Post on 19-Jan-2016
Not really, but you HAVE to pay attention.
A snapshot via Economic Indicators
• Mexico= Solid middle class nation
• Conclusions from chart A– CPA has gone up– Debt has risen– Inflation has been controlled
Continue…
• Chart B– Poverty has decreased in general – Gini coefficient=Mexico is less unequal but
it needs to improve.
Continue II…
• Chart C– Exchange compared to the world– Third line=accumulation of foreign funds
into the country net of outflow.– Deposit rate= a fee, paid on borrowed
capital
Organization of the Economy and Government Policy
• Member of the OECD• Predicts Mexican population=105
million 2005• 76.5% of population was urban in
2005, in 2000, 74.6% population was urban
No Taxes = Po’ Mexicans
• Less than 20% of the labor force is registered with tax authorities.
–OECD predicts over 43% of jobs
Employment
• Big Companies<Small Companies
• But more people work in big companies.
• Shift from agricultural work to manufacturing
Dirty Rich Man!
• Carlos Slim, example of economic extremes.
Financial Organization and Monetary and Foreign Exchange
Policy• Mexican financial system reflects
economic booms and busts from the past
• Financial liberalization was gained by diminishing direct role of government institutions, but these institutions gained a new role.
Center of Mexican Moolah
• Bank of Mexico• A.K.A. Banco de Mexico or Banxico• Independent since 1993• Manages monetary, foreign exchange policy• Wants= minimize inflation, maximize macroeconomic
stability• -Lowering inflation is the skinny jeans of
economists• Banxico and Financial Ministry work to set value of peso• Supply and demand for peso affects its value• -Banxico not so independent from the government
Look at all the failure!
• CNBV, the Insurance Commission, the Pension Funds commission
• still not stable, but working on it since the 1994/1995 crisis
• dependent on the Financial Ministry
• Mexican banks nationalized in 1982, privatized in 1991
Continuation…
• Mexican Stock Exchange=Bolsa. • Medium business=hard to find
financing• Microenterprises= microcredit
institutions (small loans) are different from banks.
• Government tries to be as transparent as possible to gain trust=more developed market in future.
Mexico Loves Foreigners
• FDI (foreign direct investing)= foreign nations bring technology, money, jobs, econ activity to Mexico.
• Brings $18 billion to Mexico, 16,000 foreign firms, and $210 billion in stocks.
People use MoneyGram, in case you don’t know.
• Remittances= money sent to Mexico from a foreign land to citizens.
• IADB (Inter-American Development Bank) estimated in 2006, remittance to Mexico= $23 billion.
• CONTROVERSY!
Trading Partners and Trade Policies
• NAFTA= developed b/c of close relations Mexico & USA had for years.
• Boomed FDI
• Secret economy abolished, everything became transparent and known.
Continued…
• ALADI / LAIA (Latin American Integration Association) more trade in Central America
• EU= negotiated free trade with Mexico.– Mexico is in two of the biggest markets in
the world.– China becomes a threat after joining the
WTO
Fiscal Policy
• Fiscal Policy= government spending/revenues, needs reforms
• Should be counter cyclical (economy) economists say – Spend money/cut taxes in bad times– decrease gov. spending when economy is
good b/c of the private sector.
Continued…
• Income tax and value added sales tax and Pemex (Petroleos Mexicanos) revenues=gov. revenue– Mexico is subject to Pemex’s ups and
downs since most revenue comes from it, though not a lot.
– informal economy=weak tax system
Continued II…
• Mexico’s president, Felipe Calderon, wants to but cannot privatize oil b/c it is protected in the Mexican constitution.
• Lack of oil=lack of money
Mexico’s New Econ Policies
• Budgetary stabilized plan= revenues from high oil prices are saved for future counter spending cycles.– Used to stimulate economy in hard times– It is working for Mexico and economy is
getting better
Continued…
• Oportunidades or Progresa– Money is spent on needy if they follow
rules ex. Immunizing children, taking them to school
Just Small Details
• Immigration in the North
• NAFTA
• Pollution
YOU ARE FREE FROM THE
ECONOMICS MONSTER!
For now…