Mexico Economic Crisis

Words: 572

Pages: 3

Open Document

This reading examines the various reasons why the economic reforms implemented after the economic crisis of 1982-1985, and which resulted in the establishment of NAFTA in 1994, in Mexico did not result in higher economic growth (Journal of Economic Literature, 2010). Theoretically privatization of government firms, and the opening of the economy to trade and foreign investment, should have produced a growth in the Mexican economy. However, this was not experienced as the growth remained stagnant and even China, which opened itself right after Mexico without any reforms, developed a much rapid growth (Journal of Economic Literature, 2010). In fact, while Mexico’s trade and inward FDI shares of its GDP were like those of China, real GDP per working-age person increased 510% in China compared to only 10% in Mexico (Journal of Economic Literature, 2010). …show more content…
Inefficient financial systems, insufficient rule of law, and a rigid labor market all contributed to the disappointing growth (Journal of Economic Literature, 2010). For example, inefficient financial institutions can lead to the misallocation of labor and capital, which in turn lead to low TFP (Journal of Economic Literature, 2010). Furthermore, inefficient bankruptcy can also cause a low TFP by preventing the entry of efficient firms and keeping inefficient ones alive (Journal of Economic Literature, 2010). It is interesting to note that although China also has these same issues, its growth it is not affected by them as China is not as economically developed as Mexico and as China develops these factors will start affecting it (Journal of Economic Literature, 2010). Without reforms, its growth is doomed to slow down just as it has in the Latin American

Peso Crisis Research Paper

Political Science 217 Essay Peso Crisis, Before, During and After Dept Crisis's around the world had a fundamental role in the Developmental progress; weather in a current state of economic decline or it has had a history of dept challenges that had reshaped its entire economic structure creating something more efficient. A dept crisis involves many elements which often end up leading to one over lying factor, substantial dept to a country or a number of countries as well as independent lending…

Words 1167 - Pages 5

Mexico Pest Analysis Essay

Mexico PEST Analysis Executive Summary Mexico has resulted in recent years as one of the most promising emerging economics nevertheless the downturn occurred in 2009 under the influence of the crisis in the United States. In 2010 the economy has restarted its growth trend, which according to the forecast will bring the Country among the elites of world economy. This short paper explains the fundamental factors determining Mexico economic growth using the PEST Analysis Framework. In particular…

Words 2150 - Pages 9

Financial Crisis and Stock Market Crash Essay

are the result of weak economic fundamentals or self-fulfilling panics? A financial crisis is ‘a disturbance to financial markets – associated with falling asset prices and insolvency, which spreads through the financial system, disrupting the market’s capacity to allocate capital.’1 Nearly all crises feature both weak fundamentals of some sort and a period of panic. If a fundamental becomes irreparably weak – that is to say a country has become insolvent - then a crisis is inevitable. However…

Words 3003 - Pages 13

North American Free Trade Agreement (NAFTA)

Mexico relied on the protectionist regime for several decades, and over time, this protectionism created an important system of factories that industrialized the country. But with time, the advantages of protectionism began to disappear and the disadvantages grew in number. It took several crises and money devaluations for the Mexican governments to decide to put an end to the era of protectionism. In the 70’s, it began to be strongly questioned, and in 1986, the year in which Mexico joined GATT…

Words 783 - Pages 4

Business Report for Tardis Ltd. Essays

reporting environment of Mexico in regards to the proposed expansion plans of Tardis Ltd and to investigate whether the country would potentially be a suitable site for the formation of a publicly listed subsidiary of Tardis Ltd. 1.2 Scope While investigating the financial reporting environment, it is important to understand the current economy and financial stability of the country. 1.3 Limitations The limitations of the report include the social, economic and political effects…

Words 1666 - Pages 7

US Involvement In The Mexican Drug War Essay

Secondly, Despite Mexico’s strengthening democracy and booming economy the country’s security crisis rages on. 50,000 people have been killed in the past five years due to drug and organized crime-related violence. It has changed the national conversation in Mexico and it has changed the way Mexicans think of their country. While the country has enjoyed steady economic growth in recent years, economic inequality has left millions of Mexicans on the margin. Those who are left on the margin are the…

Words 796 - Pages 4

Essay on To what extent the current financial crisis is different from the previous crises for Latin American countries?

financial crisis is different from the previous crises? In September of 2008, a feeling of ‘there we go again’ hit Latin American countries (LACs), as it became clear that ‘decoupling’ would not work and that the US subprime crisis would spill over the rest of the world economy. In a region where ‘normality’ had been much more the exception and periods of either crisis or crisis adjustment have been the rule in the last three decades, the interruption of the commodities bonanza by a foreign crisis reminded…

Words 2961 - Pages 12

Essay on Commanding heights episode 3

Sullivan to inform the public about the economic situation. They speak about how the economy adapted to what is today. How the world nationalized third world countries allowing exchange and investment. Episode 3 addresses the current and future problems of a globalized world. That's the structure of the film. The film clearly, thoroughly, and excitingly explains this through historic facts and stories told by citizens who lived during the changes. This is not an economics lesson but rather a high dramatic…

Words 1344 - Pages 6

Economic Relations In Mexico

in economic terms with the United States will be made, this is because the Mexican economy mainly depends on its exports, therefore, relying on a single commercial partner makes us highly vulnerable in our economy. Since the beginning of the 90's and with the entry of Mexico into GATT, the economic opening of Mexico was developed until the beginning of NAFTA in 1994, where Mexican exports increased their dependence over time, which has had negative effects and positive and negative for Mexico. We…

Words 1011 - Pages 5

Essay about Comparison of Mexico and Nigeria

democratic transitions, a number of developing countries are seeking to achieve the successful consolidation of civil order in modern days. Among those participants, Mexico and Nigeria has been spotlighted for the completely contrastive endings at the end of their long-adventures towards democratization since their independence; Mexico, from its independence, has maintained the political stability despite the authoritarian single-party regime and even accomplished the solid democratization at the time…

Words 1927 - Pages 8