Currently, the world’s attention is drawn to the rapid development of the newly industrialized countries of Asia, Africa, and Latin America. Mexico is one of these states. Economists around the world study the economic development of this state. The United Mexican States is located in the south of North America. Modern Mexico is considered one of the largest and most developed countries in Latin America. Entering a new phase of industrial development, Mexico has used financial and material support of developed countries, primarily the United States. Moreover, there was the specialization and cooperation based on the gradual integration of economic structures of Mexico with the economy of the developed capitalist countries. These factors have left a deep imprint on the economic development of Mexico, giving it a contradictory character. Although Mexico’s GDP has greatly grown in the last 10 years, it still lags markedly behind in per capita income from developed capitalist countries. The purpose of the paper is to study economic statistics, activity, and channels of distribution of the United Mexican States.
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Mexico was a Spanish colony for a long time. Moreno-Brid and Ros have noted that “certainly the centuries under Spanish colonialism determined Mexico’s socioeconomic structure as well as its institutional development” (18). Being a Spanish colony, Mexico was a cheap source of raw materials and a market for goods for Spain. The War of Independence and the subsequent instability ravaged the country and slowed its investment process. Only in the 20th century, the country began its economic recovery. According to Klein, “Economic performance improved significantly, and society increased its participation in an environment of more political openness” (149). It greatly benefited the situation in the country.
Modern Mexico is an agrarian-industrial country, where 27.8% of the economically active population is engaged in agriculture and about 25% – in industry (Wise et al. 193). The structure of industrial production in Mexico is characterized by the fact that 80.7% of all enterprises in this sector are small productions belonging to national or private capital (Wise et al. 193). Macroeconomic results show an improvement of macroeconomic indicators as compared to previous years. GDP per capita is about $12,000, and GDP at purchasing power parity is over $1 billion (Wise et al. 193). In 2015, inflation rate in the country reached 2.7% (Wise et al. 193). These figures are lower than in previous years. One Mexican peso is equal to $0.05.
Mexico is a country of contrasts in many respects, particularly in the field of economy. Thus, 41% of national revenue accounted for 10% of the most affluent citizens of the country (Wise et al. 191). Moreover, the list of the richest people in the world included 11 Mexicans (Wise et al. 191). Despite this fact, there are a great number of poor people in the country. Approximately 40% of the population is below the poverty line, of which 9% lives in extreme poverty (Wise et al. 191). These figures are lower than in other countries of Latin America. Therefore, there is a significant difference between various sectors of the population. A difficult situation on the labor market is one of the key socio-economic problems of Mexico. The official unemployment rate reduced in comparison with previous years, constituting now 4.3% (Wise et al. 195). Nonetheless, real unemployment is more than 30% of the economically active population (Wise et al. 195). Furthermore, 50% of workers are employed in the informal sector; thus, they are not covered by the social security system (Wise et al. 195). The average salary is 59-62 pesos per day (Wise et al. 195).
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Mexico’s economy is based on three main areas – oil, tourism, and agriculture. Mexico has one of the largest economies in Latin America. It should be noted that the county is the main exporter and producer of oil in the region. Despite the fact that oil production has decreased in the past few years, approximately one-third of government revenue comes from the oil industry. Most of the raw materials are purchased in the United States. In addition, agriculture occupies a significant place in the country’s economy. In the structure of agricultural production, crop production predominates but the value of livestock also increases. These days, the development of new industries is of great importance in the country. These new industries include the automotive industry, electrical and electronic equipment, information technology, aeronautics, and aerospace.
Great importance has always been attached to foreign trade in Mexico, which is one of the main sources of foreign currency that is spent on the necessary equipment for the development of the industry and raw materials. For a long time, a chronic excess of imports over exports has been a characteristic feature of foreign trade. A structure of imports shows that the country buys mainly machinery, raw materials for industry, and consumer goods. The main trading partner of Mexico is the United Sates. The US market has long been crucial to Mexico not only for its manufacturing industry but also for the economic power of the country as a whole. When Mexico signed the North American Free Trade Agreement, expanding of its access to the US market as the result of this agreement benefited its manufacturing industry, whose share in GDP increased by almost 4 percentage points for five years after signing the agreement (Wise et al. 191). In addition to the United States, the major trading partners of Mexico are Spain, Japan, Germany, Brazil, and other countries. Moreover, the country reduced tariffs on imported goods.
Channels of Distribution
Nowadays, retails in Mexico increased by 5% (“Retailing in Mexico”), which indicates about the rehabilitation of the industry and the economy as a whole. It happened after 2014 when the economy of the country experienced serious difficulties (“Retailing in Mexico”). In modern days, Internet retailing is regarded one of the fastest growing industries. It is supported by e-commerce and multi-channel retailers. They further advance online platforms. In addition to Internet retailing, groceries occupy a rather significant place in the whole retail value sales. Groceries are sold in the warehouse clubs and department stores. The latter play an important role in the channels of distribution since these days, their number continuously increases. Retail outlets vary in size, from large to small ones. Frequently, entrepreneurs own small outlets selling particular goods. However, they do not significantly increase the economic situation of the country contrary to the chain stores that sell goods from different countries. This fact improves the relation of Mexico with the foreign countries. The wholesale industry has also increased in comparison with the previous years. The main goods in this category include tobacco, beverages, and food. All these sectors are big; thus, they require a great number of wholesale middlemen. Mexico import-export agents are of the high importance for the country. These agents include different trading partners of the country such as the United States, China, and others.
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In the recent years, due to the suitable financial and fiscal policy, macroeconomic stability has been observed in Mexico. The economic development allows the United Mexican States to occupy a rather high place in the world rankings. Its GDP constantly increases while the level of unemployment decreases. Despite this fact, poverty rate in the country is still rather high. The United States is the main trading partner of the state, although Mexico has trading relation with several European countries. In conclusion, it can be noted that despite a stable economic condition in the country, the Mexican government should conduct a number of reforms to improve the situation.