A changing Mexico.

• Author: Selee, Andrew
• Position: Key Regional Voices - Report

Mexico has undergone major changes over the past two decades, as its political system shifted from one dominated by a single official party to a highly competitive democracy, and its economy opened up dramatically to global competition. These changes have produced significant dislocations in Mexican society, including high out-migration and a spiral of drug-trafficking related violence. However, signs are that Mexico has now set the foundations for future success. Average income has grown significantly, violence is plateauing, and out-migration has dropped dramatically. There are potential pitfalls ahead, but the country's future looks far brighter today than it did a decade or two ago. If Mexico continues to grow and deepen its democratic process, these changes will have a profound effect on the United States, its neighbor to the north, as well.

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The biggest storylines about Mexico in the past few years have been the outflow of migrants to the United States and the rising violence between drug-trafficking organizations. (1) Both of these phenomena have been the result of important transformations taking place in the country as its economy and political structures were transformed, almost overnight, from a closed economy and authoritarian political system, in the 1980s, to an increasingly modern democracy deeply embedded in the global economy. These changes have not been easy, or always linear, and they have generated enormous disruptions in existing institutions and in people's daily lives.

However, the main storylines over the next few years are likely to be quite different than the ones we have seen in the past. Migration from Mexico to the United States has dropped to historically low levels since 2010, and this appears to represent a structural shift in migration patterns rather than just a temporary adjustment related to the economic downturn in the United States? Violence also reached a plateau and appears to be declining slightly. (3) To be sure, violence will remain a major issue over the next few years, as Mexico wrestles with the challenge of building credible legal institutions. It is hard to tell yet what the fate of these efforts will be. But, for reasons I will describe below, we are unlikely to see the same rise in violence that took place over the past few years.

At the same time, Mexico's economy has taken off in new ways, with sustained growth over the past fifteen years and a gradually improving standard of living among Mexicans. Mexicans today earn on average roughly the same as people in Russia, Brazil, Turkey, and Malaysia, almost twice those in China, and six times those in India. (4) As a result, the ratio of GDP per capita between the United States and Mexico has improved dramatically from around 6 or 7 to 1 for most of the 1990s to an average of almost 4.5 to 1 today. (5) These figures still suggest a substantial wage gap between the two neighbors, but they point to the fact that this gap has been narrowing substantially over time. If current progress continues--something that is far from certain--it may be possible to talk about a gradual, if incomplete, convergence between the two economies over the next few decades.

As with everything in Mexico, these changes come with caveats and questions. While around half of the population is probably in the middle class today, the other half remains mired in poverty. The economy is increasingly manufacturing based and export oriented rather than being dependent on oil, as it was two decades ago, but the country has struggled with efforts to move up the value chain in production. Education is widespread and more readily accessible than ever before, but the quality of educational institutions lags. Democratic institutions have taken root in ways that would have been unimaginable only two decades ago, but significant authoritarian enclaves remain, and building effective and trustworthy police, prosecutors, and courts is one of the country's greatest challenges to stem the threat that criminal impunity poses to people's lives.

However, even with these challenges ahead, Mexico's progress is surprisingly robust. And as the country moves forward economically and politically, these changes will have an enormous impact on the United States. Mexico's imprint in the United States will have less to do with the shared challenges of unregulated migration and organized crime, as in the past, and far more to do with intense patterns of trade, binational manufacturing processes, skilled migration, and the mobility of capital. Mexico and the United States--along with Canada--are likely to work more closely to navigate the shifting terrain of the global economy.

A RISING ECONOMIC POWER

It is almost impossible to go through a day in Mexico--or most countries in the world--without using products from the United States. Ford cars, Kellogg's cereals, and Hollywood movies are everywhere in the cities--where three-quarters of Mexicans live--and even the most rural villages sell Coca-Cola. What is more surprising, however, is that today it is hard to go through a day in the United States without using Mexican products. Almost all cars that circulate in the United States have Mexican parts--a tribute to the increasingly integrated automobile market in North America--and U.S. consumer goods from Blackberries to televisions are often assembled in factories across the border.

In addition to this, many of the best-known brands in the United States are actually now owned by Mexican companies. (6) These include Entenmann's cookies, Sara Lee cakes, Thomas' Original English Muffins, Oroweat Breads, and Stroehmann's Dutch Treats, all owned by the Mexico City-based bread behemoth Grupo Bimbo, which now supplies almost a third of the U.S. bakery market. (7) Borden Milk and several other popular dairy brands are made by Lala, a collective of dairy farmers in Torreon, Mexico, who now supply nearly one-fifth of the dairy products in the United States. Bar-S, owned by Monterrey-based Grupo Alfa, produces roughly a fifth of all hot dogs and processed meats sold in the United States? Perhaps less surprisingly, Mexico's largest producer of cornmeal for tortillas, Gruma, has become America's largest supplier of corn and wheat...