MercoPress. South Atlantic News Agency
In spite of the boom in exports, Latam’s decade report is far from encouraging
Latin American and Caribbean exports are forecasted to grow 21.4% this year propped mainly by South American commodities according to the latest report from the United Nations Economic Commission for Latin America and the Caribbean, Cepal. However the overall balance of the last ten years is negative compared to the nineties and looks closer to the eighties. Read full article
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Disclaimer & comment rulesThe 2000-2010 decade was almost a lost decade for Mexico. It started out with an economic internal economic crisis, devaluation and high interest rates and it ended up with the worst economic year, 2009, in decades where the Mexican economy not only did not grow but it actually shrinked by about 10%,
Sep 03rd, 2010 - 10:20 am - Link - Report abuse 0In 2000, 40% of all latam exports camen from Mexico, in 2010, only 30%, and Brazil's exports have increased to become 20% of all Latam's.
However I sincerely believe the Mexican economy has gained in manufacturing specialization. Our labor force is the most sofisticated and prepared in the region and our manufacturing of airspace and other high tech industries has boomed in the last decade in spite of the economic troubles we encounter.
All Mexico needs is more reforms and the country is ready for those reforms. President Calderon has launched a very agressive deregulation program eliminating tons of red tape that affect our economic activitiy for both exports and imports. Mexico has signed more trade agreements with more nations and this should also increase the country's competitiveness.
70% percent of our exports still go to the US, so it is necessary to expand markets but there's a trade agreement between Mexico and the EU and this is expected to increase our exports to that continent. However our trade dependence with the US is not unusual in the region, about 67% of all Canadian exports also go the US and they don't talk much about diversification or economic dependece.
In my view, Mexico's main problem is precisely its high degree of economic opening. Both its trade balance and current account have been in deficit for years, something that is likely related to its extreme market deregulation. At least I can't see whatelse can be accounted for that, for the Mexican peso is not spoken about as an overappreciated currency.
Sep 03rd, 2010 - 11:01 am - Link - Report abuse 0Another problem of the country is that most of its manufacturing sector is in foreign hands, that is to say, under the domain of multinational indutries in the search of cheap labour. I am yet to know of a truly Mexican world-class company that is not related to either the petrochemicals or the telecommunication industries. And finally, there is the fact that most of its production activity is directed towards exportation. For that reason, Mexican industries are very sensitive to international - specially American - market vicissitudes. Mexico has both a great population and a large middle-class. Instead of sending its production to the international market, couldn't Mexico direct it to the domestic one?
All these facts together paint me a picture of Mexico as a country of extreme economic dependency. Is it possible to reach true development under such scenario?
Mexico's growth has been the greatest during the 1960-1980 period. Which economic model it followed during that period, I don't really know. But Brazil, just like Mexico, had its highest growth during those same decades. And the model it followed was one of economic nationalism, that is to say, of consciously reduced dependency on foreign capital and increased stimulus to national industries. It seems to me that economic opening should be implemented only after national industries are fully mature and can no longer expand in the national market. And this situation, I don't think has already been achieved by most Mexican industries.
Forgetit87
Sep 03rd, 2010 - 12:22 pm - Link - Report abuse 0Thanks for those interesting insights on the Mexican economic situation.
I just want to take you on something here, the 1960-1980 expansion of the Mexican economy was marked by nationalism too, the Mexican government nationalized 'strategic' industries like telecommunications, energy, the banks were also nationalized too and there was a incredible dependence on oil exports, oil accounted for more than 75% of Mexico's total exports and when the oil prices collapsed in 1982, the Mexican economy went bust and the country bankrupted.
It was actually the 90's when Mexico grew the fastest, there was a complete diversification of industries in the country and today manufactured goods represent more than 70% of total exports and oil represents less than 8% of Mexican exports. Mexico went from a commodity exporter to a manufactures exporter.
I think Mexico, just like all of Latin America, has issues to solve as well as great areas of opportunity.
Mexico's proximity to the US makes it atractive to direct foreign investment and even though our salaries are much higher than in China, manufacturing in Mexico is sometimes cheaper because of proximity and other advantages, all manufactured products can be shipped by truck to the US in matter of hours. Mexico is not an intensive labor country like China or India, in fact many intensive labor maquiladoras have already moved to China. Mexico's labor is more sophisticated, Boeing, Airbus, Hitachi, IBM, Bombardier and many other high tech companies have labs and factories in Mexico, they also demand parts and services manufactured in the country. So there's a transition in the industry of the country.
In general I see a few challenges for Mexico and many golden opportunities in coming years.
Of course I have never underestimated the incredible ability of Mexican politicians to ruin golden opportunies.
Dear JoseAngeldeMonterrey,
Sep 03rd, 2010 - 04:50 pm - Link - Report abuse 0“Mexico's labor is more sophisticated, Boeing, Airbus, Hitachi, IBM, Bombardier and many other high tech companies have labs and factories in Mexico, they also demand parts and services manufactured in the country. So there's a transition in the industry of the country”
Having multinationals making “technological stuff “ not necessary means that your local industries are turning into Germany’s base industries (to cite and example).
In Mexico multinationals are a relative new thing but you have to measure the results in the long run.
For example in Argentina we have IBM presence since 1923 when was called CTR
http://www.ibm.com/ar/aniversario/
Mercedes Benz Argentina since 1951 and the first plant outside Germany http://www.ibm.com/ar/aniversario/
Hitachi Argentina since 1954 have been one of the first international headquarters in the world.
Any way the list can be very long but having this companies alone will not turn your industry into Japan, Germany, etc.
And this is the tremendous difference between Mexico, Argentina and Brazil. The last has been smart enough to keep and create a strong national based industrial sector. While Argentina had been done everything imaginable possible to destroy it. And Mexico is not even stating to have it own base national industrial sector.
So you cannot compare Brazil with Mexico because GDPs are over 1 trillion dollar, this is an illusion that will last until multinational in Mexico desire to go someone else backyard with more cheap labour force cost.
Regards,
4.- I think your wrong about Brazil. It has the bigger multinationatls companies working there and they are the biggers in this country, wich is the bigger exporter in LA. So the left nationalims that you are proposing is not good at all, it´s a thing from the past...
Sep 03rd, 2010 - 08:00 pm - Link - Report abuse 0I think that Mexico will grow up strongly very soon, when reach the stability needed for a better developement, in the political and social areas (narcvos, etc.)
“Our labor force is the most sofisticated and prepared in the region and our manufacturing of airspace and other high tech industries has boomed in the last decade in spite of the economic troubles we encounter.”
Sep 03rd, 2010 - 08:52 pm - Link - Report abuse 0False Jose from Monterrey. Mexican labor force compare to Brazilian labor force (many studies from major banks prove that) are behind and second when it comes to high tech industry. Brazil is the most advanced in Latin America when it comes to Research and Development (R&D) in all sectors. Mexico high tech labor force is connected to foreign (mainly american) companies, while Brazil has it's own space/aircraft and oil/bio fuel industries, include foreign who use Brazilian made technology. Mexico really needs to reform it's work force, laws and become less depended on American industries.
Nicodin, Nicholas, Sergio,
Sep 03rd, 2010 - 09:56 pm - Link - Report abuse 0To be fair, I never compared Mexico to Brazil or any other country out there, I don't think it is fair either as every country has got its very own particular history and situations.
This article clearly states the following:
“South America has returned to a scenario of 20 years ago based on the export of primary goods.”
That's really an industrial regression in my humble opinion.
Then this article further expands this comparison,
“ This has meant that the growth in commodities exports compared to manufactured goods has Mexico loosing influence to South America.”
So that means the only reason why Mexico has lost ground in terms of its share of regional exports is because of “commodities exports”, commodities are non-value goods.
And it ends like this:
“Mexican exports as percentage of the region’s total dropped from 40% in 2000 to 30% in 2009, while Brazil soared from 13% to 20%. Argentina, Chile, Colombia and Peru also increased their shares because of minerals, grains and oilseeds exports expansion in volume and value.”
So, there you have it, No only Mexico exports more than any other nation in Latin America, but there is a huge difference between Mexican exports, mostly manufactured goods, and the region's exports, mostly commodities:
“Argentina, Chile, Colombia and Peru also increased their shares because of minerals, grains and oilseeds exports expansion in volume and value.”
So those countries are seeing a boom in exports because of an expansion on commodities exports and the value of those commodities in the market, ergo, the prices of those commodities are set at the NYSE, not in South America.
Hey Mexican,
Sep 03rd, 2010 - 11:08 pm - Link - Report abuse 0I understand now what you're trying to tell here. Fact is, you folks there have lost ground to the Brazilians and they dominate you in many more latin american nations in exporting commodities and manufacturing goods (non-value added goods and value added goods).
Here in the US we make the mistake to believe that Brazil is only a “commodities export” nation or or or for a BIG percentage dependent on exporting commodities. Canada and Russia are more depend on exporting commodities. Conclusion, their economy is more vulnerable than Brazil than many people think. Like Canada, Mexico is highly depended on the US, while Brazil has diverse customers.
http://seekingalpha.com/article/212033-brazil-a-look-at-export-product-groups-and-destinations
Nicholas
Sep 04th, 2010 - 03:56 am - Link - Report abuse 0This is really patetic. Brazil does not dominate Mexico at all, there is no asymetric relationship between Brazil and Mexico, our economies are not interconnected. Nor is there a competition between the two countries. Mexico does not seek political influence abroad, our politicians are just too stupid for that, they can't have any influence at home either. Many Mexican companies have important operations and factories in Brazil and south America: AmericaMovil (largest telecom company in latam), Femsa, Cemex (the largest of its kind in the world), Bimbo (largest of its kind in the world), Alfa, Televisa (largest media company in the spanish speaking world), Modelo, etc. if you shop in a store in Argentina, Brazil, Chile or any other south American nation you are likely to find Mexican products there. Mexico also has champions of technology too, we have companies designing and manufacturing high tech UAV unmanned aircrafts for military use that have won awards in the world, Hidra Technologies in one in many of these Mexican high tech companies, The Mexican Navy is also developing its very own UAVs, Softtek is the largest IT company in Latin America. There are also investments from Brazil, Argentina, Chile and other countries in Mexico too. There is no domination. There are commercial relations and that is only normal.
I never compared Mexico to Brazil. Quite the opposite, I wish for Brazil to continue growing, and the same for Argentina and for every nation in the world.
We in Mexico live next to the richest country in the world to the north, the US, and to the south, we have one of the poorest country in the world too, Guatemala. So we are beyond trying to be the first or the last. We have legion of problems to be worrying about things that.
@Sergio Vega
Sep 04th, 2010 - 08:26 am - Link - Report abuse 0Where is my left nationalism?
1- I have nothing to do with the left, the right or the centre this is all fashion mentality.
2- A nation without a strong national industrial sector become dependent of imports.
All nations including USA, Germany, Italy, Japan, etc have a large little and middle size national industrial sector. Is the most dynamic sector, flexible, innovative and provide the large employment in any country.
Or do you think that countries like Germany or US live just from Multinationals?
@ JoseAngeldeMonterrey
You are wrong about Brazil and Argentina my friend.
Agriculture stuff made the 6/7% of our GDP now close to 5% is made by the IT sector to make a comparison about how irrelevant is today de Agri-Business stuff in Argyland.
Mineral and row materials are Irrelevant may be Oil. If you take your info from CIA factbook or FMI they are outdate and has inaccurate info.
About your UAVs
Do you mean spy remote control air toys like this? UAVs and TUAVs
http://es.wikipedia.org/wiki/Lip%C3%A1n_M3
http://es.wikipedia.org/wiki/Lip%C3%A1n_M3
http://es.wikipedia.org/wiki/Lip%C3%A1n_M3
We export these toys to the Department of defense of USA, Chile, Germany, France, Norway, Egypt and Spain among others. Cost around USD 50.000 each.
So Jose making these toys like Argentina does from so many years don’t turn your country into a Technological leader. Colombia does UAVs too and I think that everyone can make toys like that.
But how many countries can design and make things with its own technology like Microchips, Mother boards, LCD/Plasma screen, Nuclear reactors, Satellites, Space Launcher, Machinery tools, Medicaments, aircraft, etc.
The list is reduced to a few players, so make your research and you will have your answer about how techy is Mexico.
I found that Argentina and Brazil qualify for 6 items, US 10, Japan 8, Germany 7, France 7, Italy 6 etc. and Mexico?
There is a huge difference between the technology used on different UAV's nico.
Sep 04th, 2010 - 10:02 am - Link - Report abuse 0Most nations are capable of building the basic UAV. Newer UAV's are hardly toys, the US have VTOL ones which carry bombs. Or the Global Hawk. The Taranis is a UAV stealth jet fighter which can combat aircraft of land attacks completely on auto pilot.
NicoDin,
Sep 04th, 2010 - 11:14 am - Link - Report abuse 0I am not wrong about a thing. I just repeated what this article states. In any case, the article is wrong, so take it up to the editor of Mercopress, they are the ones posting articles that suggest South America is regressing 20 years ago with commodities ruling its economy or that Mexico exports more goods than Brazil and Argentina together. That's what the report says, not what I say. Ten years ago 40 percent of all latinamerican exports came from Mexico, today that has gotten down to 30%, I hope it goes down further, not as a consequence of Mexico's problems, but as a consequence of Central and South American nations progressing and transforming raw materials and primary goods into manufactured products, because that is the real progress. If you show me charts indicating that more than 50 percent of Brazil's exports are primary or secondary goods, I am sorry but truly, Brazil is at a loss here because everyone knows those primary and secondary goods will be tranformed into valued goods down the line in some other more developed country. You see, some 30 years ago, Mexican leaders, even in the midst of their sea of stupidity, mediocrity, and corrupted ingenuity, they realized that the country needed to develop the means to transform our own raw materials first before we exported them out to developed nations.
Now, UAVs is just one example of many things now made in Mexico but I never said we are the best in the world or leaders anything like that. If read, I just stated that there is a “transition” in Mexico, and there truly is.
Apples to apples, there's really no big difference in our countries in terms of tech development.
Now, if Argentina or Brazil or Nicaragua or Bolivia or any other country is number one in green peas or robotics or biofuel, that's great. I celebrate that and don't worry about our poor little country here in Mexico. Be the best in the universe, please, do proceed and go for broke!
LatAm, regrettably, stays stuck somewhere between the third and fourth worlds. Held back by greedy psychotic overly-nationalist fanatics. Anybody notice any real problems working with Chile, Paraguay, Uruguay, Bolivia and the like? No. The problem is the nutters.
Sep 05th, 2010 - 05:27 pm - Link - Report abuse 0Commenting for this story is now closed.
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