Mexico Economic Status

The industrial sector saw a growth of 9.3 percent in 1997, and this dragged some other sectors along; however, most of the productive system, especially agriculture, remained at levels below those registered before the crisis in 1994. There was a slight fall in unemployment, but salaries are still 20 percent down from 1994 levels. Mexican income currently stands at a level a thousand percent lower than that of the United States and 73.4 percent lower than Mexico 11 years ago (Cevallos). More recently, it was noted that Mexico's real GDP did not return to its predevaluation level until mid1997, and even then, real average wages were 20 percent below their 1994 level. Continued growth of more than 5 percent this year and next has been predicted ("Mexico").

The effect of globalization and multinational corporations is seen today across Latin America, and the change has been having a beneficial effect in Mexico. Tijuana today is the television production capital of the world because of this trend. Mexican President Zedillo recently awarded two Mexican multinational corporations for their efforts. Nhumo produces raw materials for the tire industry and belongs to Grupo Desc, which is one of Mexico's most successful conglomerates and most aggressive exporters. Cementos de Oriente is a subsidiary of Cemex, a cement maker whose reach now exten "Mexico." The Economist (February 21, 1998). exported more than 120,000 vehicles to the U.S. market and other destinations in 1997.

The company was also faced with the possibility of having to shut down the Ramos Arizpe plant entirely if the strike were not resolved quickly, and at the time only maintenance workers and other nonassembly personnel were working at the Ramos Arizpe plant, which also exports a large percentage of its production to the U.S. market. Economists said they expected a sharp reduction in exports from the Silao and Ramos Arizpe plants to widen Mexico's trade deficit during June and July 1998. Economists projected Mexico's trade deficit at $40 million during June, partly as a result of the GM strike, and believed the deficit could widen further to $200 million in July if the strike continued (Latin America DataBase).

Multinationals therefore have both a positive and a negative effect. Overall, they have contributed to the economic growth in Mexico, and Mexican multinationals in particular are serving Mexican interests well. Latin America Database. "Strike at General Motors Plants in Michigan Forces Curtailment of Operations at Coahuila and Guanajuato Plants." SourceMex: Economic News & Analysis on Mexico (July 15, 1998). Mexico, also declined during the second quarter of this 1998. The widening trade balance is one reason for concern, but some analysts said that the greatest impact of the GM strike might be seen in statistics for industrial production.

The automotive sector is projected to grow by only 18 or 19 percent in the second quarter of this year, which would be a decline of more than 10 percentage points from a growth rate of more than 31 percent over the same period in 1997. GM published a report early in July saying that production in Mexico, the United States, and Canada during June totaled only 237,000 units, or roughly half the number produced in June 1997.

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