By: Daniel Nardini

Despite the vicious Drug War that has killed tens of thousands of Mexicans, Mexico’s economy is overall doing well. Despite the economic turmoil in the Europe Union and the U.S. economy still pretty much flat-lined, Mexico’s economy has shown growth. In fact, Mexico’s economy has been growing faster than almost any other with the possible exception of China’s. Why is this? There are two primary reasons. First, many companies find Mexico conveniently situated in the economically largest trading bloc in the world—North America. This means that companies can build everything from cars and consumer goods to heavy machine parts in Mexico and then ship them far more easily and cheaply than if they were manufactured in China and had to be shipped across the ocean. Finally, Mexico’s labor is still cost effective. Although Chinese labor is overall cheaper, transportation costs and bringing in the raw materials costs more for China than it does for Mexico.

To make it more attractive for companies to choose Mexico, many Mexican workers and skilled Mexican American business people have been locating and relocating back to Mexico. These people not only bring in skilled labor but also business investments from the United States that helps Mexico’s economy. Although Mexico’s social situation still remains unstable, the economic boom is making a growing number of Mexican migrants and even immigrants rethink about being in the United States. Although there is talk of “recovery” in the United States, this has not benefited too many in a number of immigrant communities in this country, and hence some Mexican immigrants are returning to Mexico to take advantage of the situation there. A growing number of Mexicans are also moving to the U.S.-Mexico border where they stay and live in the United States but work in Mexico. With Mexican as well as American trucks being able to haul freight through all of the United States and Canada, the costs for sending products made in Mexico have in fact gone down.

Will this economic boom last? If the U.S. economy really starts getting revved up, will this undermine Mexico’s economic boom, or will it help Mexico? Will the Drug War have a serious impact on Mexico’s economy? Will economic competition from China and other countries impact Mexico? Will an over-evaluation of the Mexican peso make Mexican-made products non-competitive? Will the number of people who still leave Mexico eventually impact its economic growth? These and many more questions have too many variables, and there is no way at present to be certain how any of these factors may impact Mexico in the near or far future. For now, Mexico’s economic dynamo seems pretty stable.