MERIDA, Mexico— At a time when the United States is confronting the possibility of a “double dip” recession, Mexico’s economy is expanding at the fastest pace in a decade.
For most of the 20th century, Mexicans lamented that when the U.S. economy slowed down, Mexico, ever so dependent on its neighbor to the north, suffered a recession. “When the U.S. gets a cold, Mexico gets pneumonia,” was a familiar saying among officials and executives on both sides of the border.
When the global recession hit in 2008, it seemed the same pattern would hold true again: In 2009, Mexico’s economy contracted 6.1 percent. Mexican officials feared that draconian immigration laws would result in the deportation of hundreds of thousands of Mexicans back to Mexico, where they would face certain unemployment. They also feared a collapse in demand for Mexican exports by recession-hit American consumers.
But the opposite has occurred. Mexico’s economy is enjoying a period of robust growth as a direct result of internal migrations away from the U.S.-Mexico border to mid-size Mexican cities, and the repatriation of investment capital from Mexicans living overseas, primarily in the U.S.
The Central Bank’s Key Role
As the global recession unfolded, Mexican President Felipe Calderon relied on Agustin Carstens, director of the central bank, to steer a financial policy for the nation. The result has been stunning.
Mexico’s gross domestic product (GDP) expanded 5.5 percent in 2010, and it is on track to grow 4.5 percent this year. Carstens is now being mentioned as a leading candidate to take over the International Monetary Fund after Dominique Strauss Kahn’s abrupt resignation. Other equally competent Mexican officials have worked to spur internal economic development. Finance Minister Ernesto Cordero, for instance, has made a point of focusing on internal growth rather than exports.
“It’s much more balanced growth with a much more dynamic domestic sector,” Cordero told reporters in Mexico City recently, emphasizing the Calderon administration’s emphasis on fueling domestic demand.
Middle-Class Resilience
The result has been an invigoration of Mexico’s middle class. Given the sluggishness of the U.S. economy, Mexicans professionals—once lured to the U.S. by Fortune 500 companies— are seeking opportunities in mid-size Mexican cities. This, in turn, is fueling new economic activity and encouraging domestic demand.
In the decade since 9/11, when U.S. officials made it more difficult for Mexican citizens to secure tourist and work visas, Mexicans have opted for alternatives. A case in point is the rapid economic development taking place in Mexico’s Yucatan peninsula. Unable to send their kids to Orlando, Mexicans have sent them to Cancun. Unable to seek medical care in Miami, they have traveled to Merida. Prevented from purchasing vacation homes in Palm Springs, they have invested in Playa de Carmen.
Where Americans can’t find the money to fill in potholes, Mexico is accepting bids for a new, world-class airport along the 65-mile Cancun-Tulum corridor that is expected to serve 700,000 passengers its first year. While the U.S. had to abandon plans for fast trains that would have linked Tampa-Orlando and New York-Washington, Mexico plans a bullet train that will link Merida’s one million residents to Cancun.
American homes languish unsold for years, while half-million dollar homes are going up in fancy Mexican communities such as the Yucatan Country Club, which boasts a Jack Nicklaus golf course and a Mark Spitz Swimming Academy. This economic vitality is seen in many areas of the country, far removed from the drug-related violence that plagues the border region.
The strength of Mexico’s middle class can also be measured by the maturity of its democratic institutions. In 2000, for instance, Mexico was governed by an authoritarian regime, a single-party state that controlled or co-opted the nation’s socioeconomic and political organizations. In less than a decade it has become a true democracy, one in which the president is from a conservative party (PAN), most of the governors are from a centrist party (PRI) and the country’s largest city—Mexico City—is run by a mayor from a leftist party (PRD). Had anyone predicted in 2000 that this would be political reality in Mexico by 2010, it would have seemed like a fantasy.
Internal Population Shifts
The sluggish U.S. economy and stricter immigration controls are two of the key factors driving the boom. The number of illegal immigrants to the U.S. fell from roughly 850,000 a year in the years before the recession to 300,000 a year from 2007 to 2009, according to a report from the Pew Hispanic Center.
True, many of Mexico’s poorest people still risk their lives to find menial labor in the U.S., but the semi-skilled are finding more opportunities at home. The result has been an internal migration to where the jobs are. Mexico’s Census Bureau, known as INEGI, for instance, reported a 16 percent increase in Yucatan State’s population—almost all of it from people moving in from other parts of Mexico, and not from higher birth rates.
Mexican sociologist M. Bianet Castellanos chronicles the vast influx of Maya migration to the resorts along the Maya Riviera—people who, a generation ago, would have made their way to the agricultural fields of California and the bodegas of New York. They are finding better jobs in Mexico than they would in the U.S.—and without risking their lives at the hands of human traffickers, U.S. law enforcement agents, drug warlords, or American racists who subject Mexicans in the U.S. to hate crimes.
At the same time, Mexico’s economy is being energized and diversified by the arrival of working-age Americans. A generation ago, it was not uncommon to see entire communities of American expatriates—senior citizens living on Social Security, enjoying retirements of leisure, spending the afternoons playing golf, beach-combing and sipping margaritas. Now, younger Americans are also coming to Mexico to start families and open businesses. American officials estimate that there are more Americans living in Mexico than in any other country and who are fiercely loyal to Mexico.
Drug Violence in Perspective
This economic growth, unprecedented in its strength in more than a generation, is taking place at a time when the country is facing a wave of drug war violence.
But one reason the violence is so shocking is that it is out of the norm. “In a country of more than 100 million people, the odds of being killed in a drug-related homicide in 2010 were one in 6,667, about the same as the odds of being killed in an automobile accident in the United States (about one in 6,500). The odds of being killed in Mexico’s drug violence decrease dramatically if a person is not a drug trafficker, mayor, or police officer in a disputed trafficking region,” Viridiana Rios and David Shirk write in “Drug-Related Killings in Mexico, 2008-2010,” published by the Trans-Border Institute at the University of San Diego.
Fear-mongering by American writers is hardly new. “This is an attempt to understand Mexico’s steep descent into turmoil,” wrote one alarmed reviewer of Andres Oppenheimer’s 1998 book, Bordering on Chaos, which lamented that Mexico was becoming a “failed state.”
Thirty years before that, Barry Goldwater was among those calling Mexico, then hosting the Summer Olympic Games, a “failed state.” Decades from now, Americans will no doubt still be uttering the same clichés. Fast forward a dozen years after Oppenheimer’s failed book, and Mexico, despite its “out of control” image, is flourishing.
Now when the U.S. catches a cold, Mexico can say, “Bless you,” and go about its business.
Letter From Mexico: Amid the Drug Wars, a Stunning Economic Boom – New America Media.
Posted on June 15th, 2011 by admin
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Active in local and national Real Estate boards; published author and acknowledged expert on Puerto Vallarta Real Estate, Michael Green moved here in 1997 to take advantage of the unsurpassed lifestyle PV offers. Mike can be reached at michael(at)tropicasa.com.