With Mexico being the 11th country in nominal
terms and 15th in purchasing power, it is evident that it is a country which can’t be
ignored as a third world country anymore. Even after being hit hard
during the 1994 crisis, low blows in 2001 crisis
and then again facing major drawbacks in the
2008 recession Mexico still remains a stable
macroeconomic country. Though the extent of influence of South
American Crisis was not much, during the 2008 recession, Gross Domestic
Product contracted by more than 6%. The main achievement for this country
has been its stable growth through a control to inflation and a constant
increase in per capita income. Despite this, among the 34 OECD
countries, it still stands the last. The areas that are causing the
main problems are economical; labor laws, income inequality,
updates in infrastructure and modernization of tax structure while
socio-economic factors are the large gap between rich and poor, urban and
rural and northern and southern states. History The history of Mexican Economy can be outlined
through three specific eras which were governed by resource
extraction, agriculture, and a fairly underdeveloped
industrial sector. The three eras include the era of
independence from colonialism, revolution and great depression and after that
World War II and the Mexican miracle. Colonial Era and Independence Freeing itself from shackles of colonialism
and the rule of King Ferdinand again and again, it worked as breeding grounds
for major economic developments. Then called, New Spain, First Mexican
Empire ended with a military coup in 1822 and led to the foundation
of a weak constitution of 1824. After the republic declaration of Mexico,
it has been constant tough times Mexico. During the first half of the
nineteenth century, the factors affecting the economy
were largely internal. The difficult topography, power struggles
within the country and lack of efficient transportation made it
very difficult for reforms to occur. This situation was then
handled a little bit after the construction
of railway lines. The external factors were
immigration laws, joint legislation problems, tax
laws and weak foreign policies that governed the
low socio-economic growth in the latter half of
the nineteenth century. Revolution and Great Depression The ten year revolution period
from 1910 to 1920 just erupted the problems for Mexico as
a newly instated republic. With internal on an
all-time high, 1920’s were a time of the great
worldwide depression. The stock market crashed
and the few companies that were there in Mexico
barely survived it. Hence the drop in export revenue
from $334 million to $299 million in 1924 and essentially collapsing in
1928 when the depression took hold. During 1938, the petroleum
industry was nationalized and in 1941 Mexico recognized
the National Finance Bank. Together, they survived the
great depression and this struggle united the country
towards the Mexican Miracle World War II and Mexican Miracle The years 1940 through to 1970
turned out to be golden for Mexico. With the constant sustained
economic growth of 3 to 4% and a general
rise in enrollment of country’s youth towards
education made sure that Mexico was looking towards
the brighter days. Additionally, the domestic market
was publicized highly which led to many consumer-based industries to
foster within the nation in 1950’s. In the years following World War II, the
government spent heavily on infrastructure. It focused all industry power and
legislation on consumer goods while it bought capital goods with the reserves
that were accumulated during the war. The gradual expansion of roadmap and rail
transportation made the growth of industries smooth during 1960’s and
thus, helped generate a GDP growth of 7% overall
and 3% per capita. Major Sectors of the economy The service sector contributes
the maximum to the GDP at 70.5%, with industrial
contribution coming up at 25.7% and agricultural contribution remaining
at the meager proportion of 3.9% the major sectors that governed the constant
GDP growth in Mexico have to be: i) Agriculture and Mining ii) Consumer and Capital Industries iii) Tourism and Finance. Agriculture and Mining Though, it is a certain pattern that
we have noticed all over the world that the countries whose agricultural
contributions are the least are generally developed nations
as their main source of income are their industries
and their service sector. This, however, was not
the case with Mexico. Their contributions to GDP via the
agriculture remain lowest though it was an important sector both
historically and politically. The main crops have not
been corn despite being a staple in the country,
the agriculture of Mexico tends to work towards horticulture
and tropical fruits and vegetables. The mining industry, since
colonial times has been based on the huge silver deposits
found in the Mexican soil. The constant productivity of
silver prompted the country’s growth worldwide as an
important exporter of silver. Consumer and Capital Industries The industrial sector was
hugely benefited from trade liberalization and made up to
50% of the total earnings. The main contribution towards this
has been the automotive industry. It is different from the
other developing countries because it doesn’t
work just merely as an assembly manufacturer but
produces complex parts and also takes part in
the capital research. The big three companies like
General Motors, Ford, and Chrysler have been working
in Mexico since the 1930s. Other notable industrial
contributions are of the food industry, electronics,
television and computers. Service Sector The service sector being the
highest contributor to GDP is the most important sector
of the nation’s economy. The tertiary sector has flourished
all through the 21st century. This includes warehousing,
tourism, finance, health, education,
and entertainment. Among these, the most important
ones are tourism and finance. Tourism Bringing in the fourth highest
contribution to foreign exchange, the tourism industry of Mexico is still
the best industry in the country. Mexico has become the 8th most
visited country in the world. Finance Mexican banking system is private and well
capitalized which makes it quite strong. The banking sector is
occupied by foreign companies in general, with the huge
exception of Banorte. Despite having recent gains, foreign
investors are still wary of the constant changes in the policies
brought about by the government.

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