Archive for October, 2012
A buzz is developing around the strength of Mexico’s growing middle class and what it could mean for U.S. businesspeople and politicians in the border region; Mexico is vital to the U.S. economy.
1. Trade with Mexico sustains around 6 million jobs in the U.S.
The Mexican economy is growing around 4 % this year, more than twice as fast as the U.S. economy. This is why Mexicans are consuming U.S. goods at an increasing rate as they move into the middle class.
2. Mexico is a world leader in the production of computers, mobile telephones and flat screen TVs.
NAFTA and other trade agreements have forced Mexican industry to become competitive. Mexico excels in the production of bulkier goods, like cars and refrigerators. One reason is that it is much cheaper to transport to markets in the U.S., Canada and Latin America.
3. U.S. export sales to Mexico, at $200 billion in 2011, are > than all U.S. exports to the BRIC countries (Brazil, Russia, India and China) combined.
People love to talk about Brazil & China, but we have a fast-growing emerging market right on our doorstep.
4. Mexico is the no.1 or no.2 export market for 22 U.S. states.
It’s not just the border states that benefit from Mexican demand. The state of Michigan is the third-highest exporter to Mexico behind Texas and California. Detroit exports more to Mexico than any city in the U.S., mainly thanks to auto parts exported for assembly.
5. For every dollar that Mexico makes on exports to the U.S., it uses 50 cents to spend on U.S. products or services. Our two economies are interlinked. The Mexico Institute at the Woodrow Wilson Center says that 40 % of Mexican imports to the states are made with U.S. content, compared to just 4 % from China.
Economists Chris Wilson and Erik Lee point out that:
“the United States and Mexico do not just sell goods to one another, they actually work together to manufacture them.”
Working together not only supports U.S. jobs, but also creates well-paying jobs in Mexico.
More jobs in Mexico = More middle-class Mexicans (they can buy Ford trucks and shop at Costco, it may also mean that less feel the need to cross the border.)