Economics in Mexico - Essay Example

However, the 2008 recession affected Mexico and other Latin American nations making its Gross Domestic product contract by more than six percent. Regardless of unprecedented macroeconomic stability that reduced the record of inflation and interest rates to be low, this has made the per capita income increase leading to enormous gaps between populations living in rural areas and urban areas, states on the northern part and the southern part, and between the rich and the poor. Some of the main challenge the Mexican government faces include improvement in infrastructure, modernizing revenue collection system, changing the labor laws and reduction of inequality of the income (Cantwell et al.). Mexico’s economy contains industrial and services sectors that are rapidly growing as well as an increasing private ownership; at the ports, the administration has increased competition, and other things such as distribution of natural gas rail roads, generation of electricity, airports and telecommunications have also increase.

The economy of Mexico is often export oriented and over 90% of business that are conducted in Mexico are under free trade agreement with over forty countries that include Israel, Japan, Central America, etc. NAFTA is one of the most influential free trade agreements that are used in Mexico beginning 1994; some of the governments that signed into NAFTA include the United States and Canada. 90% of all the exports and 55% of all the imports that took place in 2006 was between Mexico and two northern partners; there has been an approval of the judicial reforms and import tax from the Congress of Union while the reforms regarding oil industry is still under debate.

The labor force of Mexico is seventy eight million and World Trade Organization and OECD rank Mexico’s workers as one of the hardest working globally in numbers of hours worked a year although the profitability per man-hour is relatively low (Cantwell et al.). Mexico is ranked the 16th largest exporter and 82% of all the exports got to the United States, trade with both Canada and the United States has tripled after NAFTA was implemented in 1994. The products manufactured and exported from Mexico is equivalent to the amount of goods produced by all the other Latin American states combined together; hence a large percent of foreign trade takes place in Mexico’s economy as compared to any other large country.

Manufactured products are Mexico’s number 1 exports and the country has recently built its infrastructure in order to enhance trade with other countries. Carlos Helu owns a telecommunication company in Mexico and is considered one of the world’s richest men; his company is however a monopoly in Mexico and it controls 70% of all mobile phones, 70% of broadband and 80% of home phones lines. There are concerns that the lack of competition in the telecommunications sector is hampering economic growth and mobile phone penetration in Mexico is similar to that of Iraq at 85%.

In Mexico, its costs double to have broadband connection and this is similar to Chile, and things that are near monopolies include the Bimbo, Televisa and Cemex. Mexico is ranked the ninth in oil production and it exports over three million barrels daily; this is less than that of Iraq, Canada, and China but is more when compared to that of Nigeria, Venezuela and Kuwait. Pemex is the country’