COVER PHOTO: “SOMBRERO GALAXY” COURTESY OF NASA/ESA
Mexico has always held a certain allure in the American entrepreneurial mindset.
A picture of a blue ocean and an ice-cold Corona next to a laptop is pinned in cubicles all around the country.
However, these daydreams at work usually end in a Spanish-English dictionary acting as a paperweight for newspaper clippings of drug war violence.
Now might be the time to dust off that dictionary and rethink Mexico.
On a macroeconomic level, Mexico is doing relatively well. The economy has grown for 16 consecutive quarters (4 years). Steady growth has also boosted the Mexican peso to a 15-month high against the U.S. dollar, making American products more affordable to Mexican consumers.
Yet, the price of products purchased in Mexico is relatively less. If you’re a McDonald’s fan (I am not, except for a rare coffee or fries), then you’ll be happy to know that the Big Mac is cheaper south of the border.
According to The Economist’s Big Mac Index, a lighthearted measure of purchasing power parity (PPP), the cost of a Big Mac in the United States was $5.30 in July 2017. In Mexico, the price was equivalent to $2.75. This difference in purchasing power can be found across a broad range of similar goods.
Thanks to the North American Free Trade Agreement (NAFTA), Mexico is now the second-largest export market for U.S. goods and services. The country has also struck free trade deals with 45 other countries, making it easier to buy and sell goods and services from Mexico.
The largest volume of trade between the U.S. and Mexico centers on automobile manufacturing. However, if you look at this great interactive piece by the Massachusetts Institute of Technology (MIT), you’ll see that there are billions of dollars moving across the border in all kinds of products and services.
Sun, Surf, and Energy
Renewable energy certainly seems to be an attractive possibility for growth in Mexico. Despite being a major oil producer, the country aims to produce 35% of its electricity from clean energy by 2024.
Mexico has a great deal of promise beyond its beautiful beaches and sunshine. With luck, the latest NAFTA news will be positive and encouraging for continued free trade.