International Economics / Mba / Country Report / Mexico

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MEXICO
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Country Report
International Economics and Financial Markets

18-03-2013

Table of Contents
Country Overview4
The Balance of Payments7
Trade7
Trade Policy7
Trade Agreements9
Major Trade Partners11
Trade Balance13
Main Trading Goods13
Foreign Direct Investment (FDI)13
Sources of FDI14
Main Sectors Attracting FDI17
FDI Outflows18
Factor Mobility: Migration19
Exchange Rate Policy20
Exchange Rate Patterns20
Evolution of Exchange Rate Regimes21
Economic Challenges: The 1982 Debt Crisis23
Conclusion25
Bibliography27

List of Figures

Figure 1: Current Account Balance (% of GDP)
Figure 2: Balance of Payments, 2008-2017
Figure 3: Mexico’s Free Trade Agreements
Figure 4: Mexico’s Exports by FTA Partner: 1996-2011
Figure 5: Mexico’s Imports by FTA Partner: 1996 – 2011
Figure 6: Composition of Merchandise Trade: 2011
Figure 7: Mexico’s Merchandise Trade with All Countries
Figure 8: Foreign Direct Investment Inflows (% of GDP)
Figure 9: Foreign Direct Investment 2000-2011
Figure 10: Foreign Direct Investment in Mexico by sector.
Figure 11: Foreign Direct Investment, net outflows (% of GDP) Figure 12: Nominal and Real Exchange Rates 2005-2012
Figure 13: Exchange Rate Regimes in Mexico since 1954

Country Overview
Mexico's trade policy following World War II through l986, was essentially one of import substitution and closely regulated commercial ties with other countries, including the U.S, Canada and Europe (Kuri, 2012). By implementing various barriers to trade such as tariffs, import licensing requirements, domestic-content provisions, and restrictive foreign investment policies, Mexico was one of the world's most closed economies. Since joining the General Agreement on Tariffs and Trade (GATT) in l986, Mexico has pursued a policy of economic liberalization, significantly reducing trade restrictions, promoting foreign investment, cutting domestic subsidies, and expanding the role of the private sector (Kuri, 2012). NAFTA gives formal recognition and permanence to the policy changes that are taking place and which are critical to Mexico attracting the foreign investment and resources needed for its future economic growth. Nowadays, Mexico ranks second in the world in number of free trade agreements and offers excellent conditions both for business and investment. These agreements grant Mexican companies access to over one billion customers in 43 countries (Kuri, 2012).

Country Facts:
· Full name: United Mexican States· Population: 114.8 million (UN, 2011) · Capital: Mexico City· Area: 1.96 million sq km (758,449 sq miles) · Major language: Spanish· Major religion: Christianity · Monetary unit: 1 peso = 100 centavos· GNI per capita: US $9,240 (World Bank, 2011) · Life expectancy: 75 years (men), 80 years (women) (UN)

(Source: BBC Country Profile, 2012)

Mexico is a federal constitutional republic in North America, bordered by the United States on the north and Belize and Guatemala on the southeast. The south and west is surrounded by the Pacific Ocean and the Gulf of Mexico on the east. Having nearly 115 million inhabitants, Mexico is the largest Spanish-speaking country in the world. The population is geographically concentrated and one quarter of the nation resides in one of three major cities: Mexico City (about 20 mln), Guadalajara (4 mln) and Monterrey (4 mln). The median age of the population is relatively young, constituting 26 years of age. People are connected with 94.6 mln mobile phone numbers and 11.5 mln cable and satellite TV homes. Internet users account for 34.9 mln (Kuri, 2012). The Mexican GDP had been growing steadily and increased by 6.2% in 2009 as world demand for exports dropped, asset prices fell down, and remittances and investment declined. GDP posted positive growth of 5.4% in 2010 and 3.8% in 2011 rising to $1.683 trillion USD. In terms...
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