Making the Desert Bloom

The North American Free Trade Agreement of 1994 gave Mexico great potential, but the country also became among the hardest hit in the Americas by the global debt crisis, notes the Economist. Some analysts urge ongoing diversification of trade partners to strengthen the economy: “The Inter-American Development Bank, the biggest lender in the region, describes a ‘two speed’ Latin America, in which economies, such as Mexico, which do most of their trade with developed countries, lag behind those, such as Brazil, that have forged links with emerging markets.” China and Mexico compete on exporting goods to the US, with the latter benefiting from higher oil prices. Reports of violence and drug cartels in Mexico reduce foreign investment. Perhaps more damaging for the economy, though, are monopolies and uncompetitive practices in banking, telecommunications, pharmaceuticals and other industries that promote inequality, limit products and hike costs for Mexican households. The Economist article concludes that foreign competition would prompt Mexican industries to adapt and overcome an economic slump. – YaleGlobal