Mexico Economy
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Similar to the United States, Mexico is a free market economy, where prices are not regulated by the government and are determined by supply and demand. In the past, Mexico’s economy has been primarily influenced by agriculture. This has changed recently, as Mexico has become dominantly a service sector economy, with industry as a secondary sector. In 2005, the service sector accounts for 70% of the GDP and half the jobs, the industry sector contributes 26% of the GDP and about 25% of the labor force, and the once dominant agricultural sector only contributes to 4% of the GDP and one fifth the labor force (Economist).
Mexico relies heavily on mining and is the world’s largest producer of silver. The country also has large supplies of copper, iron, ore, sulfur, lead and zinc. In addition to mining, oil has also had a profound impact on the Mexican Economy. Since the 1920’s, Mexico has been one of the top five oil producing countries in the world, integrating Mexico into the “World Economy” (EIA).
In 1994 Mexico signed the North American Free Trade Agreement (NAFTA) which eliminated duties and tariffs on all goods shipped between Mexico, Canada and the United States. Since NAFTA was signed, Mexico’s trade with the U.S. and Canada has tripled. With 85% of Mexico’s exports going to the U.S., the Mexican economy has become very reliant on the United State’s economy. In a push towards a more globalized economy, Mexico has signed 12 trade agreements with 43 other nations, putting 90% of its trade under free trade regulations. These agreements has made Mexico’s trade policy one of the most open in the world, in an effort to encourage trade with other countries, and relieve the over dependence on the U.S. economy (Weintraub).
Mexico has been established as a middle-income country with the highest income per capita