The Wall Street Journal, 11/21/2013.
The struggling Mexican economy bounced back in the third quarter after a decline in the previous three months, taking some pressure off President Enrique Peña Nieto as he tries to improve the country’s competitiveness through ambitious overhauls.
The government’s statistics institute said economic output grew 0.8% seasonally adjusted from the second quarter, which translates into a 3.4% annualized growth rate.
For those who like volatility, there’s money to be made on the Mexican peso. It could rally on the hopes of a more robust future for Latin America’s second-biggest economy. Or it might get hammered by U.S. Federal Reserve policy moves. Maybe both will happen in the next six months.
While other regional economies are suffering from China’s slowing demand for commodities, Mexico is humming along. Factory exports to the United States are seen picking up and a series of economic reforms has investors seeing a brighter future.
A global race is on to create the next Silicon Valley, and Latin America is rapidly embracing technology and innovation as it vies to be the epicenter of the next tech boom. The stakes aren’t trivial. It’s clear that the countries that can develop new ideas and technology will be the economic winners of the 21st century. That’s why the Brazilian government, for instance, recently launched Startup Brazil, a business accelerator that aims to attract local and foreign talent to build tech companies in Brazil.
The program, which will provide entrepreneurs with up to $100,000 in grant money as well as office space and access to investors, is modeled after Startup Chile, the pioneering business accelerator launched by the Chilean government a few years ago. Chile was the first Latin American country to focus on attracting startups and developing an ecosystem of innovators. Other countries in the region, like Colombia and Peru, have followed their lead.
Tucked into immigration reform legislation in both chambers of Congress are little-noticed measures that could pump hundreds of millions of dollars into cultivating a new generation of American students interested in science, technology, engineering, and math (or STEM). Such a move could help shore up what much of corporate America and many lawmakers see as a glaring deficiency in the nation’s long-term economic competitiveness.
The bills offer at least $200 million per year (but perhaps as much as $700 million, advocates say) by channeling fees from high-skilled visas into investments in STEM education and job training. Specifically, legislators would increase the fee that employers pay to sponsor high-skilled temporary workers (visas known as H-1Bs) and direct $1,000 of that bump toward a special “STEM fund.” The fund would also be supported by an additional $1,000 cost to employers looking to sponsor H-1B workers for permanent residence in the United States.
There has been a huge increase in the number of businesses reporting extortion attempts by drug cartels in Mexico, according to a survey by the American Chamber in Mexico. The survey of 541 members of the American group as well as the British and Japanese chambers of commerce in Mexico showed the percentage of firms reporting cartel extortions has doubled. Such problems were reported by 18 percent in 2012, but the number jumped to 36 percent this year even as reports of most of other types of crimes declined.
“Obviously that’s one of the ones that really jumped out when we were studying the graph, because almost all of the other tendencies were down,” Thomas Gillen, chairman of the AmCham Security Committee, said Wednesday. Companies reported fewer thefts of shipments or supplies and fewer threats or attacks on employees in the most recent survey. As for the rise in reported extortion cases, “People might be becoming more comfortable in reporting it, or criminals might be getting better at extorting businesses,” Gillen said.
Unlike the unending political news of the scandals rocking the Obama Administration — IRS, AP, Benghazi, where there is a growing, universal consensus Inside the Beltway that something is, at best wrong and at worst rotten — the debate on immigration has become more of a Rorschach test than anything else. The discourse has become a bloated catch-all, and everyone with a Twitter feed or a New York Times column has been unable to resist giving their here’s-what-it’s-really-about interpretation. The debates over manicures, IQ tests, and gay rights offer some of the more colorful examples.
Perhaps the difference of immigration is that it is understood at its base as an “All-American” issue that has been with us since our founding and is as American as motherhood and apple pie. Immigration is also a solution to America’s aging population, which will give us a unique competitive advantage in the economic struggle among nations. Indeed, it is only because of immigration that the U.S. doesn’t find itself in the same economic conundrum as Japan, China, South Korea, and the European Union. These economic peers are finding it increasingly tricky to pay for their “seniors” as they age. With their birth-rates falling and longevity extending, the math no longer adds up.
President Barack Obama will find that much has changed in Mexico when he arrives on May 2. Our neighbor to the South — and second-largest export market — has moved far ahead with reforms. As Congress crafts comprehensive immigration legislation, Democrats and Republicans must keep in mind that Mexico is changing rapidly, and policies crafted to reflect yesterday’s Mexico will not help the U.S. make the most of the potential of today’s and tomorrow’s Mexico.
Mexico’s future is bright, and tapping into this growth and economic prosperity is vital to U.S. competitiveness. But the U.S. needs immigration reform to build on its huge bilateral trade with Mexico — more than $1 billion in goods and services each day, or $45 million an hour.
Jesús Briseño is a Mexican entrepreneur, brewing craft beers like pale ale, stout and a pilsner named for Jesús Malverde, the patron saint of smugglers and drug dealers. But often it’s not Mexico bars that sell his beer but U.S.-based outlets here like Wal-Mart and 7-Eleven.
The reason has to do with Mexico’s system of monopolies that are allowed to secure exclusive rights to major industries and products such as telecommunications, broadcasting, cement, even beer. Mexico’s two largest brewers use exclusivity contracts to prevent all products but their own from being sold in nearly all of Mexico’s bars and restaurants.
New Resources: Immigration and Border Realities, Regional Competitiveness, Transboundary Hydrocarbons AgreementApril 2, 2013
The Mexico Institute is pleased to share with you the following new resources:
Andrew Selee, Vice President for Programs at the Wilson Center and Senior Advisor to the Mexico Institute, wrote an op-ed for the Los Angeles Times, titled “The New Reality at the Border.” Selee asserts that in the future, illegal immigration flows to the U.S. are likely to come from places farther away than Mexico, due to the deterrent effect of increased border security, the well-performing Mexican economy, and Mexico’s changing demographic profile.
To read Duncan Wood’s statement from the hearing click here
Duncan Wood, Director of the Wilson Center’s Mexico Institute, testified before the House Committee on Foreign Affairs’ Subcommittee on the Western Hemisphere on March 14, 2013. The hearing, titled “U.S. Energy Security: Enhancing Partnerships with Mexico and Canada,” included a discussion of the Keystone XL pipeline and the Transboundary Hydrocarbons Agreement.
Christopher Wilson, Associate at the Mexico Institute, wrote an opinion piece for Animal Politico, a news site on Mexican politics. The op-ed encourages Mexico and the United States to develop a regional competitiveness agenda that envisions North America as the most competitive region in the world, addressing issues such as efficient border management, bilateral cooperation on international trade negotiations, regulatory harmonization, trade liberalization in services such as transportation and healthcare, and the simplification of customs procedures.