03/25/2013 05:28 pm ET

Is Mexico's Expanding Economy Reaching All The Population?

By all accounts the Mexican economy is booming. Earlier this month Time Magazine said Mexico’s “GDP expanded almost 4 percent in 2011 and 2012. Investment is booming and the middle class is enlarging.”

And now with President Enrique Pena Nieto working to break down some old barriers like overhauling public education and privatizing the government run oil giant Pemex, Mexicans are bracing for what might come next. And foreign corporations are salivating, ready to pounce as Mexico becomes the new China.

All of this despite dire poverty, the disenfranchisement of the rural poor, and continued drug related crime that leaves at least a thousand dead per month. Corruption and impunity continue to plague the country. Is any of this economic good news trickling down to all Mexicans, including the urban poor in metropolitan areas like Mexico City, Monterrey and Guadalajara, and the millions of peasants who live in rural areas?

Mexico has had economic booms before: In the 50′s and in the 70′s when oil reigned supreme. But little of the rewards reaped by the few ever trickled down to the poor. Booms, in fact, have hurt the poor in the long run because of the economic crashes that inevitably follow these economic booms. When austerity measures and cutbacks in social programs are implemented to deal with difficult times, it is the poor who suffer the most.

There is no doubt that steady growth is a good thing for Mexico, but unfortunately, much of the focus of the economic boom is based on manufacturing. While Mexico’s largest exports are beer, flat screen televisions, and cars, there is little room for advancement for the average worker in these industries.

Mexico’s economic boom not felt by all

Recently, Thomas Friedman of the New York Times focused one of his editorials on the economy in Monterrey. He glossed over the facts and told us Mexico will be the dominant economic power of the 21st century, and quotes the Financial Times as saying Mexico has signed more free trade agreements than China or Brazil.

The problem is that NAFTA, or the North American Free Trade Agreement, (and probably all free trade agreements) has hurt more than helped the average Mexican. These agreements are a treasure for multinational corporations who reap enormous profits. And while they do create low paying jobs, they also destroy small business, the backbone and muscle of the economy that directly affects the average Mexican.

Manufacturing jobs create a new poor class in Mexico

Manufacturing along the border in what are nicknamed maquiladoras, was supposed to be the saving grace of Mexico in the 1980′s but none of it trickled down or even sideways for most Mexicans except for the few who secured jobs in these manufacturing plants. But decades later, many of these manufacturing workers remain in the same place, with the same or similar jobs and with little possibility of change. Never mind that wages in these factories have not kept up with inflation.

What manufacturing does is it turn places into mini-boom towns with people flocking to those areas searching for jobs that are already taken. While a class of workers moves up just slightly, another poor class is created, as it happened in towns like Juarez and Nuevo Laredo back in the 80′s and 90′s. And yet in Toluca and Puebla, where automobile and automobile parts manufacturing has been on the rise since the 1990′s, the changes have been more positive. The automobile industry offers some possibility of upward mobility because of the more complex nature of building a car compared to say, clothing or electronic manufacturing.

As the Mexican government moves to take advantage of the good economic times, it is imperative that it diversify and honestly spread the wealth among the people of the country, (not ignoring poor southern states like Guerrero, Oaxaca and Chiapas). Tourism and manufacturing have always been a boon for the economy of the country, but it is through industrial diversity and infrastructure that the government can help bring jobs and growth to the far corners of the country so all Mexicans can participate and enjoy the rewards of a strong economy.

Originally published on VOXXI as: Is Mexico’s economic boom trickling down to all Mexicans?



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