The Mexican Economy: S se puede! Jorge G. Gonzalez Trinity University Recent Economic and Political Events Economic growth in the U.S. Economic growth in the U.S. Government gridlock Government gridlock Presidential campaigns Presidential campaigns Mexico U.S. relationship Mexico U.S. relationship Immigration Debate Pros: Pros: Shortage of labor in U.S. & surplus in Mexico Shortage of labor in U.S. & surplus in Mexico U.S. benefits from their labor U.S. benefits from their labor Mexico benefits from remittances Mexico benefits from remittances Cons: Cons: Effects on low-skilled natives Effects on low-skilled natives Effects on local budgets Effects on local budgets Vital Signs Is the link alive? Is the link alive? Industrial Production Index (January 2000 = 100) Source: Banco de Mxico and FED Vital Signs Is the link alive? Is the link alive? GDP growth GDP growth Real GDP % yearly change Source: INEGI Vital Signs Is the link alive? Is the link alive? GDP growth GDP growth Foreign direct investment Foreign direct investment Foreign Direct Investment Billions of Dollars Source: Banco de Mxico Debt Market Foreign Investment Billions of Dollars Source: Banco de Mxico Stock Market Foreign Investment Billions of Dollars Source: Banco de Mxico Vital Signs Is the link alive? Is the link alive? GDP growth GDP growth Foreign direct investment Foreign direct investment Super Peso and foreign sector Super Peso and foreign sector Exchange Rate Pesos per U.S. Dollar Source: Banco de Mxico Exchange Rate Pesos per U.S. Dollar Source: Banco de Mxico Inflation Differential vs. Exchange Rate Inflation Exchange Rate Source: Banco de Mxico Merchandise Trade Billions of Dollars Source: Banco de MxicoImports Exports Family Remittances Billions of Dollars Source: Banco de Mxico Vital Signs Is the link alive? Is the link alive? GDP growth GDP growth Foreign direct investment Foreign direct investment Super Peso and foreign sector Super Peso and foreign sector Federal government balance Federal government balance Government Balance Balance / GDP Source: SHCP Vital Signs Is the link alive? Is the link alive? GDP growth GDP growth Foreign direct investment Foreign direct investment Super Peso and foreign sector Super Peso and foreign sector Federal government balance Federal government balance War on inflation War on inflation Inflation Source: Banco de Mxico Vital Signs Is the link alive? Is the link alive? GDP growth GDP growth Foreign direct Investment Foreign direct Investment Super Peso and foreign sector Super Peso and foreign sector Federal government balance Federal government balance War on Inflation War on Inflation Political Environment Felipe Caldern Roberto Madrazo Andrs Lpez Obrador Political Environment Source: El Norte, April 25, 2006 President Foxs Sexenio Separation of Powers Separation of Powers Economic Stability Economic Stability Poverty Reduction Poverty Reduction Freedom of the Press Freedom of the Press No Major Economic Reforms No Major Economic Reforms Fiscal System, Energy Sector, and Labor Laws Fiscal System, Energy Sector, and Labor Laws Domestic Antitrust and Competition Domestic Antitrust and Competition War on Poverty War on Poverty Rule of Law Rule of Law North American Union? North American Union? Economic Reform: S se puede? The Mexican Economy: S se puede!