Mexico Institute in the News: Mexico's Resilient Industrial Machine

Mar 25, 2012

March 2012, Forward

 
Seven years ago, EE Technologies (EET) opened a new plant in Empalme, Mexico, on the balmy eastern shore of the Gulf of California...
 
...This was in 2005, a year before President Felipe Calderón declared war on Mexico’s infamous drug cartels. By 2007, as the small American company expanded in Empalme, criminal organizations like Los Zetas, the Juarez Cartel and the Sinaloa gang were unleashing a wave of unspeakable violence in Northern Mexico...
 
...Mexico’s 2010 GDP of slightly more than $1 trillion is about two-thirds the size of Canada’s and one-fourteenth as big as that of the United States. Yet Mexico is second in economic power only to Brazil in Latin America. And that power derives largely from industry, which produces more than a quarter of the nation’s GDP. The growth in Brazil and other Latin American economic machines like Peru and Chile relies more heavily on sales of raw material like coal, copper, bauxite and oil, and thus the potentially volatile commodities markets.
 
Why is all of this important to the rest of the continent? Jobs, says Christopher Wilson, an economist at the Mexico Institute of the Woodrow Wilson International Center for Scholars in Washington, D.C. Six million American workers, one in every 24, depend on trade with Mexico to stay employed. There are 22 American states whose individual Mexico-related jobs exceed 100,000, with California’s 692,000 coming in first and Texas’ 463,000 in second. A “back-of-the-envelope” calculation shows how Mexican GDP growth creates new jobs, Wilson adds: Mexico’s 5.5% growth in GDP in 2010 prompted a $34 billion increase in U.S. exports to Mexico; every $1 billion increase in exports supports more than 6,000 new U.S. jobs. Mexico’s 2011 GDP is expected to grow by 3.8%.
 
If these assumptions hold true, Wilson says, 

“144,000 new U.S. jobs could be created due to Mexico’s economic growth in 2011.” 

A modest figure, considering America’s jobs shortage right now, Wilson concedes. 

“But that’s with everything else being equal.  If we don’t do anything else to stimulate trade, we can at least count on the growth rate to create jobs.”...

 

Read full article here.

Experts & Staff