Mexican economy bouces back


Here is a link to my latest article on AQBlog, titled “Mexican economy bounces back” and published on March 1st, 2011. Please feel free to visit and comment.

Here is a copy of it:


Amidst growing national concern and international coverage of the violence in Mexico, a bit of news on the macroeconomic scale talks wonders of our country’s capabilities to overcome even the biggest obstacles.

Last week, Bloomberg ran a story on Mexico being the second economy in Latin America to bounce back from the 2009 recession with the highest pace of growth in the last decade. Our economy expanded by 5.5 percent in 2010.

Granted, it is not China’s double digit performance. But for a country that is largely dependent on an economic relationship with the our neighbor to the north—80.5 percent of our trade is with the United States—and is still facing important trade challenges, the GDP expansion at a 0.2 percent rate larger than expected for the fourth quarter of 2010 is excellent news. In a way, it is also good news for the United States. It shows that consumer spending is recovering in spite of the housing situation and the still present issue of unemployment (9 percent in January).

There are obvious advantages of being one of the United States’ most important trading partners. But it doesn’t take a genius to also see that dependence of over 80 percent of our trade with this partner also puts Mexico at a vulnerable state. This is even more worrying when we’re competing for this trade position with economies such as China.  Since the early 1990s, Mexico has been constantly promoting an open policy on trade. We currently hold 11 trade agreements with 41 countries. But we still need to act on them and actually reap the benefits of spreading our risk by diversifying commercial relations.

Mexico also needs to urgently focus on investing in and then maximizing the returns on innovation. We need to understand that wealth today is based on knowledge and ownership of that knowledge (patents). If we are able to tap into this, then our future will look even more promising than what we were able to do in 2010. I may be overoptimistic but continuing on this track would provide the first steps toward bridging the gap between our poorest and richest. This could go a long way toward reducing the crime that is partly a result of this present divide.

*Arjan Shahani is a contributing blogger to AQ Online. He lives in Monterrey, Mexico, and is an MBA graduate from Thunderbird University and Tecnológico de Monterrey and a member of the International Advisory Board of Global Majority—an international non-profit organization dedicated to the promotion of non-violent conflict resolution.

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