chinese shoe manufacturers. However, it is believed that many of the shoes entering Mexico from Vietnam and Indonesia actually originate in China. In addition, some Chinese shoes are thought to be repackaged in the USA for eventual export to Mexico.

Shoe manufacturers’ representatives in Mexico opposed China’s entry into the World Trade Organization (WTO) since they feared it would unleash a flood of cheap Chinese imports into the country. In an effort to help protect national manufacturers, the Mexican government has, for most of the past 20 years, levied a compensatory 35% tariff on shoes originating in China.

Challenges faced by Mexico’s shoe industry

Mexico’s shoe industry faces periodic shortages of some raw materials. In addition, the sector’s supply chains and delivery systems need strengthening.
The improvement of product quality may require further investment in technology and research.
As tariff barriers are lifted, Mexico’s shoe manufacturers will face greatly increased competition from overseas.

Source of statistics: CICEG (Guanajuato Shoe Manufacturers Association) Situación de la industria del calzado en México.

Related posts:

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!

Mexico’s shoe (footwear) manufacturing industry: regional clustering

Other 14 Responses »

Jan 052011

Mexico’s footwear industry is heavily concentrated in three main locations. Manufacturing is focused on the city of León in the state of Guanajuato. Factories and workshops in León account for about 68% of all shoes made in Mexico. The two other important manufacturing areas for footwear are Guadalajara (Jalisco) where about 18% of the national production originates, and Mexico City (together with surrounding parts of the State of Mexico), responsible for 12%.

How has this concentration come about?

León, in Guanajuato, is the center of one of the world’s most complete leather and footwear clusters. The area is a leading supplier and exporter of footwear, saddles and hats.

Footwear has been made in Guanajuato since 1645. The earliest association of shoe makers dates back to 1808. The sector is dominated today by firms with majority Mexican capital. Several of the foreign firms which manufactured shoes here prior to the second world war, changed the focus of their production lines in the early 1940s to specialize in supplying military footwear, leaving the making of consumer footwear to firms with national capital.

Concentration of shoe industry in Mexico.

The advantages of concentration

1. Local raw materials. Local inputs of leather and synthetics reduce the transportation costs (and time) for obtaining raw materials

2. Shared suppliers. Supporting the leather and footwear firms are local suppliers which offer machinery and equipment for tanneries, chemicals, leathers and skins, synthetic materials, dyes and textiles, as well as more specialized shoe-related items such as lasts, soles and heels, accessories and fittings. Shared information and machinery Because the shoe firms are grouped together in a cluster, ideas and information and even specialized machinery can all be shared.

3. Labor. This area has long specialized in footwear and leather products, so all firms benefit from the skilled local labor force.

4. Linkages. Both vertical and horizontal linkages between companies are important in the shoe industry. Vertical linkages occur when one company controls many or all stages in the production line. For instance, a company may make its own accessories and fittings to attach to the shoes it makes, or it may tan its own leather. Horizontal linkages exist where one company is supplied with components (heels, soles) made by another company.

5. Economies of scale.

6. Educational infrastructure. The León area has a variety of educational, training and research centers all supporting the leather and footwear sector. This increases the chances of technological innovations, and the speed of their adoption.

The major advantages of León as an industrial location:

The position of León is key to its success. It is located in central Mexico, close to the major urban areas of Mexico City, Querétaro and Guadalajara. On a broader scale, it is close to the major export markets of the USA, Canada and Central America.

Market proximity is enhanced by an excellent communications network, including good road and rail links, easy access to several major airports, and to seaports such as Manzanillo.

The basic statistics (2009-2010):

Number of footwear-related firms: about 8000, half of them in Guanajuato.
Size of firms: 56% micro (fewer than 10 employees), 33% small (10-50 employees).
Employment: the footwear sector provides 140,000 direct jobs, and twice as many indirect jobs, for a total of 420,000.
Mexico’s largest shoe maker: Emyco, whose 4,500 workers make 6 million pairs of shoes, boots and sandals (various brands) every year. This firm alone introduces 100 new models every three months.
Production volume: 250 million pairs/yr, about 1.6% of world total.
Domestic market: 285 million pairs/yr (average of 2.5 pairs/person/yr)

The domestic market is focused on low-cost shoes, with a few exceptions, such as the market for “cowboy” boots. The manufacture of hand-crafted, high-priced cowboy boots is dominated by smaller firms such as Botas Je-Ver, Botas Jaca and Rancho-Boots, each of which employs 50-200 workers. Some cowboy boots are made from exotic hides, such as crocodile, cayman, armadillo, iguana, ostrich and snake. They are a much-prized status symbol among the upper echelons of Mexico’s drug cartels!

In future posts, we will examine Mexico’s imports and exports of shoes, and see if it is possible to identify any patterns to the distribution of shoe retailers in some of Mexico’s major cities.

Source of statistics: CICEG (Guanajuato Shoe Manufacturers Association) Situación de la industria del calzado en México.

Related posts:

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!

How much longer will Mexico be an exporter of oil?

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Dec 152010

This interesting graph comes from a report published earlier this year by the Mexican Institute for Competitiveness (Instituto Mexicano para la Competitividad, IMCO). The purple line shows Mexico’s oil consumption in thousands of barrels/day from 2005 to 2009, with predicted values for the period 2010 to 2025. The yellow line shows Mexico’s oil production for the same period.

Graph of Mexico's oil production and consumption

Mexico's oil production (yellow) and consumption (purple), 2005-2025. Graph: IMCO.

Discussion questions:

In which year is Mexico’s consumption of oil predicted to equal its production?
What effects is this likely to have on Mexico’s economy?
What factors might cause this date to occur earlier than predicted?
What factors might cause this date to occur later than predicted?

A national map and summary of the methodology behind these rankings are provided in an earlier post:

Map of Competitiveness in Mexico

For full details of the study:

Full IMCO report on the Competitiveness of Mexico’s states (large pdf file)

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…

BRICs or EAGLEs? Mexico’s place in global economic growth

Mexico's geography in the Press 4 Responses »

Dec 102010

Mexico’s economy, the world’s 11th largest, is growing rapidly and predicted by many analysts to become the world’s fifth largest by 2050. It is not, therefore, surprising that, according to a recent report on key emerging markets from Spanish bank BBVA, investments in emerging markets are assuming more and more importance. However, the all-encompassing term “emerging market” covers a multitude of countries whose individual economies are incredibly diverse. It includes not only major economies such as those of China, India and Mexico, but also a host of tiny island states such as Grenada, Vanuatu and the Seychelles.

BRICs or EAGLE?

Economists have suggested various sub-groupings of emerging markets. One of the most commonly used in geography is BRIC, an acronym formed from the initial letters of Brazil, Russia, India and China. The term BRIC was first coined by Jim O’Neill in a 2001 paper entitled “The World Needs Better Economic BRICs”. The concept of BRICs has become outdated as the four countries’ economies have diverged over the past decade. Any term comprised of country names will inevitably date fairly quickly, and become much less useful.

Now, BBVA has proposed the use of the term EAGLE to cover the world’s Emerging and Growth-Leading Economies. The member states of this exclusive EAGLEs club are:

China
India
Brazil
Russia
South Korea
Indonesia
Mexico
Turkey
Eqypt
Taiwan

These ten countries are each expected to contribute more to global economic growth than the average of G7 members. Combined, the ten EAGLEs are expected to account for 50% of all global growth in the next 10 years.

A further eleven countries—Nigeria, Poland, South Africa, Thailand, Colombia, Vietnam, Bangladesh, Malaysia, Argentina, Peru and the Philippines—are identified by BBVA as having the potential to join the EAGLEs if their economies grow more than expected.

The BRIC is dead! The EAGLEs are rising! Long live the EAGLEs!

How important are remittances to Mexico’s economy?

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Nov 202010

There are millions of Mexican workers in the USA who send a sizable portion of their wages back to their families in Mexico. On a per person basis, Mexico receives more worker remittances than any other major country in the world.

States receiving the most remittances (highest value)

An estimated 20% of Mexican residents regularly receive some financial support from workers abroad. Such remittances are the mainstay of the economies of many Mexican communities, such as many rural areas in Durango, Zacatecas, Guanajuato, Jalisco and Michoacán. Studies suggest that the funds sent as remittances are mostly spent on housing, food, clothing and durable consumer goods. A growing portion is being invested in education and small businesses. The corollary is that only a small percentage goes towards savings.

In 2008, remittances flowing back to Mexico exceeded $25 billion.The value of remittances fell slightly in 2009, according to World Bank figures, but are forecast to increase again this year. Only India and China, both with far higher populations than Mexico, have larger sums of remittances entering their economies.

According to figures published in The Economist (13-19 November 2010), remittances in Mexico are equivalent to 2.5% of the nation’s GDP. Mexico’s degree of reliance on remittances is greatly exceeded by the comparable figures of 22.4% of GDP for Lebanon, 11.8% for Bangladesh, 11.7% in the Philippines, 7.0% in Vietnam, 6.0% in Pakistan and 3.9% for India. (In China, remittances account for only 1.0% of GDP).

Related posts on this bog:

Migration between Mexico and the USA is the focus of chapter 25 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 states in Mexico are the most competitive in business terms?

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Nov 012010

A recent report from the Mexican Institute for Competitiveness (Instituto Mexicano para la Competitividad, IMCO) provides some interesting insights into which areas of Mexico are “most competitive” in business terms. The latest report relies on 2008 data. The IMCO Competitiveness figures are usually compiled for a major urban area or a state, and international comparisons are also possible at the country level. For example, IMCO found that Mexico ranks 31st in the world for competitiveness, immediately behind Brazil, but ahead of China (rank 38). Mexico’s basic pattern of competitiveness at the state level is shown in the map.

IMCO defines competitiveness as the capacity to attract and retain investment and talent. 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 IMCO index of competitiveness is based on 120 key variables, grouped into 10 major factors affecting competitiveness. All the variables must be ones which are regularly updated and easy to interpret, with transparent methods of calculation. 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.

Using the map above, how would you describe the pattern of competitiveness in Mexico? (north/south? coastal/inland?, proximity to the USA?)
Does the pattern of competitiveness match the pattern of GDP/capita? In what way is the State of Mexico an anomaly in this regard? Are there other anomalies?

A full analysis of why some states are more competitive than others is beyond the scope of this post. However, given its relevance to geographers, we will examine the specific variables that make up the sustainable management of the natural environment in a future post, when we will also take a look at the trends for that indicator.

President Zedillo’s reforms stabilized the Mexican economy

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Oct 202010

President Ernesto Zedillo (in office from 1994 to 2000) took unprecedented steps that set the stage for Mexico’s 21^st century economy. Before discussing Zedillo’s economic reforms, it is useful to review the recent history of Mexico’s economy.

Following the fifty year “Mexican Miracle” of unprecedented economic growth and low inflation, the economy entered some very tough times in the early 1980s. Assuming high oil prices would continue, Mexico borrowed very heavily and could not pay its debts when oil prices plunged in 1981-82 and interest rates rose dramatically. The government suspended debt payments, devalued the peso by 500%, and nationalized the banks. The “lost decade” of the 1980s was an economic disaster, with inflation rates over 100% and economic growth hovering around 1%.

Economic growth improved a bit the early 1990s but President Salinas was forced to introduce strict price controls in an attempt to curb inflation. With a fixed exchange rate, the peso soon became severely overvalued. Then in January 1994, Zapatistas in Chiapas rebelled against the national government. Two month later, PRI Presidential candidate Donaldo Colosio was assassinated in Tijuana. Salinas selected as his replacement, Colosio’s campaign manager and technocrat Ernesto Zedillo, a Yale PhD Economist who had previously been a university professor, Minister of Planning and Budget as well as Minister of Education. Zedillo easily won the relatively fair 1994 election and was called the “accidental president” because he never sought the presidency and never previously held elected office.

Upon assuming office, Zedillo faced an impending severe economic crisis. As was customary, Salinas in his last year had spent very lavishly, severely aggravating the government deficit. The economic crisis of 1995 was characterized by a deep recession, hyperinflation, widespread bankruptcies, serious unemployment and soaring interest rates. He floated the peso which quickly moved from 4.0 to 7.2 to the US dollar.

President Clinton orchestrated a controversial $48 billion bail-out loan which eased the crisis. Conditions of the loan required very stiff and unpopular austerity measures including a 50% income tax hike, reduced public spending, privatizing some state-owned enterprises, and making the Central Bank of Mexico more independent from politics. Zedillo effectively implemented these reforms, knowing they were the best for Mexico’s future though they seriously hurt his public popularity.

The bailout reforms succeeded, the economy stabilized and began to grow, averaging over 5% between 1996 and 2000. Mexico repaid the bailout loan three years before its due date. During the crisis and throughout his term, Zedillo supported and expanded Mexico’s free trade (globalization) agenda.

The Mexican economy is now far more stable than is was in the years prior to the Zedillo reforms. Mexico appears to be completely beyond the self-inflicted economic crises it experienced in the late 20^th century. The 2008-09 recession was serious but was completely beyond the control of Mexico. The Mexican economy appears to be recovering nicely in 2010.

Chapters 14 through 20 of Geo-Mexico: the geography and dynamics of modern Mexico discuss the components and characteristics of Mexico’s economy. Buy your copy today to have a handy reference guide to all major aspects of Mexico’s geography!

Is Mexico a major country?

Excerpts from Geo-Mexico, Updates to Geo-Mexico 2 Responses »

Jun 112010

Compared to its very large and loud northern neighbor the USA, Mexico often seems like a rather minor country. But let’s take a closer look at Mexico’s major characteristics.

Mexico is among the world leaders in land size, population and economic production. These three criteria are a rational way of determining the world’s major countries. Mexico is the world’s 14th largest country in area, just behind the Congo and Saudi Arabia, but ahead of Indonesia and Libya. Mexico’s population in 2009 was about 109 million ranking it 11th in the world. Russia (140 million) and Japan (127 million) were slightly ahead of Mexico. Trailing Mexico were the Philippines (92 million) and Vietnam (87 million).

The Gross Domestic Product (GDP) of Mexico in 2009 was about $1.5 trillion, behind Brazil ($2.0 trillion) and Italy ($1.7 trillion), but ahead of South Korea (S1.4 trillion), Spain ($1.4 trillion) and Canada ($1.3 trillion). These GDP figures are based on “Purchasing Power Parity” which illuminates distortions based on exchange rates. For example, if a hair cut of equal quality costs $20 in the USA, $5 in Mexico and $2 in China, the haircut is counted as a $20 contribution the GDP of each country.

Mexico is one of only six countries that are in the top 15 in all three categories. The other five countries in this select group are China, India, the USA, Brazil and Russia.

That Mexico is in this very select group makes a very strong case that it is indeed a major country on the world stage.

For more information about these and many other aspects of Mexico, consider buying Geo-Mexico: the geography and dynamics of modern Mexico and adding it to your library.

The pros and cons of bottled water

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May 252010

Mexico has overtaken Italy to become the world’s largest consumer of bottled water and now accounts for 13% of all the bottled water sold worldwide.

The latest report of the Beverage Marketing Corporation puts the per person consumption of bottled water in Mexico at 234 liters a year. The equivalent figures for Italy, Spain and the USA are 191 liters, 119 liters and 110 liters respectively.

Aided by massive advertising campaigns and concerns about drinking water quality, the consumption of bottled water in Mexico has risen 8.1 % a year since 2004.

The Environment Secretariat insists that 85% of public water supplies exceed the minimum standards for drinking water, but sales of bottled water now top 26.032 million liters a year, 70% in large bottles (known as garrafones) and 30% in individual plastic bottles.

This has dire consequences for household budgets and for the environment. In 2009, 21.3 million PET (hard plastic) bottles were discarded daily; only 20% of them are recycled.

The two major bottlers of water are Coca-Cola and Pepsi, whose combined concessions for water top 37 million cubic meters a year, equivalent to the combined capacity of Mexico’s four largest man-made reservoirs, or to more than four times the capacity of Lake Chapala, Mexico’s largest natural lake.

Water and water-related issues are discussed in chapters 6 and 7 of Geo-Mexico: the geography and dynamics of modern Mexico.

Mexico’s North-South economic divide weakens slightly in 2009

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Mar 222010

The rapid rates of economic growth in recent decades in the north of Mexico has led to a pronounced economic north-south divide, mapped and analyzed in some detail in chapter 14 of Geo-Mexico: the geography and dynamics of modern Mexico.

In 2009, this divide weakened slightly. However, this was not so much a case of the south catching up but more a case of the north stumbling in its progress, due to its heavy reliance on economic ties to the USA.

Northern border states, where manufacturing is important, saw their GDP fall by more than 10% on average during 2009, according to Banamex’s Regional Economic Activity Indicators (Indicadores Regionales de Actividad Económica), published in mid-March. This decline in GDP was accompanied by a fall in employment and also by a significant fall in remittances sent home from Mexican migrant workers in the USA. It should be remembered, however, that these states all experienced marked rises in their GDP in the years immediately prior to the worldwide economic downturn.

No fewer than 29 of Mexico’s 32 states (counting the Federal District as a state for simplicity) saw their GDP decline in 2009. Only 3 states—Zacatecas, Chiapas and Oaxaca—bucked the trend and saw a rise in their GDP in 2009. In the state of Zacatecas GDP grew 1.6% (helped by a resilient construction sector), in Chiapas 1.1% and in Oaxaca 0.8%. It is noteworthy that none of these three states is particularly well integrated into the global economy. As a result, what was happening outside Mexico’s boundaries had little effect on their economic progress.

The list below gives the % change in GDP during 2009 for a sample of states, alongside the national average for comparison:

Zacatecas           + 1/6%
Chiapas         + 1.1%
Oaxaca      + 0.8%

State of México       – 5.6%
Jalisco                     – 6.0%
Federal District    – 6.4%
Querétaro           – 6.3%

National average – 6.7%

Tamaulipas        – 7.8%
Nuevo León         – 9.3%
Baja California      -10.5%
Chihuahua          -13.6%
Coahuila                -14.4%

Mexico’s most valuable brands

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Mar 092010

Consultancy firm Brand Finance recently published its fifth annual survey (2010) of the world’s 500 most valuable brands. The Mexican firms in the list are:

Corona (# 184) – principal product – beer
Banorte (#189) – finance and banking
Claro (#262) – cell phone service
Telcel (#290) – cell phone service
Bimbo (#369) – bread and pastry products
Telmex (#420) – fixed line telephone and internet service
Televisa (#490) – film and television

One noteworthy fact is that three of these—Claro, Telcel and Telmex— are owned or controlled by a single individual: Carlos Slim, Mexico’s richest businessman.

The top ten in the world (in order) are Wal-Mart, Google, Coca Cola, IBM, Microsoft, GE, Vodafone, HSBC, HP and Toyota.

Note that these firms are not necessarily the largest firms in Mexico in terms of sales. Table 16.2 of chapter 19 of Geo-Mexico: the geography and dynamics of modern Mexico lists the ten largest Mexican private enterprises in 2008. Important aspects of several of these major firms are discussed in the chapters about manufacturing, construction and services, transportation, communications, etc.

The importance of tourism to Mexico’s economy

Mexico's geography in the Press 2 Responses »

Mar 042010

Mexico is one of the 30 member states of the OECD (Organisation for Economic and Commercial Development).

Of all these countries, Mexico, Spain and Portugal are the three whose economies gain most from tourism. In Spain, 11% of its GDP comes from tourism, in Portugal 10.5% and in Mexico 8.2%.

Employment in Mexico is also greatly dependent on tourism. Of the 30 OECD countries, Mexico has the eighth highest figure for the proportion of the workforce in tourism (6.7%), after Spain (13%), Italy (9.7%), New Zealand (9.6%), Hungary (9.2%), Portugal (8.0%), Greece (7.3%) and Japan (6.9%).

Many aspects of tourism are analyzed in detail in chapter 19 of Geo-Mexico: the geography and dynamics of modern Mexico, including:

The problems of defining “a tourist”
How different kinds of tourism compare in terms of their contribution to Mexico
Tourism as a development strategy
Spontaneous and purpose-built resorts
The concepts of sustainability and ecotourism
“Residential tourism”, an unusual category of tourism that is very important in certain specific regions in Mexico.

Mexico has the world’s 11th largest economy

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Feb 242010

These are the world’s 14 largest economies (GDP, purchasing power parity, 2008, in US dollars):

USA 14,960 billion
China 7,800 billion
Japan 4,487 billion
India 3,319 billion
Germany 2,863 billion
UK 2,279 billion
Russia 2,225 billion
France 2,097 billion
Brazil 2,030 billion
Italy 1,801 billion
Mexico 1,578 billion
Spain 1,378 billion
Canada 1,336 billion
South Korea 1,312 billion

As you can see, Mexico has the world’s 11th largest economy, slightly larger than the economies of either Canada or Spain.

[Figures taken from Table 14.1 of Geo-Mexico: the geography and dynamics of modern Mexico.]

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