Mexican Economy: Growth Without Reforms

Despite the bad news about violence and a perceived failure to tackle structural reforms, the Mexican economy is expanding healthily, and the country has made strides in cultivating foreign investment and in boosting average wages and purchasing power, speakers said at the panel discussion, "The Mexican Economy: Growth Without Reforms." Panelists argued that Mexico was well-positioned to continue its growth and had significant comparative advantages over the BRICs, although the lack of reforms also meant that growth would underperform its potential.

Speakers appeared bullish on Mexican short-term economic growth prospects, citing strong domestic demand for consumer goods, a youthful but stable demographic profile, and the success of Mexican firms in boosting market share internationally. "Mexico is not a BRIC; it's better than a BRIC," said Roberto Newell, a Woodrow Wilson Center Mexico Institute-Mexican Council on Foreign Relations public policy scholar in-residence. Newell qualified his statement by noting that Mexico is both similar and different from the bigger and faster-growing economies of Brazil, Russia, India, and China. Though Mexico may not be as robust as these countries, it has other advantages, such as a more urban population, stronger consumer demand, and a unique geographic proximity to U.S. markets. It also has a higher income per capita—and in the case of China and India, much higher income—than the BRICs.

Luis de la Calle, managing partner at de la Calle, Madrazo, Mancera and former Undersecretary of International Trade, was also optimistic on Mexican economic growth and spoke to the deep economic interdependence between the United States and Mexico. "Mexican trade with the United States is on the order of US$1 billion per day," he said. De la Calle added that transnational firms are taking a second look at Mexico as a manufacturing platform, taking advantage of Mexico's unique proximity to U.S. markets and to diversify risk away from China. Mexico will be an important partner if the United States intends to meet President Barack Obama's National Export Initiative goal of doubling U.S. exports, he added.

However, Sidney Weintraub, the William E. Simon Chair in Political Economy at the Center for Strategic and International Studies, cautioned that oil sales still account for a disproportionate share of the federal budget and that the panorama for expanded exploration and production in the near term appears "uncertain."

Drafted by Robert Donnelly, Program Associate, Mexico Institute
Andrew Selee, Director, Mexico Institute. Ph: (202) 691-4088