Agricultural trade and investment plays an important role in U.S.-Mexico economic relations, even with the uneven size of the two economies. The North American Free Trade Agreement (NAFTA) continues to have a positive impact on agricultural trade and the agriculture sector in Mexico, according to the U.S. Department of Agriculture.
The automobile industry represents approximately 4% of Mexico’s GDP, 20% of national manufacturing output, and 23% of total exports. Mexico exports 82% of its total vehicle production. To date the total value of exports has reached USD55 billion and the industry supports more than 600,000 direct and indirect jobs according to the Mexican Secretariat of Economy.
The United States is Mexico’s largest trading partner. Total U.S. goods trade with Mexico in 2013 equaled USD506.6 billion, 2.8% more than in 2012. Mexico exports more to the United States in goods and services in just over a month than it does in one year to the 27 countries of the European Union (EU).
The state-owned Comisión Federal de Electricidad (CFE) is the dominant player in the generation sector, controlling over three-fourths of installed generating capacity. CFE also currently holds a monopoly on electricity transmission and distribution. In December 2013, the Mexican Congress passed an energy reform that will allow private sector participation in electricity generation.
Foreign Direct Investment (FDI)
Proximity to the United States and macroeconomic stability make Mexico an attractive location for foreign direct investment (FDI). From 2000 through 2012, U.S. foreign direct investment in Mexico totaled USD291.7 billion (51.4%), concentrated largely in the manufacturing (43%) and financial sectors (20%).
Mexico’s real GDP at the end of 2012 reached USD 997 billion. Real GDP growth during 2013 was 1.1%. Projected real GDP growth for 2014 is 3%. GDP per capita is estimated at USD 15,600.
In 2012, the Mexican mining industry generated USD 22.5 billion in foreign exchange inflows, positioning it as the fourth largest industrial sector after the automotive, electronics, and petroleum sectors. According to Mexico’s Mining Chamber (Camimex), the mining sector accounts for 10% of the country’s industrial GDP and 3% of its national GDP.
The North American Free Trade Agreement (NAFTA) between the United States, Canada, and Mexico entered into force on January 1, 1994, and created the world’s largest free trade area. NAFTA links more than 461 million people producing USD 17 trillion worth of goods and services annually (2011). The dismantling of trade barriers and the opening of markets has led to economic growth and rising prosperity in all three countries.
Oil & Gas
Mexico is an important partner in the U.S. energy trade. The energy relationship between Mexico and the United States is key for both countries’ economies. Mexico is a major non-OPEC oil producer (9th in the world) and among the largest sources of U.S. oil imports (3rd). The United States is Mexico’s #1 supplier of gasoline and natural gas.
Mexico has enormous renewable energy potential: as much as 24,300 MW in solar, 40,268 MW in wind, and 40,000 MW in geothermal, in addition to excellent possibilities for biofuels. Mexico currently generates 23% of its electricity through renewable and clean fuel sources, including hydroelectric and geothermal.
Standard of Living in Mexico
In Mexico, poverty rates remain high and income inequality is stark. There are 53.3 million Mexicans living in poverty which represents just over 45% of the population. Lack of formal employment for poor Mexicans is a major driver of migration. Security and human rights issues continue to diminish living standards and violence is estimated to cost 8 to 15% of GDP.
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