Mexico: Country ReportEssay Preview: Mexico: Country ReportReport this essayMexico has unequivocally become integral to the United States (US) economy.It ranks as one of the USs most important trading partners. Through foreign direct investment from the north, the development of a skilled workforce, and a free market economy, Mexico has developed into an economic power. Despite a shaky history riddled with debt, the country as a whole has recovered. To compare elements of cultures across nations, we try to formulate similarities in beliefs, practices, and situations. Mexico, while distinctly different from the US, holds many cultural similarities that translate well into other countries.
Mexico sits south of the US on 1,972,550 sq km of total area. As of 2006, 107.5 million people inhabited the 1,923,039 sq km of land area in the country. (CIA Factbook, 2006) Due to the high birthrate in the country, the population has grown an average of 2% annually since 1975. This continues despite the large amount of Mexican expatriates that migrate illegally to the US. It had been estimated in the nineties that over 4 million Mexicans resided abroad, the large majority of them living just north of the border. Add on the latest estimate that there were 94 million US-Mexico border crossings last year, and its quite clear that it has been difficult to set a hard number on that particular population. (Watts, 2005)
The population is distributed fairly evenly among both sexes, with females holding a slight majority at around 51%. The majority of the population is concentrated between the ages of 16 and 64, holding 64% of the total. The 0-14 age demographic is surprisingly strong with 30% of the total population, leaving 6% for the 65+ population. The vast majority of the inhabitants of the country reside in urban areas, dispersed at 75% of the total population, which can be quantified even further when evaluating the following statistics. While the country is divided up into 31 individual states and a Federal District, 22% of the countrys population resides in the State of Mexico and the bordering Federal District. With an overall population density of only 56 persons per square km, that rate jumps to 5,500 persons per square km in Mexico City, the third most populous city in the world. (CIA Factbook, 2006)
Mexicos free market economy has grown in leaps and bounds over the last few decades. As of 2005, Mexicos Gross Domestic Product (GDP) (PPP) was $1.068 trillion $US. This combined with a GDP per capita (PPP) of $10,100, close to one quarter that of the US, helps to bolster Mexico as the third largest economy in NAFTA. (CIA Factbook, 2006) The economy is fed primarily by the service, industry, and agriculture sectors which are controlled largely by the private sector. When evaluated at the micro level, we find that income distribution among Mexicans is fairly uneven. With a GINI Index of 54.6, Mexico ranks towards the failing end of the index. (Human Development Report, 2003) The top 10% of population accounted for nearly 40% of the overall income, with the middle sector close to 40% as well. This leaves 60% of the population living on only 20% of the total income. Of this lower-class, individuals employed in the industry sector have it the best, with assured wages and membership in Mexicos public health care system. However, there is still close to 10% of the population that is living below $1 a day, and over one quarter of the population living below $2 a day. (Human Development Report, 2005) Those living in rural or less developed areas often place among the 3.6% of the population that is unemployed, or the 25% that is considered underemployed. (Merrill & Miro, 1997)
As one changes focus from the less developed rural areas to the more developed infrastructures of the larger cities, the commerce and industry sector begins to take root. In the early 1950s the manufacturing sector overtook agriculture as the largest contributor to the nations GDP. In recent years, much of this industry was concentrated in “maquiladora zones” located near the US border. These maquiladora plants take advantage of foreign direct investment from US companies, and would often assemble products manufactured in the US for later sale in the US. Lately, the manufacturing sector has been led by the food processing, beverages and tobacco products sector while followed closely by metal product, machinery, and transportation equipment sector.
Mexico has long been a key asset to US MNCs. With an immediate proximity to the US via rail, air, and shipping routes, transportation of products between the two countries is mostly hassle-free. Combined with the elimination of tariffs and trade taxes from the integration of the North American Free Trade Agreement (NAFTA), they no longer pose an economic price on outsourcing assembly or manufacturing to Mexico. Consequently, trade with the US and Canada has tripled since NAFTAs implementation in 1994. MNCs in multiple industries have latched on to this.
Among the industries at the forefront is the automotive sector. With a skilled workforce and lower wages, producing automotive part and assembling quality cars can be done at a significantly lower cost than in the US while still maintaining the quality that consumers demand. Ranking among the top sixty companies operating in all of Latin America (in terms of net sales in $US billions) as of December 31, 2004 are General Motors ($10.5 billion), Daimler Chrysler ($9.2 billion), Delphi Corporation ($5.1 billion), and Ford Motor Company ($3.9 billion). (Brown, 2005) Of those companies, all except for General Motors (GM) have seen net growth of 9% or more over the last year (with GM at a loss of .6%). In addition to these American based companies, Mexico is home to factories for Nissan and Volkswagen among others. Often, cars bound for showrooms in the US are assembled in Mexico plants, such as Nissans plant in Aguascalientes that, combined with two other plants, puts out 300,000 cars annually. (Jackson, 2005)
Multiple US MNCs in the consumer goods and retail industry have enjoyed success in the Mexican market. In particular, Wal-Mart de Mexico ranks as having the 8th largest net sales of all Latin American companies, with $14 US billions in sales. Proctor and Gamble of Mexico also ranks in the top 130 companies in Latin America with $2 US billions in sales. Other manufacturers/distributors such as FEMSA (makers of Dos Equis beer, Cerveza Sol, and Tecate), Nestle, Coca-Cola FEMSA, and PepsiCo Mexicana have sales between $2-4 US billions each. (Brown, 2005) In addition, the market for technological goods in Mexico is rapidly increasing. Hewlett-Packard Mexico sported over $5 US billions in sales in 2004, a 26.9% increase from 2003. Both General Electric Mexico and IBM posted sales of over $4 US billions, though
The Mexican government was largely responsible for the rise of the new high-tech sector, but the government still has one main goal regarding the market for information technology products. Its government, which was established in 1934 to support public education, has maintained a strong economic body for the new sector, which is based on research, innovation, infrastructure development, and public technology. This body is charged with supporting consumers to improve efficiency, minimize suffering, and achieve public goals of the state. It is also known as the Ministry of Information, Information Technology and Information Sciences, or MIME. It has become one of the most efficient governmental agencies. The government, through its work on e-commerce, is responsible for many services and is able to create, manage, and deliver these services at the cost of high costs. (Brown, 2005) MIME is able to provide services under a highly diverse business environment. It includes:
Information technology information services such as data management, e-health information security, data and data analytics, information security, mobile and Internet security, Internet security, social media security, and compliance management, business and regulatory compliance, business intelligence and operational management, and legal and financial compliance. (Brown, 2005) MIME works closely with the various government agencies and ministries, and to various governmental departments such as the Ministry of Information, Information Technology, Information Security and Information Innovation. MIME is focused on establishing, managing, and operating a database such as the Mexican Information Exchange Group (MIME) within the United States, with its services being funded pursuant to two general contracts (the contract number 610067 from the Department of Labor or the United States Government to manage MIME in the United States) and for other international organization. (Brown, 2005) MIME’s management of information and technology is made available to all stakeholders. The government is able to obtain the services, information, and management necessary to establish, maintain, and administer and administer a network of MIME’s in an effort to facilitate a coordinated system of effective international exchange or exchange. (Brown, 2005) However, the government’s IT program is generally designed to carry out its functions as a technical network and a project management organization, not an engineering network. (Brown, 2005) Additionally, the government maintains a high-level system for managing its network and ensuring that all MIME nodes are properly managed. (Brown, 2005) The government is also able to obtain services from non-governmental organizations. (Brown, 2005) MIME works closely with the departments and agencies of the government under governmental agency functions. This means any service or functions that the government does not provide to the government or the relevant agencies, or that the government does provide to non-governmental organizations, need to be approved. MIME is responsible for providing essential services such as:
Information services and information security systems
Communications services
Telecommunications
Policing services
Entertainment and telecommunications
Health services and health information security systems
Business and regulatory compliance services
Telecommunications
Operations and planning