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Mexico has benefited from its close ties to the United States for decades. While trade relations between the two countries remain strong, Mexico now stands to bear a disproportionate share of any U.S. economic downturn — a situation exacerbated by the fact that its own oil resources are drying up. Our Globalist Factsheet takes a closer look at Mexico.
Where does Mexico stand among the world’s
largest economies?
With its population of 109 million people,
Mexico accounts for about 1.6% of the world population — and about
the same percentage of the global economy.
(International Herald Tribune)
How wealthy are Mexico’s people?
Mexico’s per capita GDP stands at 39%
of the average for industrialized nations. The comparable numbers
are 144% for the United States, 104% for Japan, 74% for Korea —
and just 27% for Turkey.
(OECD)
Are incomes in Mexico evenly distributed?
Mexico has some of the worst poverty and
inequality indicators by Latin American standards — with the richest
10% of citizens controlling 43% of the country's wealth and some
40% of the population living below the poverty line (as of 2006).
(New York Times)
What level of economic growth does Mexico
require?
Mexico's economy will need to grow 6%
per year on a sustainable basis to absorb new entrants to the labor
market — a performance level it has not reached since 2000.
(Financial Times)
What is notable about the Mexican government’s
finances?
Mexico's total tax revenues amounted to
only 11.4% of GDP. This is less than one-third the average for the
OECD countries (36%) — and below the average of 13.7% for Latin
America (as of 2004).
(The Economist)
Why is that?
Food, medicines, agriculture, fisheries
and land transport are either exempt from value-added tax or zero-rated.
These exemptions cost up to 2% of GDP in tax lost revenues — and
also make tax evasion easier.
(The Economist)
What’s another reason?
Mexico's informal economy still accounts
for slightly more than half of total employment in the country.
(World Bank)
Who’s paying taxes, then?
The Mexican government depends on Pemex,
the state oil and gas monopoly, to finance its budget. In 2006,
sales reached $97 billion. Of that, $79 billion was appropriated
by Mexico's government, accounting for 40% of the federal budget.
(International Herald Tribune)
When did Mexico nationalize oil production?
Back in 1938, Mexico was the first major
oil producer to kick out foreign companies, a key event that is
still described in Mexican school textbooks.
(Wall Street Journal)
Is Mexico a large oil producer?
Although Mexico has less than 1% of the
world's proven oil reserves, it is the sixth-largest oil producer.
(The Economist)
Who’s buying?
Mexico is the third-largest supplier of
oil to the United States (as of 2008) — after Canada and Saudi Arabia.
(Wall Street Journal)
But will the oil flow forever?
At current rates of production, Mexico’s
oil reserves are expected to run out in around ten years.
(BP Statistical Review of World Energy)
Are there already signs of a slowdown?
Production at Mexico's Cantarell oil complex,
Mexico’s biggest, dropped by a third, to slightly more than one
million barrels a day in 2008 — compared with 1.6 million barrels
a day in 2007.
(Mexico’s Energy Ministry)
Just how dependent is Mexico on its neighbor
to the north?
In 2007, 30% of Mexico's GDP directly
depended on the United States — through exports, tourism and remittance
flows.
(Financial Times)
What about remittances in particular?
Remittances in Mexico are the second-largest
source of foreign income, after oil, and ahead of tourism — accounting
for 3% of Mexico's GDP.
(The Economist)
What are the numbers?
Remittances to Mexico reached $23 billion
in 2006, up from $4 billion in 1995. While 80-90% of the remittances
go to subsidizing consumption, at least 10% goes into capital investment
such as housing and roads.
(Inter-American Development Bank)
How many Mexican workers are working in
the United States?
In 2006, almost 30% of Mexico's labor
force was working in the United States.
(International Economy)
What is the state of Mexico’s export economy?
Mexico's exports have risen, reaching
$272 billion in 2007 — 50% higher than four years earlier. They
are expected to reach $288.1 billion in 2008 and $310.7 billion
in 2009.
(Thomson Datastream)
Is it easy to start a business in Mexico?
According to the World Bank's Doing Business
2007 report, of the 175 countries it surveyed, Mexico ranked 108th
in terms of the difficulties faced by businesses in hiring, employing
and firing workers.
(Johns Hopkins University)
What is Mexico’s demographic profile?
Mexicans in the 0-14 age bracket make
up about 31% of the population — but are projected to decline to
16% of the population by 2050. The 15-64 age bracket is expected
to peak at 68% of the population in 2025 — and then decline to 62%
by 2050.
(United Nations)
What about seniors?
The 65 and older age bracket makes up
6% of the population as of 2007 — but is expected to grow to 21%
of the population by 2050.
(United Nations)
What explains the aging of Mexico’s population?
From 1970 to 2006, Mexico's fertility
rate declined from 6.5 children per woman to 2.2 — only slightly
above the replacement rate of 2.1. (United Nations) What health
threat faces Mexico’s citizens? Mexico is the nation with the second-most
obese population among the 30 countries of the OECD — following
only the United States.
(The Economist)
Where is Mexico’s economic activity centered?
As of 2006, Mexico City accounted for
26.7% of Mexico's GDP.
(OECD)
How quickly has the city’s population
grown?
Back in 1950, only 2.9 million people
lived in Mexico City — making it only the world’s 17th-most populous
city. As of 2005, with its population of 19 million people, Mexico
City is the second-most populous urban area in the world.
(United Nations Population Division)
What is the outlook?
By 2015, Mexico City’s population is expected
to reach 21.6 million — smaller only than Tokyo and Mumbai.
(United Nations Population Division)
And finally, how rich is Mexico’s richest
person?
The richest person in Mexico is Carlos
Slim, with a net worth calculated at $30 billion — the equivalent
of 3.7% of Mexico's GDP.
(The Economist)
Last updated
August 12, 2009
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