Mexico Economy and Environment


The Mexican economy, the fifteenth in the world in absolute terms, has undergone profound transformations in the last quarter of a century: it has set aside the dirigiste model in defense of industrialization and the internal market, to embrace the free international market. The key moment is linked to the signing of 43 free trade treaties, such as the N afta (which entered into force in 1994) and the Pacific Alliance (established in December 2011 but entered into force on 20 July 2015). Mexico also boasts free trade treaties with the EU and takes part in the negotiations of the Trans Pacific Partnership (T pp), the free trade zone involving 12 countries of the Pacific region (Australia, Brunei, Canada, Chile, Japan, Malaysia, New Zealand, Peru, Singapore, United States, Vietnam and, of course, Mexico). Thanks to these agreements with partners from all over the world and its constant opening to international trade and foreign direct investment (albeit with a rather sharp decline in 2014 compared to 2013, with 22.5 billion dollars against 38.2), the the Mexican state was able to drastically reduce its presence in the economic sphere. The oil sector is an exception, which remains an expression of the nationalism of the revolutionary era and constitutes a significant share of the national product, while still carrying valuable currency in the public coffers (in 2013 the value of oil revenues on GDPwas 6.3%) despite the epochal reform approved in December 2013 which opens the sector to international capital, allowing foreign oil companies to invest in the exploration and development of hydrocarbon fields. Like the rest of Latin America, Mexico also saw its GDP grow at a constant rate in the first decade of the twenty-first century, but suffered more than other countries from the recessive effects of the financial crisis that broke out in the 2008. The strong commercial link with the northern neighbor, which absorbs almost 80% of exports, was the main factor, making it the second largest American export market. After the sharp contraction in 2009 (-6%), the Mexican economy nevertheless experienced a rapid recovery: in 2014, GDP growth stood at 2.4% to continue growing in 2015 around 2.3% for the mf and 2.2% for the Banco de México, with improving prospects for 2016 (3.3% for the mf and 3.4% for the O ecd). A recovery favored by the launch of large national infrastructure projects and by a more favorable economic phase. However, profound imbalances remain in the Mexican economic structure, in turn a reflection of no less deep territorial faults, between the richer and more industrialized north and the rural and more backward south. The leading sectors of the Mexican economy are represented by manufacturing (the main item of Mexican exports), oil (which supplies about 7% of GDP) and banking. Finally, the huge remittances of immigrants living in the United States (more than 24 billion dollars a year) constitute a significant factor in the Mexican economy (about 2% of GDP). Analysts agree that the growth of the Mexican economy will be steadily high if the current executive Peña Nieto succeeds in carrying out the wave of reform that is still underway.

Energy and environment

According to ebizdir, Mexico is the 10th largest oil producer in the world and a net exporter of crude oil to international markets. Thanks to monopoly control by the state, the energy sector has actively contributed in recent decades to finance the public budget. Indeed, P emex (Petróleos Mexicanos), the state-owned energy company, is not only one of the largest oil companies in the world but also a key contributor to the national economy (alone contributes 34% of state revenues). However, the decline in domestic production has reduced export volumes over the past decade. In addition, the large weight of oil in the energy mix Mexican (51%) causes domestic consumption to absorb more than two thirds of production, depriving operators and state coffers of important revenues. Poor diversification is now weighing on the bill costs, even if the current low oil prices have helped to calm the high costs. Currently, diversification is taking place mainly in favor of natural gas, increasingly used for electricity generation and to which Mexico is a net importer by U know. To counter the downward trend in production, fill the serious technical gaps accumulated over the years, encourage investments and the know-how necessary for the prospection and exploitation of new wells, since 2008 P emexit has been at the center of sector reforms, but only the ‘Pacto por México’ has made it possible to carry out those necessary changes also in the field of energy. This reform should confer greater autonomy, allow for the introduction of private and foreign capital injection and, at the same time, allow public authorities to have tighter control over the activities and efficient financial management by its managers. Furthermore, the P emex reform should boost the productivity and competitiveness of the company, while at the same time fueling an annual economic growth of the GDP of 2.4%.

In terms of environmental protection, the Mexican situation is contradictory. The problems are mainly linked to the delay in the field of renewable energy, deforestation and severe pollution of the capital, one of the most populous cities with the most unbreathable air in the world. On the other hand, progress has been made in the positions that Mexico has been climbing for some time in the world rankings of environmental protection, and which then found a decisive impetus from the signing of the Nafta onwards. In view of the 21 in Conference of the Parties on Climate Change, which took place in Paris at the end of 2015, Mexico has presented as a national contribution to the commitment to reduce by 50% by 2050 their emissions of CO 2, in line with the expectations of the international community. Moreover, the fear that US companies would move to Mexico, confident of being able to avoid the huge costs incurred at home to reduce harmful emissions, had been repeatedly raised by opponents of the Nafta. In fact, since the birth of the free trade area, investments in alternative energies, waste disposal and protection of wooded areas have grown steadily in Mexico, with encouraging results.

Mexico Economy and Environment