About Mexico
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Mexico is located in North America and it has a total area of approximately 2 million square kilometers. The northern border shares 3,000 kilometers with the United States. Its climate varies from tropical in the south to desert in the north with the enormous biodiversity this creates. The government is organized in a Federal Republic, integrated by 31 states (provinces) and a Federal District. Today, Mexico is the country with most Free Trade Agreements (FTA's) in the world. The largest free trade agreement is the NAFTA, covering the United States, Canada and Mexico. The Mexico-EU Free Trade Agreement, created in 2000, was the first free trade area between Europe and the American continent. Mexico's network of FTA's with 32 countries, on three different continents, represents a unique opportunity for foreign investors, offering preferential access to a potential world market of more than 950 million consumers. Mexico's strategic geographical location, between the Atlantic and the Pacific Oceans, and connecting North and South America, makes it an ideal hub for worldwide production.
The free trade agreements have helped Mexico to liberalize and open up its economy, attracting sizable foreign investments. |
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Economy:
Mexico is the 5th oil producer in the world. Oil and gas exploration and production is controlled by the state-owned company Petroleos Mexicanos (Pemex). Although companies have begun to undertake drilling operations under specific service and performance contracts, the constitution does not allow joint ventures in oil production with private companies. Foreign participation in downstream natural gas and in LNG facilities is allowed among other areas in the value chain. Despite falling oil production, with recent discoveries Mexico may become again one of the most important exporters of crude in the world.
Mining is also an important economic activity since the country is the 2nd. largest producer of silver in the world, with copper, lead, gold, zinc and fluorite reserves among other minerals.
Services continue to represent the largest part of the economy. Economic expansion, improved financial regulation, consolidation and a wave of foreign acquisitions have strengthened and stabilized the banking sector. The insurance industry is also gradually modernizing. Sectors such as telecommunications and media are still regulated.
In agriculture the share of GDP has fallen from an average of 6.9% in the 1980s to 4% in the past years. Although employment in agriculture has also declined, it remains a major source of hand labor. Producers for the export market (mainly fruit and vegetables) have benefited from NAFTA, but the rest of the sector has had difficulty in shifting production to more competitive commodities and thus opening the need for new technology.
The manufacturing sector in Mexico is largely focused on the US, especially since the introduction of NAFTA in the mid-nineties spurred foreign investments near the US-Mexican border. The so-called maquila industry (assembly for re-export) produces a variety of goods, including vehicles, electrical goods, textiles and furniture. The automotive sector is one of the most dynamic and important branches of manufacturing in terms of production, employment, investment and exports. It employs around 500,000 workers and accounts for around 2.6% of GDP. Aerospace has also grown quite considerably. The maquila industry lost low-paying jobs to China and other Asian countries, but has also managed to shift to products with a higher added value.
Mexico’s main regions in economic terms
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Central Region
The central area of Mexico includes Mexico City and the states of Mexico, Morelos, Hidalgo, and Puebla. The total population for the five entities is estimated at 44 million people. This region is also the political and financial hub for Mexico, and concentrates over 45 percent of Mexico's total industrial base. Economic and financial activity is concentrated in Mexico City (usually referred to as the Distrito Federal, or DF), which accounts for over 20% of the country’s GDP. Its neighboring state, the heavily industrialized Estado de México, accounts for a further 10% of GDP. Areas of interest cover all ranges of industrial activity, manufacturing, design, automotive. Most corporate headquarters for national and international companies are located in Mexico City.
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Northeast
This region comprises the states of Nuevo León, Tamaulipas and Coahuila, which altogether add 14% of national GDP, and a total population of 9.6 million. Because of the strategic location for the NAFTA market, as well as the importance of the industrial activity these three provinces are important when looking to manufacture for export to the U.S.or Canada. The most promising sectors in the region are: food and beverage, steel, ceramics, automotive and auto-parts, electric and electronics, cement, glass, and manufacture in general in Nuevo León; in- bond production, trade through land and sea ports, logistics, petroleum and refinery of related products and agriculture in Tamaulipas; and automotive, dairy and mining in Coahuila. There is also a large market in this region for technology and products for water and environment related industries. |
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West
Western Mexico is comprised by the states of Aguascalientes, Jalisco, Queretaro, Guanajuato (Bajio Area), Colima, Michoacan, Nayarit, and Sinaloa. This region has an economy larger than that of Chile or Colombia, or all of Central America combined, at just over $100 billion. A population of 20 million is concentrated in Jalisco and Guanajuato, which along with Aguascalientes and Queretaro, are key manufacturing and industrial states, while Michoacan, Nayarit, Colima, and Sinaloa are important agricultural producers. Major sub sectors within the region, supported by foreign investments, include auto parts, electronics, jewelry, furniture, textiles, footwear, tourism, metalworking, processed foods, agricultural equipment, dairy products, and fruits and vegetables.
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Northwest
The northwestern region is comprised by the States of Baja California, Baja California Sur and Sonora. The State ofBaja California shares its northern border with California and Arizona, and is known as an active industrial, agricultural, in-bond manufacturing and tourist area. The Pacific Ocean borders Baja California Sur on the west and this peninsula borders the Gulf of California on the east. This State is making major investments to develop its exclusive resort areas, with major investments in hotel and golf infrastructure and is a producer of seafood and agricultural products. The State of Sonora has also an important industrial, mining, fishing and agricultural industry.
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Other important regions:
On the Gulf coast,Veracruzhas benefited from agricultural exports and oil production. The state of Veracruz has the largest container-handling port in the country for exports to the east United States and Canada as well as Europe. Other port facilities in the state are being expanded also to accomodate for the increase in trade. Quintana Roo, spurred by Cancún, has experienced strong growth in tourism. Neighboring Campeche has grown due to the predominant oil industry, with Ciudad del Carmen being the oil hub in the whole area. The southwest of the country, which is largely agricultural, remains still much undeveloped. The states of Chiapas and Oaxaca, along with some areas of Guerrero, all on the Pacific Ocean side of the country, offer a wide range of tourism alternatives.
Source: Inegi, Ministry of Economy, Banco de Mexico