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Mexico: World´s Manufacturing Powerhouse

7 October 2010 2 Comments

Today Mexico is Latin America’s largest exporter with exports accounting for 30% of the region, and well above the joint level of exports of Brazil and Argentina.

This has been the result of trade liberalization process and the signing of free trade agreements that have led Mexico to be one of the countries with more trade agreements in the world. In particular, the signing of NAFTA was essential to promote and boost the exports to the U.S. and Canada, and has positioned Mexico as a major cluster for the international manufacturing industry.

However, taking this road was not easy. In the late seventies and early eighties Mexico had become highly dependent on the exports of commodities, especially in oil. This dependence on oil exports made Mexico highly vulnerable to the fluctuations of international oil prices resulting in the collapse of the economy in 1982.

From that date on, the Government of Mexico created the possibility to become a major exporter powerhouse and prepared itself by signing several free trade agreements with various countries to develop a manufacturing industry and protect itself from the dangerous boom and bust exporting cycles. Mexico gradually stopped its dependency on commodities exports and has clearly surpassed other Latin American countries.

Despite China’s competition in the manufacturing business starting 2002, Mexico has been able to gradually bounce back in the last few months, taking advantage of the 2008 crisis to position itself again as one of the world’s favorite destinies for manufacturing.

Mexico has evolved from the traditional maquila to value-added manufacturing, which has led Mexico to be considered today the first choice in the manufacturing industry worldwide according to international qualifiers. Even ahead of China and India. According to the Tijuana Manufacturing Association, Tijuana is “the city with the most manufacturing firms in Mexico, which makes It an obvious choice.”

Specifically, Tijuana is becoming the capital of the manufacturing industry in sectors such as aerospace and aeronautics which are considered to be “new industries”. Tijuana is house for 54 companies in this field. Also, the federal government is encouraging the Mexican Space Agency (AEXA) to promote the development and dissemination of research studies and exploration of outer space and its application to technological, economic and industrial aspects in the country. This vividly exemplifies the country’s government efforts to expand this particular business. Also, the state of Queretaro has become a national cluster for aeronautics, having an aerospace park and hosting the National Aeronautical University, from which lots of international firms have benefited to install their plants for aircraft assembly.

Rather than thinking in giving up in its export strategy what is needed is to deepen in technological innovation and expanding into next generation product and services that can produce value added for the consumer, just like Mexico has been doing in some focused industries and sectors. Mexico has taken a big step in this direction so far, and it seems is going for more.

2 Comments »

  • | TheCatalist said:

    [...] cars. The results of leaving behind being a commodities export country and focusing in high value added manufacturing is starting to reap benefits and innovation and entrepreneurship are blooming. Let´s acknowledge [...]

  • Mexico: Leading Country in Business Location Competitiveness! | B2B::Forum said:

    [...] ranks first across all 17 industries studied from three sectors: (1) manufacturing, (2) corporate and IT services and (3) research and development. But surprisingly, though known by [...]

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