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Monday, September 24, 2012

Booming economy overshadowed by Mexico's violence

Overshadowed by drug violence, Mexico's emerging economy surprises many.Forbes Magazine reports that Mexico is "the little darling of emerging market investors" and poised to become Latin American's largest economy, surpassing Brazil.


"Stars appear to be increasingly aligned for an economic outperformance" by Mexico, says a report by Nomura Securities, cited in The New York Times.

"A changing of the guard is slowly but surely taking place." Most headlines around the globe for the past six years have focused on outgoing president Felipe Calderón's war with the drug cartel.

"The sight of miles upon miles of factories outside the industrial capital of Monterrey attracts far less attention than the image of nine bodies hanging from a bridge in the border city of Nuevo Laredo," the Times wrote.

In his final state-of-the nation report earlier this month, Calderón defended his war and cited the government's programs that helped turn Mexico's economy.

A huge investment in infrastructure - from airports to seaports, highways and railroads - boosted trade and caught the eye of manufacturers from around the world. With better infrastructure came better manufacturing jobs.

Calderón said more than 2 million jobs were created during his six years in office. The economic downturn in the United States and anti-illegal immigrants sentiments in states such as Arizona also sent many Mexicans home.

That boosted the middle class, analysts say, as those workers put their U.S.-learned skills toward opening businesses or working in manufacturing plants.

This, in turn, attracted retailers such as Walmart, Costco, Home Depot and Sam's Club to open stores in Mexico.

"Not only is Mexico doing better, macroeconomically speaking, than the false stereotypes would have us think, Mexico is actually doing better than the United States," Richard Fisher, president of the Federal Reserve Bank of Dallas told The Washington Post.

In their report, "Mexico: A Middle Class Society, Poor No More, Developed Not Yet," economists Luis De La Calle and Luis Rubio of the Mexico Institute at the Woodrow Wilson Center for Scholars, discuss the impact of this growth.

"The implications of this change are immeasurable, and among its consequences is the appearance of a society that values stability and demands more accountability from its authorities," they wrote.

"The rise of the Mexican middle class is the most relevant development of the last decade in the country. "Therefore, the consolidation of this sector is perhaps the most important issue on the agenda for the future."

azstarnet.com

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