U.S Investment in Mexico
Economics 580
Dr. Leon
Haitham Boukhadour
Fall 96
Mexico has established itself as one of the biggest emerging markets in
the world today. It has exhibited many of the signs of a high growth economy,
offering several advantages to prospective investors. Some highlights of the
Mexican economy include " single-digit inflation, a balanced public budget, real
economic growth (presently at a rate of 12 percent), a deregulated economy and a
favorable investment climate" (Risk Management/ June 94, P.32). Mexico also
possesses a strategic geographic location as a gate way to Latin American
markets.
Mexico is among the fastest- growing export markets for the United
States. In 1985, Mexico became the third largest market for total U.S. exports,
behind Canada and Japan. In 1992, Mexico surpassed Japan as the second largest
export market for U.S. manufactured goods. Mexico now accounts for $1 out of
every $10 of total U.S. exports.
After the passing of NAFTA, bilateral trade was quite balanced in 1994,
with the U.S. registering a surplus of $1.3 billion, virtually unchanged from
1993. However, there was a sharp increase in trade opportunities, as both import
and export growth exceeded 20 percent. One-fifth of the total trade that occurs
between the United States and Mexico was created in 1994.
One of the major sectors that holds a large promise for the U.S.
manufacturers is that of the automobile indus ...