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ECON IS FUN!. Not really, but you HAVE to pay attention. A snapshot via Economic Indicators. Mexico= Solid middle class nation Conclusions from chart A CPA has gone up Debt has risen Inflation has been controlled. Continue…. Chart B Poverty has decreased in general

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not really but you have to pay attention

ECON IS FUN!

Not really, but you HAVE to pay attention.

a snapshot via economic indicators
A snapshot via Economic Indicators
  • Mexico= Solid middle class nation
  • Conclusions from chart A
    • CPA has gone up
    • Debt has risen
    • Inflation has been controlled
continue
Continue…
  • Chart B
    • Poverty has decreased in general
    • Gini coefficient=Mexico is less unequal but it needs to improve.
continue ii
Continue II…
  • Chart C
    • Exchange compared to the world
    • Third line=accumulation of foreign funds into the country net of outflow.
    • Deposit rate= a fee, paid on borrowed capital
organization of the economy and government policy
Organization of the Economy and Government Policy
  • Member of the OECD
  • Predicts Mexican population=105 million 2005
  • 76.5% of population was urban in 2005, in 2000, 74.6% population was urban
no taxes po mexicans
No Taxes = Po’ Mexicans
  • Less than 20% of the labor force is registered with tax authorities.
    • OECD predicts over 43% of jobs
employment
Employment
  • Big Companies<Small Companies
  • But more people work in big companies.
  • Shift from agricultural work to manufacturing
dirty rich man
Dirty Rich Man!
  • Carlos Slim, example of economic extremes.
financial organization and monetary and foreign exchange policy
Financial Organization and Monetary and Foreign Exchange Policy
  • Mexican financial system reflects economic booms and busts from the past
  • Financial liberalization was gained by diminishing direct role of government institutions, but these institutions gained a new role.
center of mexican moolah
Center of Mexican Moolah
  • Bank of Mexico
  • A.K.A. Banco de Mexico or Banxico
  • Independent since 1993
  • Manages monetary, foreign exchange policy
  • Wants= minimize inflation, maximize macroeconomic stability
  • -Lowering inflation is the skinny jeans of economists
  • Banxico and Financial Ministry work to set value of peso
  • Supply and demand for peso affects its value
  • -Banxico not so independent from the government
look at all the failure
Look at all the failure!
  • CNBV, the Insurance Commission, the Pension Funds commission
  • still not stable, but working on it since the 1994/1995 crisis
  • dependent on the Financial Ministry
  • Mexican banks nationalized in 1982, privatized in 1991
continuation
Continuation…
  • Mexican Stock Exchange=Bolsa.
  • Medium business=hard to find financing
  • Microenterprises= microcredit institutions (small loans) are different from banks.
  • Government tries to be as transparent as possible to gain trust=more developed market in future.
mexico loves foreigners
Mexico Loves Foreigners
  • FDI (foreign direct investing)= foreign nations bring technology, money, jobs, econ activity to Mexico.
  • Brings $18 billion to Mexico, 16,000 foreign firms, and $210 billion in stocks.
people use moneygram in case you don t know
People use MoneyGram, in case you don’t know.
  • Remittances= money sent to Mexico from a foreign land to citizens.
  • IADB (Inter-American Development Bank) estimated in 2006, remittance to Mexico= $23 billion.
  • CONTROVERSY!
trading partners and trade policies
Trading Partners and Trade Policies
  • NAFTA= developed b/c of close relations Mexico & USA had for years.
  • Boomed FDI
  • Secret economy abolished, everything became transparent and known.
continued
Continued…
  • ALADI / LAIA (Latin American Integration Association) more trade in Central America
  • EU= negotiated free trade with Mexico.
    • Mexico is in two of the biggest markets in the world.
    • China becomes a threat after joining the WTO
fiscal policy
Fiscal Policy
  • Fiscal Policy= government spending/revenues, needs reforms
  • Should be counter cyclical (economy) economists say
    • Spend money/cut taxes in bad times
    • decrease gov. spending when economy is good b/c of the private sector.
continued1
Continued…
  • Income tax and value added sales tax and Pemex (Petroleos Mexicanos) revenues=gov. revenue
    • Mexico is subject to Pemex’s ups and downs since most revenue comes from it, though not a lot.
    • informal economy=weak tax system
continued ii
Continued II…
  • Mexico’s president, Felipe Calderon, wants to but cannot privatize oil b/c it is protected in the Mexican constitution.
  • Lack of oil=lack of money
mexico s new econ policies
Mexico’s New Econ Policies
  • Budgetary stabilized plan= revenues from high oil prices are saved for future counter spending cycles.
    • Used to stimulate economy in hard times
    • It is working for Mexico and economy is getting better
continued2
Continued…
  • Oportunidades or Progresa
    • Money is spent on needy if they follow rules ex. Immunizing children, taking them to school
just small details
Just Small Details
  • Immigration in the North
  • NAFTA
  • Pollution