The Borderless Economy and Mexico
In today's borderless economy, Mexico faces enormous challenges. A decade after the enactment of the North American Free Trade Agreement (NAFTA), Mexico has benefited from free trade but problems remain if it is to compete effectively with the rest of the world. On the way to establishing itself as a middle-income country, it currently has the highest per capita income in Latin America, and a literacy rate of over 90%. Access to clean water is available to over 85% of the population and life expectancy at birth has risen to almost 74 years. With abundant natural resources, including oil, Mexico's export position is favorable. Manufacturing jobs are growing and foreign investment has increased. All of this bodes well for the future of Mexico. Mexico has come a long way from the catastrophic financial crisis of 1994-1995, when millions of Mexicans were thrust into poverty and life savings were wiped out. Two million jobs were eliminated. The early days of NAFTA had failed to benefit Mexico as expected, and most of the manufacturing exports still came from the maquiladora sector along the northern border with the U.S. A corrupt and unstable political environment limited foreign investment. In January 1995, President Clin
As mentioned above, Mexico has the highest per capita income in Latin America. How is this consistent with the extreme poverty conditions we see there? The answer is that while the average standard of living is increasing in Mexico, the gap between the upper classes and lower classes is increasing. The richest ten percent of the population earns almost forty percent of total income, while the poorest ten percent earns only about one percent of total income. This inequitable situation is compounded by ethnic and regional differences and by differences in access to basic services. Mexico's goal of reducing poverty and hunger by half, under five year old infant mortality by two-thirds, and maternal mortality by three-quarters by the year 2015 appears to be in jeopardy. ton was motivated to provide a $47 billion bailout of the Mexican economy. Much of the benefit of NAFTA has been reaped by larger companies, with access to cheaper foreign financing. Smaller companies in Mexico have trouble upgrading technology because of higher borrowing costs. ''You're clearly concentrating power in the top producers that have financial power,'' says Raul Hinojosa, a professor of public policy at the University of California at Los Angeles (Business Week Online). A study he led for NAFTA discovered that the top fifty companies accounted for one-half of exports and most of the export growth. Foreign investment has been extremely important to the progress Mexico has mad
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Approximate Word count = 992
Approximate Pages = 4 (250 words per page double spaced)
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