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Mexico is One of the Most Complex Economies in the World.

13 June 2012 No Comment

In Harvard University’s recent study “The Atlas of Economic Complexity: Mapping Paths to Prosperity”, Ricardo Hausmann and Carlos Hidalgo found that Mexico is within the select group of countries with one of the most complex economies in the world. According to the authors, there is a group of countries that manufactures products requiring a superior level of complexity in theirproduction chain, compared to other type of goods (such as commodities). Economies become more complex as they require more diverse types of competencies and specific knowledge to produce more sophisticated products with greater value added,and are not just growing by trading on increased quantity. From this point of view, economies with more complexities will be in abetter condition to compete in the XXI Century.

This study looked at 128 countries and Mexico holds the 20th position. A surprising place, by the way, making it is the best positioned country in Latin America and placing it far ahead of Panama in 30th place. In addition, Mexico is the only one of the Eagles countries that is within the first 20 places; none of the BRICs appear before 29th place, which is held by China. Within North America, the United States has 13th place and Canada is way down in 41st place. It is also surprising to find that, for instance, a country with a reputation for having high tech manufacturing,  Israel, occupies only 19th place. Even countries like Ireland, Denmark and Italy are barely above Mexico in this classification. And even though this might be a surprise at first glance,it is consistent with other results that point to Mexico as one of the most creative economies within Latin America and amongemergent countries in general.

And that is not all!  Regarding growth potential of its per capita income moving towards 2020 , Mexico occupies 10th place, and is only surpassed by Panama in Latin America. Conversely, when reviewing GDP total growth, Mexico occupies 22nd place, surpassed by both China and Panama. Furthermore, when comparing the advance in complexity of the economy during the period 1964 – 2008, Mexico stands out in 12th place among the economies with the greatest change in the development of their complexity.

These results are certainly not by chance, but are the consequence of a consistent progress in the Mexican economy’s growth and its orientation toward  development of even more sophisticated products with greater value added. Mexico’s development as a world power in engineering production has created significant results, as has its rise to the world’s fourth place within software exporters in only 10 years. Mexico has also become a champion in the global automotive industry and is now in 5thplace in that category;  it has become the world’s capital in aeronautic manufactures with a state-of-the-art manufacturing cluster, and of course, it has now added this step forward in the Atlas of Economic Complexity. Mexico also holds fourth place worldwide in development of engineers, and if adjusted by population size, it is in first place in that category.

Mexico’s progress has been intentional and structured, certainly learning from several countries that went before it who started manufacturing and copying others, subsequently jumping into becoming the owners of technology development. This is inexorably Mexico’s path…  a future it is walking towards with purpose and pride.

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