Global Player from Latin America: Mexico’s Remarkable Export Development

With 50 nations, including powerful economies like the US, Japan, and the EU, Mexcio has ratified or signed free trade agreements. In fact, Mexico’s trade openness increased by 182% from 1993 to 2019. This is unprecedented for much of the rest of the globe. Mexico is unquestionably the heavyweight champion of opening up commercially in a region where practically every nation has experienced an increase in economic openness in recent decades.

Trade opening up has aided Mexico’s rise to export awe. From 1994 to 2021, the percentage of GDP that was made up of exports of goods and services more than doubled to 41%. In the same time frame, Mexico’s exports increased in value by more than four times, to US$465 billion. This rate is competitive with Malaysia and Thailand.

After Mexico ratified the North American Free Trade Agreement (NAFTA) in 1994, which led to significant trade liberalization and a shift away from the oil industry, exports took off. NAFTA abolished obstacles to cross-border investment and most tariffs on goods exchanged between Canada, Mexico, and the United States. The 2018 United States-Mexico-Canada Agreement (USMCA), which is mostly analogous to the NAFTA, is expected to maintain Mexico’s robust trading connections with its northern neighbors.

The majority of Mexico’s exports (89 percent) are manufactured goods. Followed by oil and petroleum products (6%). Automobiles make up about 31% of all sales of manufactured goods, with metals, machinery, and equipment as the largest category (69%) and subcategory. Electrical and electronic appliances (18%) and specialized equipment for industries (13%) are two further significant categories. Products from the mining industry make up 1%, while agricultural products make up 4%.

The United States is Mexico’s top export partner (80%), followed by Canada (3%) and Germany and China (both 2%).

• First off, a rise in exports often denotes an increase in demand for Mexican products on global markets. This may present chances for international investors seeking to fund export-oriented Mexican businesses. These businesses might see better revenues and profits as the market for Mexican goods expands. This might boost investors’ returns on their capital.
• Second, a rise in exports can likewise raise the value of the peso in relation to other currencies. As a result, this might increase the appeal of investing in Mexican equities or bonds for foreign investors. Foreign investors may find it simpler to transfer their profits back home if the currency is stronger.
• Thirdly, a rise in exports would encourage more foreign investment in industrial and infrastructure projects in Mexico. Companies may need to make investments in new facilities, machinery, and technology as they want to increase their export capacity. For foreign investors that specialize in funding or investing in infrastructure projects, this may present opportunities.

In conclusion, Mexico’s commercial openness has increased significantly over the past few decades, spurring a rise in exports. Therefore, Mexico elevating it to the status of one of the most fiercely competitive emerging markets worldwide. Numerous free trade agreements, such as NAFTA and USMCA, have been signed by the nation. As a result, it opens the door for international investment. For foreign investors looking to finance export-oriented Mexican enterprises, invest in Mexican stocks or bonds, or support infrastructure and industrial projects, the development in exports offers a variety of alternatives. As it continues to develop its international trade partnerships and draw in foreign investment, Mexico’s future appears promising.

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