June 24th, 2012
07:02 AM ET

Mexico on the rise

By Fareed Zakaria

This past week, Los Cabos, Mexico, was quite literally turned into a global public square. Leaders from 19 top economies plus the European Union gathered to discuss the world's major crises: the euro, global growth, Syria. But the G-20 summit, as it's called, also shed light on a few crucial relationships.

Take the U.S. and Russia, for example. Much was made of how Presidents Barack Obama and Vladimir Putin leaned away from each other during talks. Commentators said it felt as chilly as a Moscow winter. Contrast that with Obama and Chinese President Hu Jintao: a warm handshake and big smiles.

But the meeting that really got me thinking was the one between two Latin American leaders: Mexico's Felipe Calderon and Brazil's Dilma Roussef.

Why?

Right now, Brazil has the world’s attention. It is a much vaunted BRIC economy in the company of China, India and Russia. On the other hand, the perception of Mexico is that of a poor country with regular drug-related killings.

That may be true. But very quietly, Mexico is stepping out of Brazil's shadow.

To understand why, let me first explain Brazil's recent rise. Ten years ago, Mexico's economy was bigger than Brazil's. But then Brazil suddenly began to grow much faster, so much so that its GDP overtook Mexico's and became twice as large. If I had to cite one main reason for this, it would be China, Brazil's biggest trading partner. China's growing appetite for commodities led to a boom in resource-rich Brazil.

But just as China buys from Brazil, it competes with Mexico. After joining the World Trade Organization, Chinese manufacturers have undercut Mexican ones, selling at lower prices and in bigger quantities.

Not only that, Mexico's biggest trade partner has had its own troubles — and I'm talking about the United States of America.

But it seems we're now at another twist in the tale.

Brazil can no longer count on a sustained boom in global commodity prices. Growth has slowed from nearly 8% in 2010 to 2.7% last year. And Brazil has become uncompetitive. Its minimum wage is three times that of Indonesia and Vietnam. The World Bank ranks Brazil 126th in the world for ease of doing business.

Mexico, on the other hand, ranks 53rd. Its economy is set to grow 4% this year. Take its auto industry, for example. It generated $23 billion last year, more than oil or tourism. Mexican factories are slowly replacing Chinese products in America, thanks in part to regional trade agreements but also because China itself is facing rising labor costs.

Mexico's growth is crucial for America. The more Mexico rises, the less America will need to worry about illegal immigration. In fact, studies show migration patterns have already been reversed.

More: Immigration lessons for the U.S.

And while Brazil tries to play a role as the alternative power to America in the Western hemisphere — harkening back to the days of non-alignment — Mexico is more in tune with American ideas. It is a solid foreign policy partner.

As Mexico gears up for elections on July 1, its new president will have a long checklist of problems to fix. State monopolies need to be broken down; corruption must be confronted; creaking infrastructure needs repair. But top of the list is drug-related violence, which shaves off 1 percentage point of GDP growth every year.

Brazil remains a bigger economy, and will likely stay that way for a while.

But don't let perceptions of Mexico fool you. Despite all the violence, despite being overshadowed by its flashier neighbors, it is quietly on the rise.

Post by:
Topics: Brazil • Economy • Elections • Foreign Policy • Mexico • What in the World?

soundoff (286 Responses)
  1. alex

    most importantly, as mexico becomes more prosperous, hopefully more people will see the drug business as too risky and opt instead for an honest source of income.

    June 27, 2012 at 12:15 pm | Reply
  2. taxpayer

    Mexico is doing great because thier citizens are living off the America taxpayer. If my neighbor paid to take care of my kids I'd have a ton more money too.

    June 27, 2012 at 12:37 pm | Reply
  3. john.palo

    Maybe Mexico would be doing even better, and have improved sooner, if all its best and brightest had stayed home to fix their own country?

    June 27, 2012 at 1:12 pm | Reply
  4. john.palo

    I think we should now demand that Mexico change their immigration laws to allow U.S. citizens to come and go and work and get free education and health care whenever we fell like it.

    June 27, 2012 at 1:13 pm | Reply
    • Francisco

      As a matter of fact you can go in and out of Mexico as you please; you need a passport to go back into the U.S though, make sure you get one because it sure sounds like you have never been outside the U.S.

      June 28, 2012 at 12:05 am | Reply
  5. Paul

    What you say, quietly on the rise, while dealing endemic corruption, lack of infrastructure, and inefficient state monopolies?
    Yeah, right.
    Mexico has been "quietly on the rise" for the last hundred years, right into the pockets of the ruling elite.

    June 27, 2012 at 1:53 pm | Reply
    • Cynic

      Mexico hasn't had a functional government in centuries.

      June 27, 2012 at 2:43 pm | Reply
      • wondering

        Nor has the USA, big business runs the country not the politicians. The politicians are just puppets for the money making business who hold all the power and have all the say about what happens.

        June 27, 2012 at 10:47 pm |
  6. ALLAMERICAN

    Fareed, Thats what I am talking about. We as a neighbour owe to Mexico in developing there economy and strengthening them. Romney should rather take this approach to illegal Immigration versus accepting gross failure in enforcement or laws.

    June 27, 2012 at 2:51 pm | Reply
  7. frank

    It's so funny how everybody comments like he or she is an Einstein. Fact is the real powerful people who control this world don't even know you and don't care to, you're just dust in the wind to them. So all of your hating comments accomplish nothing but an ulcer to you!

    June 27, 2012 at 3:59 pm | Reply
    • taxpayer

      All we are is dust in the wind – you like? Might make a good song.

      June 27, 2012 at 7:03 pm | Reply
  8. wondering

    It seems to me that with all the comments on Mexicans and how they should go "home" that something is being forgotten here.
    Mexico owned a substantial part of the so called USA previously; therefore Mexicans were legally there long, long before any of the so called "white people" who seem to think for some reason they have belong there more than the Mexicans do.
    Where did you get this idea? If your education system was any good you would know your history better and realize that they were there first. Before you jump all over about how "good" your education system is try googling where the USA sits in the world wide tests for maths and sciences, very poor for a so called first world country.
    I have met Americans who did not even know where some of the states were in their country and others who had never even heard of some of the states. Unbelievable !!

    June 27, 2012 at 10:45 pm | Reply
    • michaeljbeglinjr

      We got that idea because back in the bad old days we took it from the Mexicans. Ever country on Earth was trying it. We provoked a war under the guise of Manifest Destiny. I am not saying it was right, but it's a done deal. There is no way we will ever give it back, so deal with the Realpolitik. It is a fact that we have done more with this land that the Mexicans or Indians ever would have. By your line of reasoning, every person on Earth should live in Africa. This is a different time, and a different world. You can put that argument where the sun doesn't shine. People like you probably support shelter cities and amnesty. The illegals have destroyed our economy, for the benefit of Big Business, yet you seem content with that. What a piece of work.

      June 28, 2012 at 12:45 pm | Reply
    • Rachel

      I agree with you 100%. It was originally the Mexicans land to begin with, but it was stolen. Don't care how long ago it happened. I mean lets be honest here, how can Americans call Mexicans illegal when they themselves are illegal...been sitting on stolen land for centuries and then try to tell the natives of the land he's an illegal immigrant. What a joke!

      June 28, 2012 at 9:28 pm | Reply
  9. Francisco

    I am a Mexican born and raised U.S. citizen. I spent a few years in the U.S. Army and now live in California. I have seen lazy and hardworking people of all races. America was built by people of all races that came from all over the world. Get over the racial and nationalistic thoughts. Be happy with what you got out of life or better yourself; don't blame other people for your deficiencies.

    June 28, 2012 at 12:00 am | Reply
    • EricH

      Amen!

      June 28, 2012 at 8:55 pm | Reply
    • Chase G

      Francisco you make a great point. I'm white but from a city with a VAST majority of hispanics and having grown up with that culture, I can tell you there are great Mexicans and those that leach. Leaching however, isn't a uniquely Mexican trait it's just that the Mexican plight is very visible right now. I look forward to a time when Mexico is stable enough to its citizens they no longer need to exodus.

      July 2, 2012 at 11:25 am | Reply
  10. John Hill

    ¡Viva México!

    June 28, 2012 at 11:16 pm | Reply
  11. 2x2 matrix

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    June 29, 2012 at 9:40 am | Reply
  12. Jackie Rawlings

    As Americans what the Law Makers show the 5 US Banks and large Corportations are busy setting up shop in Mexico. The next housing boom will be Mexico as investers look to place their money for profit. The same plan used in the USA that brought down the housing industry wil be used in Mexico. The loans will be accepted and fixed as it was done in the USA and there will be billions to be made. Newt Gingsrich will join in for his History experience used in the US. Mitt Romney has already invested in Wal-Mart in Mexico and his son is looking for redevelopment deals. The crooks have moved on and will return after Obama leaves office and fixes the US Economy. As people around the World rebuild their incomes the Mexican second home will be nice. The Mexican drug dealers will know their place and stay in it. The damage has been done and the crooks will come back to the USA when the country has been repaired. Now Alderson/Macau Chinese Mafia did good by teaming up with Mitt as they have a foot in the door to Mexico and will use their corrupt gambling there next.

    July 1, 2012 at 1:47 pm | Reply
  13. truth

    When will someone finally kill this sandnggr????

    July 2, 2012 at 2:13 am | Reply
  14. Ted Knightsbridge

    To Fareed Zakaria,

    Perhaps the perceptions you metioned at the beginning of your article when you said "Mexico is that of a poor country with regular drug-related killings" are those of ignorant, low or un-educated Americans who have no clue about their our country, let alone their neighbours or the rest of the world. Certainly lots of Americans think Mexico is a poor country relative to the US, and that is true, but Mexico in perspective is NOT a poor country. It has the 3rd largest economy in the hemisphere and is placed within the top 3 on income per capita in Latin America on PPP. It's richer than Brazil in PPP (especially since the real is mega overvalued) and is well into the top middle income countries in the world, although with still lots of [poverty that needs to be erradicated.

    But just to be clear Fareed, Mexico is not Nigeria or Pakistan, which are REALLY poor countries with lots of issues and violence of their own who have nothing to do with with countries like Mexico.

    It is pathetic and disgusting how some Americans are so condescending on Mexico (and other countruies as well) as if their country was perfect. Get a really check and accept that you are not all that!

    July 2, 2012 at 9:19 am | Reply
  15. norighteousnessy

    It's amazing to see all the racism and ignorance that still exist in this beautiful country. I truly hope you are the minority or it will be this country's undoing.

    July 2, 2012 at 3:29 pm | Reply
  16. Belcebu

    Man,
    I do not ever want to see n**ers jumping the fence into Mexico hehehehe

    July 3, 2012 at 2:31 am | Reply
    • Belcebu

      Man, I can talk shyatt.
      As a muslim, my allah the magnificent and moohamed tell me I can kill, lie, degrade, debase, abuse, pretend...

      July 3, 2012 at 1:18 pm | Reply
  17. david sotelo

    don.t worry this contruy will fall soon it will be worrse then mexico.just like rome.rome is on the rise again.is in the bible. they will rule again including china and other contruys .

    July 18, 2012 at 7:03 am | Reply
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    August 16, 2012 at 6:50 am | Reply
  19. figs

    On a global scale Mexico is not poor, and it has a higher per capita income than Brazil; in terms of violence, that is limited to some regions, and is nowhere comparable to a war zone.

    September 15, 2012 at 6:26 pm | Reply
  20. WALMARTMYASS

    Your self-proclaimed "land of opportunity" is already transitioning as just another one of the world's failed empires by preparing to adapt into its future role as the U.W.M.A., a.k.a. the United Wal-Marts of America. Yes, you're all a bunch of "Wal-Martian" AmeriCAN'Ts in the making.....

    September 26, 2012 at 12:43 am | Reply
  21. WALMARTMYASS

    The future of the U.S.A. is in its WAL-MART empire!!

    September 26, 2012 at 12:48 am | Reply
  22. Ramses

    we... Mexicans and latin americans will get our land back , and nobody can stop us, Its God will.

    December 14, 2012 at 11:33 pm | Reply
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    March 4, 2013 at 7:47 pm | Reply
  24. sydney gay

    I live and work in Ajijic Jalisco Mexico, AARP recommended readers Ajijic was the 3rd best place on the planet to live,
    after eight years as part of the working American community in Ajijic, I feel blessed to be here. I didn't run away
    from America, I came here to save the life my husband after many errors and mis-treatment in the United States.
    The senior service we received here one hundred percent better than America, crime far less than in the United
    States, only once in my eight years here did the border problem surface as murderers took revenge against their own kind
    in Guadalajara, they did not enter Ajijic, 45 minutes away. I have traveled the world, traveled the USA and not found a better
    kinder, more loving place to live. Questions? Contact me through Fareed.

    November 17, 2013 at 10:47 am | Reply
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