MEXICO AS AN EMERGING
ECONOMY AND ITS INTERNAL
PROBLEMS
Francisco Villarreal 859696
AGENDA
1. In what consists Mexican economy?
2. What are the most known companies and
products (globally and nationally)?
3. Emerging Economies
4. How Mexico achieved to be one?
5. Energy industry relation with Mexican economy
6. PEMEX exports oil and imports fuel!
7. Social problems (Drugwar, corruption, economic inequality)
8. What is coming for Mexico in the following years
MEXICO
MÉXICO
MEXICO
 Population : 113,423,047 (most populous spanish speaking country)
 Area Total : 1,972,550 km2
 Nominally Roman Catholic 89%
 Historic Data: Highly developed cultures, including the Olmec, Maya,
Toltec, and Aztec, existed long before Spain conquered Mexico in 1521.
 GDP: US$ 1,034,804 millions (2010) #13
 GDP Composition by sector:
agriculture: 3.9% industry: 32.8% services: 63.4% (2011 estimate)
MEXICO
 Other figures:
MEXICAN ECONOMY
 Tourism
 Industrial Activity
 Mining (9th place in mining production globally; it represents 1.5% of the PIB)
 Agriculture
 Remittance from the Mexican emigrants in USA
 Oil Sector
 Exports. México is the country that has signed more international treaties of
free trade. However, USA is the country that receives most of the exports.
The principal products that are exported are: oil, machinery, textiles, coffee,
chemical products, etc.
MEXICAN ECONOMY
 Tourism
31 places declared as cultural and/or natural world heritage of UNESCO
MEXICAN ECONOMY
 Tourism
 Industrial Activity
 Mining (9th place in mining production globally; it represents 1.5% of the PIB)
 Agriculture
 Remittance from the Mexican emigrants in USA
 Oil Sector
 Exports. México is the country that has signed more international treaties of
free trade. However, USA is the country that receives most of the exports.
The principal products that are exported are: oil, machinery, textiles, coffee,
chemical products, etc.
MEXICAN ECONOMY
 Industrial Activity
Leading in building material, worldwide presence
60% of the beer market in Mexico, worldwide
presence
FEMSA is the second world's largest bottler of Coca
Cola in the world.
The most important Baking Company in the world on
the basis of brand positioning, production volume and
sales.
Grupo Carso: One of the most important
conglomerates of Latin America
MEXICAN ECONOMY
 Tourism
 Industrial Activity
 Mining (9th place in mining production globally; it represents 1.5% of the PIB)
 Agriculture
 Remittance from the Mexican emigrants in USA
 Oil Sector
 Exports. México is the country that has signed more international treaties of
free trade. However, USA is the country that receives most of the exports.
The principal products that are exported are: oil, machinery, textiles, coffee,
chemical products, etc.
EMERGING ECONOMIES
 As developed markets struggle to recover, big emerging countries are
racing ahead – not only boosting their own living standards, but
stimulating growth in the rest of the world.
 With much more rapid growth than the developed world, these
countries have become significant players in the global economy.
 Moreover, as they grow, their middle classes are rising in importance
and attracting the lion’s share of attention from many of the world’s
biggest companies.
Global Economic Outlook: A Deloitte Research Publication
“Emerging Market Lead recovery”
EMERGING ECONOMIES
EMERGING ECONOMIES
Its physical closeness to the US has some
companies looking to invest in Mexico as
Chinese costs rapidly increase. Industry in
the country is growing but its internal
problems are still keeping US and European
countries from committing to the nation.
MEXICO AS AN EMERGING ECONOMY
* What has been done right?
 Public investment: reaching 5% of GDP, compared to 3.3% annually during the
previous decade.
 Improved infrastructure
 More competitive salaries compared to China (manufacturing sector), it is
expected that Chinese salaries are going to increase in the following years
making it more expensive
 Mexico's foreign reserves surpassed $150 billion for the first time ever. (April
2012)
 More open market
 The government has eliminated more than 2,000 administrative procedures and
16,000 regulations that were suffocating the entrepreneurship capacity.
 An online office was created to facilitate the procedures of exportation and
importation.
 In 2011 electronic invoicing was introduced
MEXICO AS AN EMERGING ECONOMY
* Still a lot of work to do
 The congress is not closing some agreements needed (example energy
reform, labour reform (it is 90 years old!)
 Energy sector is facing some problems
 There is almost 30% of the economy as informal economy which is not
being taxed.
 Drug cartels had created an atmosphere of insecurity
 46% of the population is poor
ENERGY SECTOR
Petroleos Mexicanos
Is a public decentralized entity.
https://www.cia.gov/library/publications/the-world-factbook/rankorder/2173rank.html
ENERGY SECTOR
Petroleos Mexicanos
Is a public decentralized entity.
 There is an economical and political crisis regarding PEMEX
 The proven resources, production and exports had been reporting a
decrease for the last years
 The imports of gasoline from USA had resulted in an increase in
gasoline prices
ENERGY SECTOR
Labor union of Pemex
PEMEX doesn’t have enough
resources to invest
PEMEX imports 4 of every 10 liter
of gasoline
Corruption
PEMEX pay taxes over sales
If this would be produced internally
more jobs would be created
Bureaucracy
Not enough resources to
develop new technologies
Gasoline demand is growing faster
compared to the economy
Lack of competitiveness
and efficiency
40% of the income of the
government comes from PEMEX
For the next 20 years it would be
necessary to build a new refinery
every 3-4 years
MEXICO AS AN EMERGING ECONOMY
* Still a lot of work to do
 The congress is not closing some agreements needed (example energy
reform, labour reform (it is 90 years old!)
 Energy sector is facing some problems
 There is almost 30% of the economy as informal economy which is not
being taxed.
46% of the population is poor
 Drug cartels had created an atmosphere of insecurity
POOR PEOPLE IN MEXICO %
The rich are getting richer and the poor are getting poorer
MEXICO AS AN EMERGING ECONOMY
* Still a lot of work to do
 The congress is not closing some agreements needed (example energy
reform, work reform (it is 90 years old!)
 Energy sector is facing some problems
 There is almost 30% of the economy as informal economy which is not
being taxed.
 46% of the population is poor
 Drug cartels had created an atmosphere of insecurity
DRUG WAR
 The geographic location of Mexico, its closeness to the United States
one of the principal consumer of drugs had converted Mexico in being
not just a route for the drugs but also in a producer and a consumer
country.
 According to the World Drug Report 2011, U.S. is the number 1
consumer of cocaine with 36% of world consumption.
 Approximately 80,000 people had lost their lives in this war.
FUTURE FOR MEXICO
 It is expected a growth between 3.5% and 4% in the GDP
 At least one refinery will be built during the following years
 This year a new president will be elected
 Levels of insecurity, we don’t know where this is going.
 Wealth distribution, by now not any reform has been
signed to promote equity.
REFERENCES:
 Las Empresas mas grandes de Mexico.
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http://www.explorandomexico.com.mx/about-
mexico/6/62/
http://www.countrywatch.com/country_profile.aspx?vcountry=114
http://databank.worldbank.org/databank/download/GDP.pdf
http://siteresources.worldbank.org/DATASTATISTICS/Resources/GNIPC.pdf
http://cec.itam.mx/medios_digitales/documentos/Estudios_sectoriales/Resumenes_Ejecutivos/Mineria.p
df
http://siteresources.worldbank.org/DATASTATISTICS/Resources/GDP_PPP.pdf
https://www.deloitte.com/assets/DcomGlobal/Local%20Assets/Documents/Deloitte%20Research/dttl_dr_geoQ111_250111.pdf
http://es.latintrade.com/2012/03/reformas/
http://www.elfinanciero.com.mx/index.php?option=com_k2&view=item&id=15598&Itemid=43
http://www.emergingmarkets.org/Article/2997100/Mexico-hails-shift-towards-domestic-economicgrowth.html
http://www.marketwatch.com/story/mexicos-foreign-reserves-at-record-15026-bln-2012-04-03
MEXICO
THANK YOU FOR YOUR ATTENTION.
GRACIAS