Mexico is growing its economy and trading heavily with the United States, an expert said last week.
Chairman and CEO of ABC Capital Mario Laborin Gomez, the keynote speaker at a panel discussion on the Mexican economy and trade with the United States at the University of Texas at Brownsville, explained just how both countries' economies correlate.
"Mexico is tied to the largest economy in the world," Laborin Gomez told a packed lecture hall.
ABC Capital is a commercial bank and the largest independent loan servicing company in Mexico. He served in the cabinets of two Mexican presidents as CEO of Nacional Financiera for President Vicente Fox, and he continued that appointment and also became CEO of Bancomext for President Felipe Calderon.
Both economies became closely entwined in 1994 when the North American Free Trade Agreement was signed between the U.S., Canada and Mexico.
"Eighty percent of trade for Mexico is tied with the United States," he said, adding that the Mexican economy is not only good -- it's growing.
According to the Office of the U.S. Trade Representative, NAFTA created the world's largest free trade area, which now links 450 million people producing $17 trillion worth of goods and services.
In 2010, Mexico purchased $163.3 billion in U.S. exports and exported $229.7 billion in goods to the U.S. Canada exported $275.6 billion in goods to the U.S. that same year.
But to get the economy in Mexico to where it is, Gomez said it took a lot of work because from 1988 to 1994 the Mexican government became more involved with the economy and it owned more than 3,000 businesses.
"The government is not designed to be efficient managers of business," he said. "The next 10 to 15 years were a bad time because of the government's involvement. That's where we had the worst time in 50 years or so."
He said debt increased 20 times from $4 billion to $80 billion.
"And we were not able to pay that," he said, adding that Mexico began prioritizing paying down its debts and worked to reduce inflation. "We started to deal with that and put an end to it. We've been working for 20 years to put things in place. Now we're in place."
Another huge game changer for Mexico's economy was the 2000 elections that resulted in the election of the first non-PRI president in 70 years with President Vicente Fox, he said.
Gomez said the election radically transformed Mexico into a democratic society.
At first, he said he wasn't sure the votes for Fox would be accepted, but they were.
Before 2000 he wasn't so sure democracy would work in Mexico the way it works in the United States so now "we have a very new way of living in Mexico."
The people, the politicians and the business people were not used to the system because they were used to working with PRI people and it took time to build new relationships and see how things would go, he said.
"So, Mexico had a huge change in 2000," he said.
And on Dec. 2, 2012, the three main parties in Mexico signed the Pact of Mexico in an effort Gomez said was meant to move the country forward.
Right now, there are 95 policy proposals looking to reform everything from education to telecommunications, energy and fiscal reforms that would benefit and further stimulate Mexico's economy, he said.
"The bottom line is the parties need to work together and not against each other," he said, adding that Mexico is back on track and that's great news for both countries because of how much each economy relies on the other.
"You're going to have a partner instead of a problem on the other side of the border," he said.
Mark Reagan writes for The Brownsville Herald.
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