Globalization’s Impact on Mexico
By: Drew Ferchak
Section: Age of Globalization BADM 1004-34
Mexico is a Latin American country that is located in the southern part of North America and borders the United States of America to the north, Belize and Guatemala to the South, the Pacific Ocean to the west, and the Gulf of Mexico and the Caribbean Sea to the east. Mexico had been habituated for thousands of years, and one of the first civilizations to emerge in Mexico were the Olmec’s. Various tribes struggled for power and land until the Spanish conquistadors arrived in Mexico and conquered these tribes. The principal tribes that were present in Mexico until about the early 1500’s were the Aztecs and Mayans. The ancient Mayans are primarily known for their successes in math and science and built vast cities that are still standing today. By the 1400’s the Aztecs had taken over the other small tribes that surrounded them, and they built on the Mayan civilizations and incorporated a social class that included the nobles and the commoners and a religion that involved human sacrifice. Their capital city was called Tenochtitlan and was the largest city in the world around 1519 with a population of 500,000 people. Tenochtitlan is still the capital of Mexico today and is now known as Mexico City. Spanish conquistadors arrived in Mexico in 1519 and with the help of some of the indigenous people of Mexico who were scared of being offered as human sacrifices in the Aztecan culture were able to defeat the Aztecs in 1521 and gained control of the capital city of Tenochtitlan, but did not achieve full control until 1523. The conquistadors brought diseases with them that almost completely wiped out the indigenous people of Mexico who fought alongside the Spanish. For the next 300 years, Mexico was influenced and shaped by Spanish colonialism and development. Mexico declared their independence from Spain in 1821 and this declaration started the Mexican War of Independence that lasted for a little over ten years. Mexico recorded September 16th, 1821 as its independence day and is a holiday that is similar to the American Fourth of July and is still celebrated today.
Mexico has come a long way since it has declared its independence because of globalization but still has many problems today. Mexico is currently an emerging market country but currently has problems with immigration, trade, corruption, and violence.
Mexico currently has a population of 124 million people and is expected to grow. Since they now have a child mortality rate of 14.6 per 1000 births and this had exponentially decreased since 1960 when it was around 150 per 1000 births and had a high fertility rate in the 20th century since many families had about six children and it peaked in the early 1960s when the average was around 7.2 children. Life expectancy has also increased since the mean life expectancy in the 20th century was around 36 years, and males lived to about 35.5 years old, and women lived to about 37 years old. Today, the average life expectancy is 75 years, and men typically live to 74 years and women tend to live to 78 years old. This compares very similar to the United States and Canada since their average life expectancy is 79 years and 82 years respectively. The median age currently in Mexico is about 28 years old with men at around 27 years, and women are around 29 years old. The age ratio based on gender is about 1 to 1 for all ages. Mexico’s population has been growing over the last century and can be seen from these stats and their population pyramids.
The most significant ethnic group in Mexico is the mestizos, and they make up 62% of the total population. Identifying as a mestizo means that they are a mixed identity made up of European, American Indian, or potentially African heritage. Many that identify as the ethnic group assume that they have a European ancestry primarily Spanish since they are the ethnic group that conquered Mexico in the 1500s and many Mexicans do not want to identify as Spanish since the Spanish were ruthless colonizers. Some also include American Indian as part of their ethnicity because of the ancient history of the Mayans and Aztecs. Many even believe that they are of African descent and this is strongest along the coasts. The mixed mestizo identity is fascinating because it does not rely on genetics since many depended strongly on Spanish customs and sometimes others display pride in being an American Indian or having African heritage. The mestizo identity is flexible and ever-changing since this identity was pushed by the Mexican government in the early 20th century since they wanted one national identity and an ethnic group that encompasses all of the people living in Mexico. 21% of the population predominantly views themselves as American Indians, 7% of their population is primarily American Indian, and 10 % of their population sees themselves as another ethnic group which is predominantly Spanish.
The primary language spoken in Mexico is Spanish which 92% of the population speaks. About 6% of the population speaks predominantly Spanish and indigenous languages, and about 1% of the population only speaks the indigenous language. The native languages include various Mayan, Nathual, and regional dialects. About 83% of the communities are members of the Catholic Church, 2% are Pentecostal, 1% is Jehovah’s Witness, 5% are apart of other evangelical churches, and 7% are atheists.
Most of the population is found living near Mexico City and the middle of the country between the states of Jalisco and Veracruz. About ¼ of Mexico’s population lives in or around Mexico City. 80% of the total population also lives in very urban areas because urbanization has been occurring at about 1.4% per year. The major population areas of Mexico are Mexico City with a population of 21 million, Guadalajara with a population around 5 million, and Monterey with a population around 4.5 million.
Mexico has a net immigration rate of – 1.8 migrants/ 1000. Many Mexicans are leaving the country of Mexico and primarily immigrating to the United States. Mexicans are the most massive immigration group in the United States since the 1980s. Approximately 11.6 Mexican immigrants reside in the United States today. Mexicans account for about ¼ of the foreign-born population in the United States. 11 million people have immigrated to the United States, and this number is down from 2008 when it was around 12 million. Illegal immigration from Mexico accounted for about 50% of the total population of illegal immigrants that are currently residing in the United States in 2016. President Trump focused a lot on this issue during the 2016 election. He promised to deport illegal immigrants that have committed a felony because of the Kate Steinle murder that occurred in San Francisco where an illegal immigrant from Mexico killed a United States citizen, and this illegal immigrant had been deported multiple times back to Mexico but because of weak border security was allowed back into the United States. He promised to build a wall on the United States’ southern border with Mexico as a safeguard against this issue and the President ordered the construction of the wall in January of 2017 and he visited the prototypes of the wall in San Diego in early March of 2018. Homeland Security Secretary Nielsen has made many visits to the border and has toured the construction of the border in Calexico, California in April of 2018. President Trump has most recently ordered to send the National Guard to the Mexico-American border to fight illegal immigration.President Bush took similar action in 2006, and President Obama also took a similar measure in 2010 because all three of them believed that national security should be a primary issue.
President Trump also tried to use the national guard as a deterrent for the caravan of refugees and migrants that are currently making their way through the Latin American countries. Many illegal immigrants are seeking refuge in sanctuary cities such as San Francisco, and these are cities that limit cooperation between local law enforcement and federal agencies such as the Department of Homeland Security and the United States office of Immigration and Enforcement. In these cities, many do not ask about the immigration status of people living in these cities. President Trump and many Republicans have said that these sanctuary cities allow criminals to go free and lead to crimes being committed by people that could have possibly been deported. Many local officials have called their city a sanctuary even though they do not have said policies in place. President Trump signed an executive order when he first came into office that limited funding to sanctuary cities. Chain migration from Latin American countries is another problem that the United States is facing. Chain migration defined by the White House is the process by which foreign nationals permanently resettle in the United States and bring over their relatives, then who bring over their relatives and can do so until their whole extended families are in the United States. Every two new immigrants to the United States bring seven foreign relatives with them. Chain migration is the most prominent reason for legal immigration to the US today and accounts for over 70% of the total immigration to the US. More than nine million foreign nationals have entered into the United States through chain migration in the past decade. In the same time frame, about 2 million chain migrants have come to the US, and the average Mexican that immigrates into the US brings roughly six other foreign relatives with them. Mexico sends the most chain migrants to the US currently. President Trump ended the program Deferred Action for Childhood Arrivals(DACA), and both political parties have been trying to come with a solution that would grant amnesty anywhere from 800,000 to 3 million illegal aliens. By giving amnesty to them, it would trigger more substantial chain migration that would bring anywhere from one to nineteen million new foreign nationals to the United States. Mexico does not only have emigration but also has immigration. Many Mexicans have returned to Mexico from the United States, and more Mexicans have returned to Mexico than those who have emigrated to the United States since the Great Recession, and between 2009-2014 one million Mexicans including US-born children have fled the United States and have headed back to Mexico. 870,000 Mexican nationals emigrated from Mexico and immigrated to the United States during the same time. The flow of immigration between the two countries is at the lowest since the 1990s and is primarily due to the drop in Mexican nationals immigrating to the US. The decline in flow may be due to the slow recovery of the United States economy, stricter enforcement of immigration laws, and family reunification.
Mexican Culture and Business
According to the Hofstede measures, Mexico is a country that has very high power distance (81), very low individualism (30), has somewhat high masculinity(69), has high uncertainty avoidance (82), has very low long term orientation(24), and has very high indulgence( 97). Mexico has a very high power distance since it has a very hierarchical society and this means that everyone has a place, centralization is popular, inequalities are expected, subordinates are told what to do, and the ideal boss is a good father. Mexico is considered a collectivist society since they have a very low score for individualism and this means that group interests prevail, group membership determines opinion, the relationship between the employer and employee is almost like a family, hiring/promotion occurs in groups, relationships prevail over tasks, and decisions are made with relatively intense conversation in groups. Mexico scores very high on the masculinity dimension and is a masculine society and this means that their society is driven by success, achievement, and is competitive in nature. Mexico scores very high on the uncertainty avoidance measure and this means that uncertainty is a continuous threat, fear of ambiguity and risk, something different is dangerous, strong need for rules, and motivated by security. Mexico has a very low score for long-term orientation and this means that their culture is normative and they place a great deal on traditions. Some of Mexico’s traditions are the Day of the Dead, piñatas, posadas, and mariachi music. The Day of the Dead has both indigenous and Catholic roots and is about celebrating those loved ones who have perished into the next life. Piñatas are colorful figures made of paper -mache and come in all shapes and sizes. Posadas are part of their Christmas celebration and are a reenactment of Mary and Joseph’s travels to Bethlehem and is celebrated by friends and family members. Both dance and music are an important part of Mexican culture and mariachi music is the best known type of music in Mexico and includes specialized instruments and was primarily an all male band. Mexico has a very high score for indulgence and this means that their citizens posses a positive attitude and believe that leisure time is important.
Communication is very important to culture and society. Mexicans have modern technology and are able to communicate to others through email, mail, texting, phone calls, and internet services such as Skype.
Trade Deal with EU
Mexico has been becoming an emerging market since its global connectedness score ranks about middle of the pack with them having an overall global connectedness score of 64 out of 140, but their global connectedness has been increasing over the past 10 years or so. Economic inequality is big in Mexico since about 1% own about the half of the country’s wealth and about half of their population lives in poverty (around 53 million) and has one of the highest rates of inequality in the developed world according to the Organization for Economic Cooperation and Development. Mexican workers can expect to have a minimum wage around $1 after taxes, but that surely isn’t going to be able for them to purchase a basket of needs and is among the lowest around the world because Australia has one of the highest minimum wages after taxes at around $10 and Latvia and Mexico are near the bottom with wages under $2. Mexico’s wages have been stagnant since about the 1970’s because inflation policy has been a priority of the Mexican government because Mexico’s inflation rate was near 200% in the late 1980’s and was because of the Latin American debt crisis that occurred in the early 1980’s because many Latin American countries including Mexico were unable to pay back their foreign debt. Currently, Mexico’s inflation is around 5% and is above the healthy inflation rate of 2% and their national debt was around $611 million and is a lot lower than the United States which has a national debt of around $19 trillion.
Mexico’s gross domestic product (GDP) was around 2.4 trillion in 2017, which is much larger than Canada, which had a gross domestic product of 1.6 trillion in 2017 but is much less than the United States, which had a gross domestic product around 18 trillion in 2017. Their GDP growth rate was around 2 percent in 2017, which was much less than the United States, which had around a 3 % GDP growth rate in 2017 after President Trump came into office and Canada also had around 3% growth in 2017. Mexico’s standard of living, which is measured through their GDP per capita, was around $19,500, which is much less than the United States ($52,194) and Canada ($50,231).
Mexico is the 13th largest exporter around the world and about 81% of their goods are exported to the United States. Mexico’s trade with Canada and the United States has tripled since joining the North American Free Trade Agreement (NAFTA) and 90% of their trade occurs because of 12 free trade agreements that they are currently in and they have trade agreements with 44 nations, which is the most for a single nation.
The North American Free Trade Agreement (NAFTA) is a trade agreement and its purpose is to help North America be more competitive in the global marketplace. This agreement is between the United States, Mexico, and Canada. Ronald Reagan pitched the idea of NAFTA and was signed into law under the Clinton Administration and its passage was considered one of Clinton’s first successes in office. NAFTA has fulfilled all of its goals when it was signed into law and made North America the largest free trade area in the world because the gross domestic products of each three countries involved increased dramatically. Many have argued that this trade deal needs to renegotiated/ updated. Stiglitz has noted how President Trump has complained about trade agreements like the North American Free Trade Agreement (NAFTA), which allows for the free movement of goods between Canada, Mexico, and the United States. Stiglitz believes that there will be changes with the aspect of economic globalization and trade agreements. Stiglitz believes that agreements made close to a quarter of a century ago or more have to be updated-but they will be changes that will be mutually agreed to. In the 2016 election cycle, then candidate Donald Trump promised to renegotiate NAFTA to get a better deal for U.S. workers. He primarily wants Mexico to get rid of their tax on U.S. imports. If Mexico and Canada don’t agree to these terms President Trump has threatened to pull out of NAFTA and has also threatened to impose a 35% import tax on Mexican goods coming to the United States. President Trump has not been the only one to attack NAFTA since both presidential candidates attacked it during the 2008 election cycle and even Hillary Clinton attacked this trade deal that her husband signed into law in the 1990s. Then candidate Barack Obama attacked it for the amount of unemployment that it was causing, but did not do anything about this during his two-term presidency. President Trump has repeatedly threaten to pull out of NAFTA since he believes that it is not a fair deal for the American worker, but he has previously pulled out of the Trans -Pacific Partnership (TPP) and now recently wants to get back into TPP as long as it is a fair deal for the American worker. NAFTA is currently in the renegotiation phase and meetings are set in Washington D.C. to push for progress and Vice President Pence believes that progress is being made since him and Prime Minister Justin Trudeau of Canada have told reporters that a deal could be made in the coming weeks and Mexican Economic Minister Guadajaro has said that a total of 10 chapters of the renegotiated NAFTA deal are complete. Some would argue that President Trump started a trade war with China by putting heavy tariffs on Chinese goods and Mexico has stated that if the United States has put tariffs on steel products then they would also put tariffs on these goods as well because they do not want multinational companies and countries to elude these tariffs by conducting business in Mexico. Mexico is not only involved in NAFTA, but they are involved in the Trans-Pacific Partnership, FTA:Panama, FTA: Peru, TLC Unique, Pacific Alliance, FTA: Uruguay, European Free Trade Association, and the World Trade Organization (WTO).
Mexico is known for their manufacturing and they manufacture the most goods out of the Latin American countries. Foreign trade is in large part what supports their growing economy. Their number one export is manufactured goods, but also exports natural resources such as silver and agricultural products such as fruits, vegetables, coffee, and cotton. They also export oil since they are the one of the top ten oil producers in the world and they produce around three million barrels of oil a day. They produce more oil than Kuwait, Brazil, or Nigeria but less than Iran, Iraq, and Canada.
Mexico does not only export goods, but they also import metalworking machinery, electrical equipment, and automobile and aircraft parts. Mexico ‘s economy has grown over the years and their industries have changed from being primarily agricultural and now are known for their manufacturing of goods. They are a primary manufacturing hub for electronics. They mainly produce flat screen TVs, medical devices, and aerospace parts and planes.
Because of the amount of trade deals that Mexico is currently engaged in, companies are able to interact with about 60% of the world without facing import or export taxes. This benefit attracts many multinational companies to conduct business in Mexico. Many American firms have left the United States and other countries such as China because of rising costs of production in these countries and many companies are finding manufacturing near the home country much more appealing for them. A San Diego based company called 3D Robotics moved their production to Mexico in June of 2013 and are producing affordable electronic products such as drones for consumers in the United States marketplace. This idea is called near shoring because businesses are moving their production to countries that are nearby the United States such as Canada and Mexico because of their proximity to the United States. Not only are countries moving their production to Mexico, but also they are using an entry mode strategy of foreign direct investment, which has doubled between the years of 2009 to 2012 to about $7 billion. Employment in the manufacturing industry in Mexico has increased to about 2 million workers and many companies are investing and moving their plants to Mexico because many companies believe that it is cheaper for them to produce there than China. President Trump has seen that many companies are moving to Mexico and he is very skeptical of this because he campaigned for the American worker and has been promoting his passage of tax cuts because he believes that they are creating jobs in the United States and he even intervened in December 2016 to prevent Carrier Corp of outsourcing many of their jobs to Mexico and tried to get them to keep their operations open in Indianapolis, Indiana and did so by giving the company incentives to stay in the United States and helped keep 1,000 jobs in the United States. President Trump also believes the reason why many corporations are outsourcing their work to developing countries or emerging markets is because of the high cost of doing business in the United States such as the United States having the highest corporate tax rate in the world at around 40% with state and federal taxes and will decrease to around 20% after passage of the Tax Cut and Jobs Act, where as Mexico has a corporate tax rate around 28%-30% over the last 10 years which made conducting business in Mexico cheaper until the recent passage of the Tax Cut and Jobs Act since the United States will have a lower corporate tax rate from 2018 onward unless Mexico’s legislative body passes regulation that lowers their corporate tax rate and will make America competitive again.
World Bank Indexes
Mexico is partly free and is one of the worst political free countries in Latin America since Brazil and Argentina have better freedom scores than Mexico according to Freedom House. Mexico is a democracy where citizens over the age of 18 have the right to vote. They have a very similar political structure to the United States with a President and a bicameral legislature with a Senate and Chamber of Deputies. Their current President is Pena Nieto who won in 2012 and serves a six-year term that ends this current year. He beat out Manuel Lopez Obrador with 38% of the vote and Obrador at first did not accept the results of this election because he believed that illegal activities such as vote buying and media bias where the reason why Nieto won in 2012. Their Federal Election Committee found that this was not the case and did not invalidate the 2012 election. Obrador has decided to run in the 2018 election and currently has the lead over other candidates ahead of the election that is about to occur in two months because he has a 48% popularity while other candidates have around a 26% popularity in the polls as of now. Many scholars believe that Obrador has the election in the bag unless he screws up or the other candidates gain tremendous momentum or there is election fraud, something that he alleged in the 2012 election.
Senators are also elected to six-year terms through direct and proportional representation. The Chamber of Deputies, which is the lower house out of the two in Mexico has a total of about 500 members which 300 are elected through direct representation and 200 through proportional representation. The members of the Chambers of Deputies serve three year terms and in 2015, the Instuitional Revolutionary Party(PRI) held a 260 seat majority of the Chambers of Deputies. The PRI is a socialist party, but it is not a traditional socialist party since they adopted free market capitalism and aligned with the Catholic Church in the 1980’s. They held power in Mexico for a little over 70 years since its inception until the early 2000’s. Currently, senators and members of the Chambers of Deputies are allowed to run for reelection. Senators are allowed to run for two six year terms and members of the Chambers of Deputies are allowed to serve four three year terms, which means that elected representatives in Mexico’s bicameral legislature are allowed to serve for a maximum of twelve years.
Mexico has a very similar federal and local political system to the United States since they have a President, bicameral legislature, governors, and mayors. There are 32 governors in Mexico which each one represents the states of Mexico. 14 of them are members of the Instuitional Revolutionary Party, 12 are members of the National Action Party, 4 are members of the Party of Democratic Revolution, and 1 is an independent.
Corruption and violence is high currently in Mexico since some scandals affected high ranking members in the Instuitional Revolutionary Party, a number of journalists have been spied on or where either killed (six journalists where killed because of their work and another 12 were possibly killed because of their work), and Mexico had its highest murder rate since 1997. Multiple former PRI governors where facing corruption scandals and some decided to flee the country and one has been extradited to the United States from Italy. The government had also used a spyware to spy on opponents that included activists, journalists, and lawyers. Violence is rising which can be seen with Mexico having the highest murder rate and many journalists being killed. The Mexican government decided to deploy the military to decrease violence and fight crime, but had received pushback from the United Nations. Mexico is a currently a very violent country and has a crime problem due to the ongoing drug war that started in 2006 and recently the United States Department of State tried to persuade American citizens from not visiting Mexico by putting parts of Mexico on the Do Not Travel List and telling American citizens to use increased caution when traveling to Mexico because of the increased crime and violence.
Mexico has a total area of 1,964,375 sq km and is about three times the size of the state of Texas. Mexico has a coastline of about 9,330 km. The country’s climate is somewhat tropical, but also has a desert climate in some parts of the country. Mexico’s terrain is primarily high, rugged mountains with low coastal plains and desert with high plateaus. Mexico has an average elevation 1111 m with its highest point Volcano Pico de Orizaba at about 5000 m and its lowest point Laguna Salada at about -10 m. Mexico’s natural resources are petroleum, silver, copper, gold, lead, zinc, natural gas, and timber. 54.9 % of the land is used for agriculture in Mexico and 33% of the land is forest. Some of its agriculture products are corn, wheat, soybeans, rice, beans, cotton, coffee, fruit, tomatoes; beef, poultry, dairy products; wood products. They export these products to neighboring countries such as the United States and Canada because of the trade agreement that these three countries were previously in and that is currently undergoing the renegotiation phase.
The possibility of tsunamis and hurricanes occurring in Mexico are high since it borders the Gulf of Mexico and the Pacific Ocean, but the majority of tsunamis that have occurred in Mexico are along the coastline that borders the Pacific Ocean. The possibility of volcanic eruption and earthquakes are high in Mexico since there is an active volcano that happens to be there highest point at about 5000 m. The volcanic activity and earthquakes primarily occur in the central-southern part of the country. One of the most recent earthquakes occurred in Mexico City on September 19, 2017 and it killed about 220 people. This earthquake struck around 1pm and was around 100 miles from Mexico City and was a 7.1 magnitude earthquake. This earthquake made about 40 buildings collapse and struck on the 32nd anniversary of the 1985 earthquake that killed around 10,000 people then. This earthquake also occurred a little less than two weeks than a previous one that registered as an 8.1 magnitude and killed around 90 people and destroyed thousands of stores and buildings and was felt by millions of people living in Mexico when it occurred. The earthquake that occurred in Mexico City caused destruction to the main airport there and many of the citizens living in around the city were fearful to go back into their home, office, or school and many were staying outside on the streets.
Some environmental issues that are currently affecting the country are the scarcity of hazardous waste disposal facilities; rural to urban migration, natural freshwater resources are scarce and polluted in northern part of the country, raw sewage polluting the rivers in the urban parts of the country, and deforestation. The government of Mexico has claimed that deforestation and the lack of a clean water supply in some parts of the country is a national security risk. Mexico is a part of many environmental agreements such as the Climate Change-Kyoto Protocol, Law of the Sea, Marine Dumping, and Ozone Layer Protection.
Globalization’s Future Impact
Many believe that Mexico will become a world power with the BRIC countries because it has one of the world’s top 10 GDP’s and is an emerging market but is not as developed as the United States or UK. Mexico happens to have the world’s largest auto plant in the Northern Hemisphere and many airline companies such as Bombardier. Mexico happens to have many internal problems though such as crime, violence, drugs, and inequality. They also do not only have internal problems but external problems such as geopolitical volatility because of the actions taken by Donald Trump and other world leaders because President Trump wants to renegotiate NAFTA to benefit the United States more which could put Mexico at a disadvantage or they could lose out of a whole trade deal since the United States has threatened to pull out of the deal completely. Mexico has had a growing economy though since their GDP has grown anywhere from 2 to 3% in the past five years and they have had a lot of foreign direct investment and many companies are either outsourcing/near sourcing parts of their companies in Mexico or putting their whole company in Mexico. North America is relatively stable as it comes and doing very well economically. While as Europe is very instable because many countries have rifts with the European Union (EU) such as UK trying to leave entirely, Greece economically pulling down the EU, Poland getting tired of the leadership of the EU and basically bucking the whole system and saying that they do not have to listen to the rules and regulations established when in comes to taking in migrants primarily those from the Middle East. Asia is also very instable because of the tensions that have occurred on the Korean Peninsula in the last year but has looked like they have simmered down since South Korea hosted the 2018 Winter Olympics and allowed the North Koreans to participate and seems like Kim Jong Un wants to meet with other leaders around the world such as President Moon of South Korea and President Trump of the United States and Mike Pompeo(US Secretary of State). China has their own problems as well such as pollution and the emerging middle class. Every country has their own problems, but Mexico has very little external problems and more internal problems that can be curbed in the 2018 Election if the next President of Mexico decides on dealing with crime, violence, and corruption. George Friedman makes a very good point in his article titled Mexico could be the World’s Next Great Power that most of us cannot see Mexico emerging as the next great power and many did not see the emergence of China, Japan, and the United States as a great economic power.