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NAFTA at 20 Years US Mexico Chamber of Commerce November 7, 2013. Animesh Ghoshal DePaul University. North America as a Competitor on the Global Stage. Mexico in 1982 Integration of US and Mexican Economies Concerns about China

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Nafta at 20 years us mexico chamber of commerce november 7 2013

NAFTA at 20 YearsUS Mexico Chamber of CommerceNovember 7, 2013

Animesh Ghoshal

DePaul University


North america as a competitor on the global stage
North America as a Competitor on the Global Stage

  • Mexico in 1982

  • Integration of US and Mexican Economies

  • Concerns about China

  • Other issues (demography, employment, border crossing, security, education)

  • Changes in Mexico



Integration of us and mexican economies
Integration of US and Mexican Economies

  • Trade: Amount and Quality

  • Investment

  • Tourism

  • Population Movement








Growth in bilateral investment us fdi in mexico
Growth in Bilateral Investment: US FDI in Mexico China, 2012 (billions of dollars)


Growth in bilateral investment mexican fdi in us
Growth in Bilateral Investment: China, 2012 (billions of dollars)Mexican FDI in US


Fdi flows in mexico 1992 2011
FDI Flows in Mexico, 1992-2011 China, 2012 (billions of dollars)


Overall fdi inflows into mexico
Overall FDI Inflows into Mexico China, 2012 (billions of dollars)

  • Dependence on US has actually decreased since advent of NAFTA

  • FDI inflows in 2011:

    • Total, from OECD: $19.6 billion

      • US: $10.6 b

      • Spain: $3.3 b

      • Netherlands: $1.5 b

      • Switzerland: $1.2 b


Mexican concerns about competition from china
Mexican Concerns about Competition from China China, 2012 (billions of dollars)



In others no evidence of displacement

In others, no evidence of displacement China, 2012 (billions of dollars)



Mexican concerns about competition from china cont
Mexican Concerns about Competition from China (cont) Share Growing Too

  • China joined WTO in 2001

    • Faced reduced trade barriers (MFN)

    • Very low labor costs

      • In 2003, hourly labor cost in China $0.62,

        in Mexico $5.06

  • Many maquiladoras shut down or moved to China, but…

  • Labor costs in China have risen rapidly

    In 2008, hourly labor cost in China $1.36

    in Mexico $6.12

    Since 2008, wages in China have increased 10-20 percent a year





Role of distance travel time to major world ports
Role of Distance: Travel Time to Share Growing TooMajor World Ports


Other issues
Other Issues Share Growing Too

  • Tourism

  • Demography

  • Education: major factor in long term growth


Tourism and population movement
Tourism and Population Movement Share Growing Too

  • Tourism:

    • Mexico #1 destination for US residents in 2011

      • Mexico 20.1m, Canada 11.6m, UK 2.4m

    • Mexico #2 source of tourists to US in 2011

      • Canada 21.3m, Mexico 13.5m, UK 2.4m

  • Population Movement and Social Networks

    • US: 12 m residents born in Mexico, 32 m of Mexican origin

    • Mexico: I m American residents (20% of total)


Us ageing population demographic challenge
US: Ageing Population: Share Growing TooDemographic Challenge


Mexico younger population demographic window
Mexico: Younger Population Share Growing Too“Demographic Window”




Mexico s economy has some problems
Mexico’s Economy Has Some Problems Annual Average (Source: OECD)

  • Extremely high dependence on US, with 80% of exports going to one country

  • Trade agreements with many countries, but rules of origin make export diversification difficult

  • Lack of competition in many industries

  • Concerns about violence


But mexico today very different from mexico of the past
But Mexico today very different from Mexico of the past Annual Average (Source: OECD)

  • Composition of Exports

  • Macroeconomic Conditions

    • Inflation

    • Exchange Rate

    • Debt Service

    • Interest Rate


Composition of mexico s exports 1982 and 2010
Composition of Mexico’s Exports, Annual Average (Source: OECD)1982 and 2010


Economic situation in mexico 1982 and 2011
Economic Situation in Mexico, 1982 and 2011 Annual Average (Source: OECD)



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