Just after the devaluation of the peso, Mexico’s economy started to rebalance. The process of rebalancing proceeded quite fast. In the first half of the year, Mexico’s economy contracted by 10%. In the three years thereafter, the economy recovered rather well, with an average growth rate of almost 6%. Moreover, the current account deficit declined from -5.8% in 1994 to -0.5% in 1995. Along with the fall in GDP, unemployment rose from 3.7% in 1994 to 6.2% in 1995. But, as with the overall economy, the situation on the labor market improved fast, showing a decline to 5.5% in 1996.…
Although the Mexican maquiladora system is an important component of Mexico-US trade, the connection between the acceleration in maquiladora growth and the North American Free Trade Agreement (NAFTA) needs clarifications. Manufacturing in Mexico obligates American firms to comply with Mexico 's detailed labor regulations; however, increasing foreign investment requires that the Mexican Government attempt to make these regulations flexible enough not to scare off foreign investors. Consequently, as much as NAFTA may have increased economic benefits to the Mexican economy, the maquiladora development…
Foreign exchange rates and International trade are important aspects of economics. The United States macroeconomy’s health is determined by these concepts and their factors.…
“A falling dollar will mean a faster U.S. recovery” written by Martin Fledstein argues in favor of the weak United States Dollar while David Malpass argues in favor of the United States Dollar being strong. Both men present valid reasons as to why they believe the United States currently should be weak or strong compared to other countries’ currencies. This ongoing debate is extremely important because it reflects the United States economy. The United States Dollar is the most actively traded currency in the world and if we had a strong dollar there would be growth in the economy. The pros of having a strong dollar outweigh the pros of a weak dollar even though some people believe that a weak dollar solidifies the…
Positioning the United States as its key trading partner was accomplished via dollarization. Accepting the US dollar as its sole form of currency eased trade complications between El Salvador and the US and eliminated volatility of the Colón in the foreign exchange market. This dollarization gave Salvadoran industry the credibility of the US dollar, eliminating or limiting national inflationary effects upon trade. This dollarization, however, lessens the Salvadorans control on their economy through fiscal policy, but also serves to prohibit political instability’s effect on the currency.…
Because of NAFTA and excellent trading relations with the U.S., Mexico's Gross Domestic Product has risen 5.5 percent per year for the last five years. When Mexico experienced the peso crisis, it rebounded quickly, from an $18.5 billion deficit in 1994 to a $7.1 billion surplus in 1995. The unemployment rate is down in Mexico as well as in the U.S. Mexico's urban unemployment rate is less than four percent, after having risen from six percent in 1992 to 8.5 percent in 1995. Manufacturing, construction, transportation, and communications through NAFTA connections have been leading Mexico through its tremendous success. Mexico's exports however, are the greatest factor in this booming period. In fact, it is estimated that the year 2001's real exports will be more than three times as large as when the NAFTA was signed (Orme 53). When Mexico is successful, jobs are created, and the economy is stable, there is much less of a desire for Mexicans to come illegally to the U.S. There are many opportunities in Mexico since NAFTA has influenced the market and that certainly cuts down illegal immigration. Mexico's prosperity should be a concern of all Americans. It makes for better investments and opportunities within Mexico for its…
2. Mexico and the United States share many economic interests and are partners of the Trans-Pacific Partnership1. According to whitehouse.gov, “our countries are economically entwined” and on any given day over $1.5 billion crosses our border. Mexico’s economy relies heavily on the free-market economy of tourism, agriculture and exports to the United States. According to state.gov, in 2013 two-way trade in goods and services was more than $1.4 trillion. Mexico is among…
Since the introduction of NAFTA, Mexico’s economy has grown exponentially. The Mexican economy is strongly tied to economic conditions in the United States, making it very sensitive to economic developments in the United States. Mexico is highly reliant on exports and most of Mexico’s exports go to the United States. In 2009, Mexico’s exports quadrupled to $292 billion. Under NAFTA the United States became the largest source of foreign direct investment in Mexico, accounting for over…
“When the U.S. dollar was introduced on April 2, 1792, it was based on the peso with the exchange rate of 1 dollar to 1 peso” (“What is the Mexican peso?, n.d.). Since that time the exchange rate of Mexican peso to United States dollar has changed considerably. Due to supply and demand of products produced by either country the exchange will rise and fall. Consequently products produced by either country result in a higher or lower demand for that product resulting in the amount that the currency is worth in that country when exchanged for another countries currency. For example, if Mexico produced a product that was in high demand in the United States the Mexican Peso’s exchange rate would rise and the United States dollar would fall because it would take more dollars to equal 1…
They concluded that while wages had increased, the increases were relative and the difference between them remained the same over the years of the study (Clemens, M. (2015, March 17)). The argument also stands that Mexico would have still developed over time into an industrialized country, NAFTA just quickened the process. Given the detriments to the U.S. economy to simply speed up the industrialization of Mexico, it is difficult to say that the benefits outweigh the costs. Not only did job loss and wage stagnation occur, but the trade balance also shifted. In 1993, the U.S. had a $1.7 billion trade surplus, but in 2013, trade had shifted to benefit Mexico in the amount of $54 billion (Mcbride, J., & Sergie, M. A. (2017, January 24)). Along with the trade deficit, immigration from Mexico to the United States has become a severe problem due to high unemployment rates. Though illegal immigration has not been as rampant in recent years, over half a million Mexican workers without a job migrated to the United States after NAFTA was enacted (Mcbride, J., & Sergie, M. A. (2017, January…
Since NAFTA has been initiated, the price of objects has gone up in Mexico unlike in Canada the price has gone down. In Mexico, the price of some abundant resources (metals) went up. Unlike other abundant resources (food) is less money now because America grows it also so we don't need it from Mexico. In Canada, the price of objects go down but the economy…
Mexico gained independence in 1821 after it ruled by Spain for three centuries. Then it started creating the future of this new nation. However, Mexico lost half its territory, in which most of them was occupied by the United States. Then, it ushered the crucial event, the Revolution of 1910, which leads to the positive changes in its politics. After the rule of Lazaro Cardenas in 1934, he grants many benefits to peasants and encouraged workers to pursue better working conditions (p. 410). This period also witnessed the development in industry and agriculture. The turmoil in the oil market brought the economical crisis for Mexico in the late 20th century. It experienced the reforms in electoral processes and institutions, which contributes to the fairness of the election. The hope of Fox to improve the relationship and cooperation between Mexico and America failed after the events of September 11, 2001. Now the Mexican president paid much attention to the security and stability of the country.…
Bill Clinton’s unofficial campaign motto works well to answer this question “It’s the economy, stupid”. Economic pressures are the most immediate force; families think about money daily no matter their situation. In a capitalist society, the ability to make money directly correlates with standard of living. For this response I will focus on Mexico as the example of a third-world country sending immigrants to the United States. The average GDP per capita of the United States is the highest out of countries with anywhere near the population of the United States. In 1997, Mexico’s GNP per capita was $3000 and the United States’ GNP per capita was $29,000. (Theories of International Migration) The demand for low-income foreign workers is built…
Issues in International Political Economy: Mexico is Facing a Difficult Time | Center for Strategic and…
Since the 1970s, Mexico has strayed from the ideals of the revolutionary era: equal land rights, nationalization of industry, security, and equal opportunities. This most recent decade, the 2000s, has seen the rise of an emerging drug trade which has become a threat to security of the people. The economy has sputtered, and workers’ wages have been ravaged since NAFTA. To recover from the drastic effects of this decade, Mexico must aim to achieve political and social stability and security by ending the war on drugs, and eliminating NAFTA to bolster the economy.…