The Mexican Involvement with NAFTA.

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5. On account of Mexico, conversely with Canada, there are likewise critical ... I.3 The Transformations of Mexico. 1.Demographic Transformation: from 20 million ...
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The Mexican Experience with NAFTA Francisco J. Alejo Consul General of Mexico October 22, 2003 University of Texas LBJ School of Public Affairs

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Contents Introduction The Context of NAFTA 1. Quickened Globalization 2. Mexico/USA: An Asymmetrical Relationship 3. The Transformations of Mexico II. Mexican Experience with NAFTA 1. Monetary Performance, Trade and Investment 2. The Pending Agenda 3. Lessons and Policy Implications 4. Conclusions

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The Context of NAFTA I. Presentation

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Along the most recent quite a long while, until the end of 2001, worldwide exchange developed at around three times the rate of OCED economies, surpassing $7 trillion in cross-outskirt development of merchandise and administrations. 2. Remote direct venture (FDI) became considerably speedier than global exchange and really surpassed $1 trillion in streams in 2000 1 . In light of: Earl H. Broil, "North American Integration. Arrangement Options", CSIS, Policy Papers, July 2003 Highlights of the Globalization 1

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The quantity of multinational enterprises (MNC\'s) in the World additionally extended significantly, from 7000 in the 1960\'s to approximately 65,000 today. The 65,000 MNC\'s control 850,000 members, which utilize 54 million laborers worldwide and were in charge of creating $19 trillion in yearly deals in 2001, right around three times the total estimation of worldwide universal exchange.

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5. Universal money exchanges add up to roughly $1.5 trillion every day. Generation sharing frameworks and securities exchanges constitute a 24 hour marvels directed by consistent, electronic programmed frameworks. 6. Regardless of September 11, 2001 occasions, universal tourism came back to record levels in 2002 with 715 million individuals spending over $460 billion

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7. Movement and displaced person streams are likewise without parallel, and no less than 175 million individuals presently live in nations not quite the same as their place of birth. 8. The quantity of exchanges through web confusing the planet is galactic and develops at an enraging pace.

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I.2. Mexico/US: An Asymmetrical Relationship The US mainland land mass is proportionate to approximately 4.5 times to that of Mexico. The number of inhabitants in the previous is right around 2.8 times more than the 100 million Mexicans living in Mexico. 2. The Mexican GDP is identical to one sixteenth of the US comparing GPD. A 6.5% yearly development of the US economy totals extra generation identical to the aggregate Mexican GDP, despite the fact that the last positions between the ninth and tenth biggest on the planet.

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3. After just about 10 years of NAFTA, 85% of aggregate Mexican fares are gone for the US economy and constitute 20% of the nation\'s GDP. About portion of the 3 million new employments made in Mexico somewhere around 1993 and 2000 were fare related. Conversely, 37% of aggregate US fares are bound to the NAFTA accomplices, and contribute with just 4% of the US total GDP and business. US responsibilities as a worldwide superpower progressively spread out everywhere throughout the planet.

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4. The developing size of the US economy, its worldwide organizations, and the need to keep an expansive worldwide techno military edge, legitimizes a massive and amazing interest in science and innovation. 5. On account of Mexico, interestingly with Canada, there are additionally vital asymmetries in instruction, social and institutional improvement.

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Of extraordinary and fundamental significance are the asymmetries in physical and media communications base. 7. It was unequivocally as a result of the principal part of the asymmetries that the European Community allocated a urgent part in the accomplishment of European incorporation to the exceptional assets for adjusting the levels of essential improvement among the part countries.

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I.3 The Transformations of Mexico 1. Demographic Transformation : from 20 million tenants in 1950 to 100 million 2000. 2. Settlements change : from 80% rustic populace to 75% urban populace in just 60 years. With one and only city with more than one million occupants to one megalopolis with 18 million tenants, two urban areas with more than 3 million and ten urban areas with more than one million tenants in the year 2000.

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3. Instructive Transformation : from more than 70% absence of education level to more than 90% proficiency, to very nearly 100% scope by the primary educational system and to just about 66% scope by the secondary educational system in just two eras. 4. Monetary Structure Transformation : from a predominantly horticultural and mining provincial economy to a basically mechanical and administration urban economy in just 30 years from 1950 to 1980.

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5. Exchanging Transformation : from a firmly shut economy, with more than 90% of the importation code subject to "past particular grant" by the legislature and a normal traditions tax of more than 80% by 1982 to under 5% of the code subject to past prermission and maximun traditions duty of 20% and a weighted normal tax of under 10% by 1990. Subsequent to consenting to organized commerce arrangements with Chile and the United States in the mid 90\'s, Mexico has marked such settlements with more than 30 nations. No other nation has marked such a variety of.

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6. Open/Private areas parts Transformation : from an economy firmly controlled and ruled by general society division (people in general segment use spoke to 48% of the GDP in 1982 and there were increasingly the 1200 partnerships completely or for the most part claimed by the national government) to an exceptionally decentralized economy with just a heap of state possessed organizations and open segment consumptions speaking to a greatest of 22% of GDP. The procedure of deregulation has included all divisions of monetary action.

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7. Majority rule Transformation : from a profoundly unified and one hegemonic party framework that went on for more than a large portion of a century to a multiparty, exceedingly solid and aggressive political framework in just 22 years. This included new enactment for political gatherings in 1978, new surveying enactment in 1978, 1987 and 1995; a legal framework for managing post surveying debate in 1995 and 1998; an enormous exchange of money related assets from elected to state and nearby governments occurred somewhere around 1995 and 2002; another enactment on straightforwardness and availability to open records and data as an unquestionable a good fit for residents and the media.

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8. Human Rights Transformation : protected changes and new enactment took into account another self-governing administration for the 10 million individuals from the indian groups of the nation and the foundation of a completely free national commission as a guard dog for human rights in addition to the membership to the Inter-American and United Nations Human Rights bargains.

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2/Based on: Aldo Flores Quiroga, "The North American Free Trade Agreement… ", Secretaria de Relaciones Exteriores, Mexico, Agosto, 2003. II. The Mexican Experience with NAFTA 2

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Four good results for Mexico emerge amid NAFTA\'s initial 10 years Substantial increment in exchange and venture, with a positive effect on financial development and employment creation Lower powerlessness to outside stuns, aside from those that have begun in the US economy. Efficiency increments connected with innovation exchanges Stable and dependable legitimate system for the arrangement of exchange debates

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Much all the more, in any case, should be done: Integration of gainful chains Expand physical, monetary, and enlightening framework, particularly at the outskirts Create remuneration assets to advance locally adjusted development Improve existing components for strife determination Develop keen fringes for the stream of products, administrations, information and individuals

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Contents Economic execution, exchange and venture The pending motivation III. Lessons and arrangement suggestions IV. C on c lusions

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A. Macroeconomic merging Inflation rates Interest rates Exchange rate Country hazard Production

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Mexican swelling is joining toward the US and Canadian rates… Annual expansion rates, Mexico, United States and Canada Mexico United States 4.3% 2.6% Canada 2.1% Source : INEGI

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… bit by bit adding to financing cost union amongst Mexico and the United States Interest rates, Mexico and United States (One month certificated stores) Mexico United States 5.18% 1.22% Source : INEGI

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The Mexican peso has debilitated however its unpredictability is generally low Aver a ge d aily v o latility in the f oreign trade market (% every day apreciation or deterioration) Interban k F oreign Exchange Rate ( MXP/USD) 10.93 S ource : SRE w ith Banxico\'s information S ource : B anco de México

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Country hazard has separated from other Latin American markets Country hazard (Emerging Markets Bond Index EMBI+, JP Morgan) Latin America EMBI+ Mexico Source: JP Morgan

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Mexico\'s GDP execution is nearly connected with varieties in US GDP Quarterly GDP, Mexico* and USA** (regularly balanced arrangement) United States (right scale) Correlation coefficient: 97% Mexico (left scale) * Billions of pesos of 1993 ** Billions of dollars of 1996 Source: INEGI

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This nearby relationship is because of the extending coordination of US and Mexican mechanical segments Industrial generation (yearly % variety, three month moving normal) Canada USA Mexico Correlation coefficient: 97.2% Source: INEGI

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B. Exchange and venture Trajectory and reallocation of exchange streams in the North American territory Mexican interest in the US advertise Long and transient capital streams into Mexico

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Seventy-six percent of Mexico\'s aggregate exchange is arranged toward the United States Africa and the Middle East United States Eastern Europe Western Europe Latin America and the Caribbean Asia Canad

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