Economy of Mexico
The economy of Mexico is the 15th largest in the world in nominal terms and the 11th largest by purchasing power parity, according to the International Monetary Fund. Since the 1994 crisis, administrations have improved the country's macroeconomic fundamentals. Mexico was not significantly influenced by the recent 2002 South American crisis, and maintained positive, although low, rates of growth after a brief period of stagnation in 2001. Mexico was one of the Latin American nations most affected by the 2008 recession with its Gross Domestic Product contracting by more than 6%.
In spite of the Mexican economy's unprecedented macroeconomic stability, which has reduced inflation and interest rates to record lows and has increased per capita income, enormous gaps remain between the urban and the rural population, the northern and southern states, and the rich and the poor. Some of the government's challenges include the upgrade of infrastructure, the modernization of the tax system and labour laws, and the reduction of income inequality. The tax revenues, all together 19.6 percent of GDP in 2013, are the lowest among the 34 OECD countries.
The economy contains rapidly developing modern industrial and service sectors, with increasing private ownership. Recent administrations have expanded competition in ports, railroads, telecommunications, electricity generation, natural gas distribution and airports, with the aim of upgrading infrastructure. As an export-oriented economy, more than 90% of Mexican trade is under free trade agreements (FTAs) with more than 40 countries, including the European Union, Japan, Israel, and much of Central and South America. In 2006, trade with Mexico's two northern partners accounted for almost 90% of its exports and 55% of its imports. Sectors
Gross Domestic Product (GDP) in purchasing power parity (PPP) in 2006 was estimated at US $1.134 trillion, and GDP per capita in PPP at US $10,600. The service sector is the largest component of GDP at 70.5%, followed by the industrial sector at 25.7% (2006 est.). Agriculture represents only 3.9% of GDP (2006 est.). Mexican labour force is estimated at 38 million of which 18% is occupied in agriculture, 24% in the industry sector and 58% in the service sector (2003 est.). Agriculture
Agriculture as a percentage of total GDP has been steadily declining, and now resembles that of developed nations in that it plays a smaller role in the economy. In 2006, agriculture accounted for 3.9% of GDP.
Mexico's comparative advantage in agriculture is not in corn, but in horticulture, tropical fruits, and vegetables. Potato production in Mexico is mostly for commercial purposes; the production for household consumption is very small. Approximately 160,000 medium-sized farmers grow sugar cane in 15 Mexican states; currently there are 54 sugar mills around the country that produced 4.96 million tons of sugar in the 2010. Industry
The industrial sector as a whole has benefited from trade liberalization; in 2000 it accounted for almost 50% of all export earnings. Among the most important industrial manufacturers in Mexico is the automotive industry, whose standards of quality are internationally recognized.
Currently Mexico is focusing in developing an aerospace industry and the assembly of helicopter and regional jet aircraft fuselages is taking place. Electronics
The electronics industry of Mexico has grown enormously within the last decade. Mexico has the sixth largest electronics industry in the world after China, United States, Japan, South Korea, and Taiwan. Currently electronics represent 30% of Mexico's exports. Televisions
The design and manufacture of flat panel plasma, LCD and LED televisions is the single largest sector of the Mexican electronics industry, representing 25% of Mexico's electronics export revenue. Computers
Mexico is the third largest manufacturers of computers in the world. Mexico is Latin America's largest producer of electronics and appliances made by domestic companies. OEM and ODM manufacturing
Mexico is also home to a large number of OEM and ODM manufactures both foreign and domestic. Engineering and Design
The success and rapid growth of the Mexican electronics sector is driven primarily by the relatively low cost of manufacturing and design in Mexico. Joint Production
While many foreign companies like Phillips, Vizio and LG simply install wholly owned factories in Mexico a number of foreign companies have set up semi-independent joint venture companies with Mexican businesses to manufacture and design components in Mexico. Domestic Industry
Although much of Mexico's electronics industry is driven by foreign companies, Mexico also has a sizeable domestic electronics industry and a number of electronics companies. Another area being currently developed in Mexico is Robotics, Mexico's new Mexone robot has been designed with the idea that in future years develop a commercial application for such advanced robots. Oil
Mexico is the sixth-largest oil producer in the world, with 3,700,000 barrels per day (590,000m3/d). In 1980 oil exports accounted for 61.6% of total exports; by 2000 it was only 7.3%.Energy
Mexico's installed electricity capacity in 2008 was 58 GW. Of the installed capacity, 75.3% is thermal, 19% hydro, 2.4% nuclear and 3.3% renewable other than hydro. Manufacturing
Over the years, simple assembly operations in Mexico have evolved into complex manufacturing operations including televisions, automobiles, industrial and personal products. Automobiles
The automotive sector accounts for 17.6% of Mexico's manufacturing sector. In 2014 more than $10 billion in investment was committed in the first few months of the year. Services
In 2014 more than $10 billion in investment was committed in the first few months of the year. Mexico's service sector is strong, and in 2001 replaced Brazil's as the largest service sector in Latin America in dollar terms. Tourism
Tourism is one of the most important industries in Mexico. It is the fourth largest source of foreign exchange for the country. Mexico is the eighth most visited country in the world (with over 20 million tourists a year). Banking system
Lending to the public and private sector is increasing and so is activity in the areas of insurance, leasing and mortgages. However, bank credit accounts for only 22% of GDP.
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