The Mexican Economy: ¡Sí 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 México 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 México

Debt Market Foreign Investment Billions of Dollars Source: Banco de México

Stock Market Foreign Investment Billions of Dollars Source: Banco de México

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 México

Exchange Rate Pesos per U.S. Dollar Source: Banco de México

Inflation Differential vs. Exchange Rate Inflation Exchange Rate Source: Banco de México

Merchandise Trade Billions of Dollars Source: Banco de México Imports Exports

Family Remittances Billions of Dollars Source: Banco de México

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 México

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 Calderón Roberto Madrazo Andrés López Obrador

Political Environment Source: El Norte, April 25,

President Fox’s 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: ¿Sí se puede?

The Mexican Economy: ¡Sí se puede!