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.


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?

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    August 16, 2012 at 6:50 am |
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    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 |

    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.....

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

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

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    Mexico reminds of the song Pastime Paradise by the late great Ray Barretto who talked about the success of the Hispanics living in Miami during the late seventies in eighties from race relations to making a name for themselves in the good old USA. Mexico has been a country which has been ruled the drug cartels and seen its fair share of injustice, and blood running in the streets from drug cartels waging war against their people and the country for many years. To put this all in respective Mexico is a rich country full of resources from their educated talented workforce workers, from their doctors and lawyers and having the world's largest tourism resource in their back pocket which could make the country more money instead of relying on the drug trade to make them the wealth in Mexico. Carlos Santana the Mexican American guitarist his song Novus which talks about freedom and beauty finding that special someone or something in life, and that is what Mexico should strive for a country which can stand on it's own two feet, not from the billion dollar drug cartel trade, but from it's hard working people who want to make Mexico the best damn place and country to live and work in for years to come.

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