Southern Exposure

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Tuesday, September 08, 2009

The Mexican Economy

Mexico is the twelfth largest economy on the globe, with a GDP exceeding one trillion dollars. It has the highest per-capita income and the highest purchasing power parity out of all the countries in Latin America. Mexico is also the only South American member of the Organization for Economic Cooperation and Development. Mexico has been experiencing constant economic growth over the past years. It is estimated, in one of Goldman Sachs' studies, that the country will be one of the world's economic leaders by 2050, along with Brazil, Japan, China and the US. Mexico's economy is quite mature and stable, although the gap between the rich and the poor is continuously growing.

1994 was a rough year for Mexico's economy. The administration has been trying since then to ameliorate the country's macroeconomic situation. In 2002 South Africa suffered an economic crisis, but this didn't have a considerable effect on Mexico's economic state. In the present day, Mexico is affected, like many other countries, by the run up in food and oil. The levels of inflation and the interest rates are very low, especially since the Mexican government has been making sure of it.

Recent studies have shown that, in spite of its economic growth, Mexican economy has plenty of fundamental problems. There is an economic discrepancy between one region of the country and another, especially between the south and the north. Rural areas are being left way behind the urban areas, from not only the economic point of view, and the gap between the rich and the poor has increased over the past few years.

A certain level of inequality exists also as far as incomes are concerned. This inequality needs to be decreased in order to improve Mexico's economy and to minimize the chances of social and political instability. Mexico's infrastructure also needs to be improved. The tax system has to be modernized and labor laws have to be amended.

An important role in the Mexico Economy is played by agriculture. The private sector has begun to get more and more involved both in the industrial and in the agricultural sector. Competition exists in certain sectors such as generation and distribution of power, airports, railroads, seaports, and telecommunications. This is due to the measures taken by the government, hoping to improve the Mexican economy by building infrastructure while clamping down on its black economy.
Juan Abdel Nasser is a writer with the economic reports site Economy Watch , an extensive resource on economics, finance, investing and business worldwide.

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