Garza: Mexico’s economy becoming a bright spot in hemisphere – Austin American
Published: 8:15 p.m. Tuesday, Aug. 7, 2012
There’s no question we are in the midst of historic change in the world. The international policy agenda has never been more diverse and there’s a lot of uncertainty, punctuated by anxiety, about the direction of change.
In the U.S., we’re in the bubble of a presidential election year, which means that domestic concerns dominate. That doesn’t mean that international issues have disappeared from the national dialogue; they simply are not at the forefront of discussions. When foreign concerns do break through, they typically do not do so on the basis of positive news. That’s especially true now as the established order is being redrawn by changes in the Middle East, Europe and Asia.
Latin America is largely a study in contrasts compared with these other parts of the globe. The region has been resilient in the midst of global economic turmoil and political stability prevails. These facts may account for why the region — accustomed to benign neglect—is currently so far off the U.S. radar.
Perhaps the brightest light in the region is Mexico. That statement might surprise those who do not often look beyond U.S. headlines about our neighbor to the south. Though the country’s close links to the U.S. economy meant Mexico suffered during the global economic downturn, its fundamentals are strong and it has weathered the crisis relatively well. Prudent policies have helped reduce vulnerabilities and positioned the economy for growth. In a highly touted report, Nomura Equity Research recognized Mexico’s economic and demographic strengths and potential when it stated last month that the country will likely overtake Brazil as Latin America’s biggest economy within the next decade. Other analysts have reached similar conclusions.
It’s encouraging that the positive story of Mexico’s growth (4.6 percent and 4 percent growth in the first and second quarters of this year) and expanding opportunity (through record numbers of new jobs, rising levels of foreign investment and a growing middle class) is beginning to be recognized. As Brazil’s economic prospects have begun to dim slightly and uncertainties about Venezuela’s future mount, we shouldn’t lose sight of this bright spot in our hemisphere.
Mexico’s president-elect, Enrique Peña Nieto of the PRI, is preparing to take office in December amid a growing sense of optimism. He has pledged to carry out pro-market reforms that will bring even more vibrant growth to the country. It will take a lot more than resolve to bring about the structural reforms that have long been blocked by entrenched interests. But even if the prospects for some of the large-scale reforms (such as opening Pemex to competition and broadening the tax base) are still unknown, even lower profile ones (such as changing regulatory practices) that are more easily achieved could bring strong gains. Mexico would shine brighter still.
Garza, former U.S. ambassador to Mexico, is counsel in the Mexico City office of White Case and chairman of Vianovo Ventures, a cross-border business development and consultancy based in Austin. www.tonygarza.com