Mexico: One Country, Two Economies

Geopolitical Futures Oct 5, 2017

Summary

Mexico is a bit of a paradox. Its economy is the 15th-largest in the world by nominal gross domestic product ($1.06 trillion) and the 12th-largest by purchasing power parity. At first glance, these rankings seem well-suited for a country with a booming, high-value manufacturing sector and sophisticated business class. And yet, the idea of Mexico being a leader of economic growth and purchasing power contrasts sharply with its extreme poverty and dependence on subsistence farming in some places. The coexistence of these two realities raises the question: What geopolitical factors have contributed to this simultaneous development of two distinct economies in one country?

Two Mexicos

The phrase “Two Mexicos” has been used by academics, political analysts and the like to describe and discuss the economic and social disparities among Mexican states. A dual economy is not unique to Mexico; it’s a concept observed in the economies of many developing countries in which the conditions for development vary by region.

Often, the disparity found within a dual economy is not a temporary phenomenon or transitional phase of economic development but an enduring quality born of geopolitics. Such is the case with Mexico, which has struggled with economic inequality since it was a Spanish colony in the 1520s. After the Mexican revolution and its subsequent reconstruction, Mexican governments more openly acknowledged their country’s discrepancies, enacting policy reforms meant to harmonize the economy’s most important areas: land ownership, social welfare, infrastructure development and industrial development. Sometimes they were successful in this regard, but they never fully reconciled the differences between the Two Mexicos.

The Two Mexicos are not just economically divided but geographically divided. Central and northern states typically boast more dynamic, advanced economies. Infrastructure networks – roads, electricity, telecommunication, etc. – are well developed and incorporate large portions of the population. The workforce in these states is generally higher educated, relies on formal employment, and receives comparatively higher wages. The poor, southern states have limited access to education, are often informally employed, and are paid lower wages, employed as they are generally in low-value manufacturing and subsistence farming. ...........To read more - Mexico: One Country, Two Economies appeared first on Geopolitical Futures.