Bordering on a Boom: Mexico Manufacturing Builds a Future

Ed Skelton, a business economist at the Federal Reserve Bank of Dallas, discusses the growth of the manufacturing sector in Mexico, factors behind its expansion, and what its resurgence implies for the global economy.https://docs.google.com/viewer?url=https%3A%2F%2Fwww.frbatlanta.org%2Fdocuments%2Fpubs%2Feconsouth%2F13q1_mexico_manufacturing.pdf

...As measured by the vast variety and sophistication of exported products, Mexico’s economy is the most complex economy in Latin America and the 20th most complex in the world, according to Harvard University’s Atlas of Economic Prosperity. (The Atlas defi nes “complex” as the amount of productive knowledge a country contains.) This complexity is one reason Mexico’s per capita GDP is projected to be the world’s 10th fastest growing between 2009 and 2020.
...Overall, according to the Economist, the combined effects of currency movements relative to the U.S. dollar, rising wages in Asia, and increasing logistics costs have made Mexico the cheapest place in the world to manufacture goods for export to the United States—cheaper than China, India, and Vietnam.
...The HSBC projects that in just six years the United States will be more dependent on imports from Mexico than from any other country. What’s important to note, though, is that 40 percent of our imports from Mexico represent goods that originated in the United States and were sent to Mexico for manufacturing. In fact, 13 percent of all our manufacturing exports go to Mexico.