Mexico is one of the most industrialized countries in Latin America. Many German companies also have locations in Mexico, for example Volkswagen (VW). Mexico is also a strong exporter ; it is one of the most exporting countries in the world. Mexico’s economy has been growing for many years. Mexico has been a member of the Organization for Economic Co-operation and Development (OECD) since 1994.
However, the distribution of income in the country is very uneven. There are a few rich people, a broad middle class, but also many poor people. There are also big differences, for example, in the average income, which is much lower in the country than in the city.
What do you grow in Mexico?
Agriculture contributes 3.6 percent to the country’s economic output. 13.4 percent of all employees work in this area.
The center of cattle breeding is the dry north. Traditional products of the pre-colonial period such as corn, beans, pumpkins and onions are grown on the fertile volcanic soil of the south. In addition to keeping goats and poultry, they are the livelihood of many small businesses.
There is also an important cultivation of fruits such as papayas, pineapples, bananas, oranges and lemons. Exports are primarily avocados, tomatoes and coffee, as well as fishery products, much of the United States.
Industry in Mexico
Mexico’s mountains and highlands are rich in mineral resources, and the Gulf has rich oil and gas deposits. Mexico is still the most important silver supplier and one of the leading oil exporters.
24.1 percent of the people are employed in industry. It generates 31.9 percent. Electronics (such as televisions, computers, cell phones), cars, food and beverages, chemicals, iron and steel, petroleum, building materials and textiles are manufactured.
There are car factories from many foreign companies such as General Motors, Ford, Chrysler, VW and Nissan, but there are also domestic car manufacturers, for example DINA or Mastretta. A large part, namely 83 percent of the goods intended for export, are manufactured in maquila factories.
What are maquila establishments?
There are many maquila companies in northern Mexico in particular, for example in Ciudad Juárez, Tijuana or Mexicali. In maquila factories, individual parts are put together to create the finished product. That could be machines or cars or clothes. The individual parts are imported (imported into the country) and the finished goods are exported again – either to another country or to the country from which the individual parts came.
Why do you do this? This saves the companies money. For one, they have to pay almost no taxes and duties in Mexico. On the other hand, workers in Mexico do not earn much either – much less than the workers in their own country would have cost. And finally, the transport routes from northern Mexico to the USA are short and therefore cheap. A large part of the goods manufactured in the maquila factories are intended for the American market.
In the short term, the maquila companies help people because they get work at all. But their pay is low, they often work in dire conditions and have few labor rights. Working hours of 60 hours a week, i.e. 12 hours a day, are not unusual. Nevertheless, many Mexicans keep moving from the overpopulated south in and around Mexico City to the north of the country to be able to work there.
The companies also save money because there is a free trade agreement between the USA, Canada and Mexico. That means NAFTA for short (North American Free Trade Agreement). Almost all tariffs were abolished in 1994. To get more information on Mexico and North America, check animalerts.
Mineral oil and natural gas
Mexico ranks eleventh in oil production worldwide (2018). The export of oil brings the highest income to the country. The oil industry is entirely in government hands, there is only one company that is responsible for the extraction, refining and trading. So this company, PEMEX, has the monopoly on oil. Only PEMEX sells gasoline in Mexico. Mexico also produces natural gas. The country ranks 19th in the world in terms of output (2017).
61.9 percent work in the field of services. They generate 64.5 percent. This also includes tourism. In 2013 there were 24 million visitors, and by 2018 the number had even increased to 41 million. Many people come to see the sites of the early cultures, for example Chichén Itzá, Teotihuacán or Monte Albán. Others enjoy the white beaches.