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By THOMAS L. FRIEDMAN - OpEd | New York Times
Published: February 23, 2013

In India, people ask you about China, and, in China, people ask you about India: Which country will become the more dominant economic power in the 21st century? I now have the answer: Mexico.

Impossible, you say? Well, yes, Mexico with only about 110 million people could never rival China or India in total economic clout. But here’s what I’ve learned from this visit to Mexico’s industrial/innovation center in Monterrey. Everything you’ve read about Mexico is true: drug cartels, crime syndicates, government corruption and weak rule of law hobble the nation. But that’s half the story. The reality is that Mexico today is more like a crazy blend of the movies “No Country for Old Men” and “The Social Network.”

Something happened here. It’s as if Mexicans subconsciously decided that their drug-related violence is a condition to be lived with and combated but not something to define them any longer. Mexico has signed 44 free trade agreements — more than any country in the world — which, according to The Financial Times, is more than twice as many as China and four times more than Brazil. Mexico has also greatly increased the number of engineers and skilled laborers graduating from its schools. Put all that together with massive cheap natural gas finds, and rising wage and transportation costs in China, and it is no surprise that Mexico now is taking manufacturing market share back from Asia and attracting more global investment than ever in autos, aerospace and household goods.

“Today, Mexico exports more manufactured products than the rest of Latin America put together,” The Financial Times reported on Sept. 19, 2012. “Chrysler, for example, is using Mexico as a base to supply some of its Fiat 500s to the Chinese market.” What struck me most here in Monterrey, though, is the number of tech start-ups that are emerging from Mexico’s young population — 50 percent of the country is under 29 — thanks to cheap, open source innovation tools and cloud computing.

“Mexico did not waste its crisis,” remarked Patrick Kane Zambrano, director of the Center for Citizen Integration, referring to the fact that when Mexican companies lost out to China in the 1990s, they had no choice but to get more productive. Zambrano’s Web site embodies the youthful zest here for using technology to both innovate and stimulate social activism. The center aggregates Twitter messages from citizens about everything from broken streetlights to “situations of risk” and plots them in real-time on a phone app map of Monterrey that warns residents what streets to avoid, alerts the police to shootings and counts in days or hours how quickly public officials fix the problems.

“It sets pressure points to force change,” the center’s president, Bernardo Bichara, told me. “Once a citizen feels he is not powerless, he can aspire for more change. ... First, the Web democratized commerce, and then it democratized media, and now it is democratizing democracy.”

If Secretary of State John Kerry is looking for a new agenda, he might want to focus on forging closer integration with Mexico rather than beating his head against the rocks of Israel, Palestine, Afghanistan or Syria. Better integration of Mexico’s manufacturing and innovation prowess into America’s is a win-win. It makes U.S. companies more profitable and competitive, so they can expand at home and abroad, and it gives Mexicans a reason to stay home and reduces violence. We do $1.5 billion a day in trade with Mexico, and have been spending $300 million a day in Afghanistan. Not smart.

We need a more nuanced view of Mexico. While touring the Center for Agrobiotechnology at Monterrey Tech, Mexico’s M.I.T., its director, Guy Cardineau, an American scientist from Arizona, remarked to me that, in 2011, “my son-in-law returned from a tour of duty in Afghanistan and we talked about having him come down and visit for Christmas. But he told me the U.S. military said he couldn’t come because of the [State Department] travel advisory here. I thought that was very ironic.”

Especially when U.S. companies are expanding here, which is one reason Mexico grew last year at 3.9 percent, and foreign direct investment in Monterrey hit record highs.

“Twenty years ago, most Mexican companies were not global,” explained Blanca Treviño, the president and founder of Softtek, one of Mexico’s leading I.T. service providers. They focused on the domestic market and cheap labor for the U.S. “Today, we understand that we have to compete globally” and that means “becoming efficient. We have a [software] development center in Wuxi, China. But we are more efficient now in doing the same business from our center in Aguascalientes, [Mexico], than we are from our center in Wuxi.”

Mexico still has huge governance problems to fix, but what’s interesting is that, after 15 years of political paralysis, Mexico’s three major political parties have just signed “a grand bargain,” a k a “Pact for Mexico,” under the new president, Enrique Peña Nieto, to work together to fight the big energy, telecom and teacher monopolies that have held Mexico back. If they succeed, maybe Mexico will teach us something about democracy. Mexicans have started to wonder about America lately, said Bichara from the Center for Citizen Integration. “We always thought we should have our parties behave like the United States’ — no longer. We always thought we should have the government work like the United States’ — no longer.”


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Very nice, informative article.

Let's just hope unions don't stick their noses in and screw up the chances.

And an interesting rebuttal: Thomas Freidman Gets Lost South of the Border.

Thomas Friedman Gets Lost South of the Border | Beat the Press


Thomas Friedman Gets Lost South of the Border
Saturday, 23 February 2013 23:28

In this century Mexico has had the slowest per capita GDP growth of any country in Latin America. It has made almost no progress in reducing poverty and it is plagued by drug gangs and corruption. But Thomas Friedman sees a Mexico that doesn't show up in the data: "In India, people ask you about China, and, in China, people ask you about India: Which country will become the more dominant economic power in the 21st century? I now have the answer: Mexico." How does he come to this conclusion? Well one of the big factors in Friedman's story is that wages for workers in Mexico are falling behind wages elsewhere: "with massive cheap natural gas finds, and rising wage and transportation costs in China, and it is no surprise that Mexico now is taking manufacturing market share back from Asia."

While Mexico might not do well by standard economic measures, Friedman points out that it does very well when it comes to signing trade agreements; "Mexico has signed 44 free trade agreements — more than any country in the world — which, according to The Financial Times, is more than twice as many as China and four times more than Brazil."

In this same vein, Friedman excitedly quotes the Financial Times: "Today, Mexico exports more manufactured products than the rest of Latin America put together.” Let's assume this is true. Much of what Mexico exports are products like cars where it imports most of the parts. These are then assembled in Mexico and exported back to the United States. This assembly doesn't add much to Mexico's economy, but if for some reason you think that exports by themselves are a measure of economic success, you can score big through this route.

After telling readers that people in Mexico use Twitter, Friedman then comments that U.S. companies are investing more in Mexico, "which is one reason Mexico grew last year at 3.9 percent." Friedman apparently doesn't realize that 3.9 percent was not an especially rapid growth rate for Latin America last year.

Just to ensure a regional balance, Friedman managed to overstate the cost of the war in Afghanistan by a factor of three by telling readers that: "We do $1.5 billion a day in trade with Mexico, and we spend $1 billion a day in Afghanistan. Not smart." Yes, the war in Afghanistan may not be smart, but CBO puts the price tag at less than $100 billion in 2013.

Anyhow, it is easy to see why the NYT runs Thomas Friedman's columns. He gives you all sorts of information that you would never find anywhere else.

Originally Posted by Woooosh

And an interesting rebuttal: Thomas Freidman Gets Lost South of the Border.

Thomas Friedman Gets Lost South of the Border | Beat the Press

Whoever wrote that article (curious that there is no name attached to it) seems to have a personal issue with Friedman. Just read the comments below the article and they do the best job of refuting the piece.

Originally Posted by BajaGringo

Whoever wrote that article (curious that there is no name attached to it) seems to have a personal issue with Friedman. Just read the comments below the article and they do the best job of refuting the piece.

A story on Mexican economics controversial? Can't be. I think Freidman got it right. I really enjoyed his book "The World is Flat" which basically says technology has leveled the international playing field. That's true with tech jobs that can be transmitted via the net, but harder to accomplish with physical goods. If it is accurate México counts as exports items that were only assembled here and then exported, the import numbers would be way off too.

Originally Posted by Woooosh

If it is accurate México counts as exports items that were only assembled here and then exported, the import numbers would be way off too.

That is true of ALL the industrialized nations today and underscores the role China has played in the new and still emerging global economy. Look at any US based factory today and find one that isn't using imported parts.

Rising energy costs will become a bigger factor and why so many CHINESE companies are investing and building operations in Mexico. The cost to ship anything across the Pacific is getting more expensive by the day and Chinese entrepreneurs are adapting.

Originally Posted by BajaGringo

The cost to ship anything across the Pacific is getting more expensive by the day and Chinese entrepreneurs are adapting.

I think that if there was a culture designed to drive the Chinese nuts, it would have to be the Latino culture. Not too many people know both cultures, so let me explain.

The Chinese value stability. In business, this means that if you say something, it had d*** well better happen or else your client will get really really upset, lose his temper and make you miserable, or even worse, take his business elsewhere. No excuses for changes or delays are acceptable for any reason.

I think I don't have to explain how Mexico would be very stressful for them.

That being said, there is a huge Chinese immigrant community in TJ I believe. So some have been able to adapt.

Originally Posted by bwall

I think that if there was a culture designed to drive the Chinese nuts, it would have to be the Latino culture. Not too many people know both cultures, so let me explain.

The Chinese value stability. In business, this means that if you say something, it had d*** well better happen or else your client will get really really upset, lose his temper and make you miserable, or even worse, take his business elsewhere. No excuses for changes or delays are acceptable for any reason.

I think I don't have to explain how Mexico would be very stressful for them.

I hope they can demonstrate more restraint than the Koreans...



.

Yeh, I think that the Koreans share a lot of values with the Chinese. . . . Who knew that Koreans didn't mind punching their employees? I guess in Korea the employees need to be treated like that for social stability?

I'm sure that that guy was ready to explode (well, ok, he did in fact explode) and I'm sure that the employee had no idea why the Korean guy was upset--that's why he just stood there until he got punched for a second time. . . . oil and water....

Originally Posted by bwall

Yeh, I think that the Koreans share a lot of values with the Chinese. . . . Who knew that Koreans didn't mind punching their employees? I guess in Korea the employees need to be treated like that for social stability?

I'm sure that that guy was ready to explode (well, ok, he did in fact explode) and I'm sure that the employee had no idea why the Korean guy was upset--that's why he just stood there until he got punched for a second time. . . . oil and water....

If they try to treat Mexicans like that the factory would be burned down one night and no one would be blamed for doing it. If a worker in China complains he is being mistreated, he will be further mistreated and his gov't will just take notes.