Pestle of Mexico

Topics: Mexico, International trade, World Trade Organization Pages: 13 (4382 words) Published: May 18, 2011
PESTEL analysis Mexico:
While Mexico has been a formal democracy since Independence, in reality the nation has been plagued by essentially a series of caudillos, representatives of local and regional power arrangements that have been successful at reaching national levels.

Politics are still corrupt and scandal-ridden, with parties often focused more on individuals than on programmes for action. And while progress has been made, the Mexican state is still far from comfortable with the concepts of accountability and transparency.

Previously the relationship with US was complicated but now the situation has significantly changed, especially after the end of cold war. U.S. successes, especially on the economic front, but also on the political front, obliged Mexicans to examine how their own nationalism was possibly preventing them from seizing opportunities for advancements.

Five Key Political Risks in 2010:

Drug Violence & Terrorism
Congressional Stalemate
Calderon Losing Maneuverability and Political Capital
Guerrilla Activity & Sabotage

On the economic front over the 1970s and eighties, pushed the country to consider opening up to its northern neighbor as never before. As Mexico’s attempts to diversify its trade and investment portfolio failed in the 1980s, the fear of U.S. protectionist tendencies increased. At the same time the break-up of so much of the world into economic blocs underscored Mexico’s dangerous isolation. It was then that the new ideas finally began to prevail with the opening up of much of the economy to foreign influence. This was in great part aided by the negotiations towards, and the signing of, the North American Free Trade Accords and their enforcement in January 1994.

The country has moved, in the last two decades, to open up and then consolidate a democracy and to build a strong and relatively modern economy; however, two threats seem looming where the sustaining of such progress is concerned. They are the deeply entrenched security problems of the country which have so far withstood all attempts at addressing them successfully, and the dependence on the United States in the economic sphere that is currently threatening Mexican economic growth. Continued advancements will depend upon how this North American partner deals with each of these issues. Mexico, not only a full member of the North American Free Trade Area for nearly a decade and a half, but also now a player in the North American Security and Prosperity Partnership for three years, is nonetheless more than able to provide surprises for those who feel it already fits comfortably into these new connections with its more prosperous, stable, and structured neighbors to the north.

The Mexican economy has grown in recent decades to become the world’s 12th to 14th largest, with a GDP of some $840,012 million in 2006. Since the 1994 crises were successfully resolved and NAFTA began to apply in that same year, the Mexican peso has never been more stable during any other time in recent history.

With per capita income standing at $8,066 per annum, Mexico enjoys the 55th highest in the World and is fully a nation of middle-income status. No longer chronically poor, the Percentage of its population in extreme poverty has fallen nationally from 24.2% to 17.6%. Indeed the progress in rural areas has been even more impressive with those in this condition falling from 42% to 27.9% in the period between 2000 and 2004.

This has largely been the result of stability sustained since early 1994 under the Zedillo and Fox governments. From 1995 to 2002 the average growth of the economy was some 5.1%. This has been particularly visible in the macroeconomic and fiscal spheres although it is also more generally visible with inflation down to record lows and growing middle class prosperity. It is important to note that the previous short downturn in the U.S. economy in the early 2000s,...
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