Whilst many of the world’s major nations are considering going back on a number of trade deals as the mood of protectionism sweeps the globe, Mexico is said to be one of the world’s most open economies.
Latest figures from the World Bank show that Mexico’s exports, together with imports, represent some 66% of the country’s Gross Domestic Product. This compares with Brazil’s 26% of GDP.
Much of the country’s openness is due, say commentators, to the North American Free Trade Area (NAFTA) which was originally put in place in 1994. Although controversial at the time, this is said to have led to Mexico’s current status as an advocate of free trade and making it one of the top 15 manufacturing economies in the world.
One of the best examples of this is the Mexican car industry which is one of the top five global players. In 1994, the year of NAFTA, the Mexican car industry produced just over one million cars; in 2012, that has risen to just short of three million.
But, it’s also on the streets that Mexican reaps the benefits of its openness, with its population now having access to a wide range of multinational brands. The growing middle classes, which make up to 40% of the population, are themselves being globalised by Free Trade.
It’s not just the car industry which is making great strides though, with many Mexican companies now operating on a global scale with a huge market to tap in the US and beyond. Being open brings other advantages for Mexican companies, including the knowledge that they can be bought by overseas competitors – this ensures that they keep an eye on costs.
Observers say Mexico may have its problems and detractors, but as far as Free Trade goes, it almost leads the world in how to exploit the benefits of free trade.
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Reference: The Economist