Sign New Mexico Banking Medical History Mobile

Industry sign banking new mexico medical history mobile

okay hi there welcome to a new growth and development video we're going to take a few minutes to look at the challenges and the opportunities facing the emerging market economy of Mexico now we've chosen Mexico because it's reached a permanent middle-income status as a per capita income in excess of $17,000 a year at OS in the country but it's also a nation at risk of falling into the middle income trap where an economy is unable to make if you like the next step to high income advanced country status it's a sizeable economy it's become a global manufacturing hub each one of the top 10 exporting nations in the world but now facing up to severe competitive pressures from China obviously emerging Asia and African countries so their comparative advantage is under threat particularly manufacturing it's also a country exposed to another number of other external shocks particularly those persistent trade tensions with the United States the IMF in 2019 came out with an absolutely classic line they said that Mexico faces three structural challenges corruption informality and crime three fundamental barriers if you like to their growth and development here's our usual summary of over 20 relevant development indicators by the way of course you can download a copy of this presentation I'll put it in the comment section of the video HDI ranking of 76 as you'd expect a relatively low level of working poverty given their per capita income is now above $17,000 crucially for Mexico the two things we're going to focus on in this video are a large level of inward foreign direct investment averaging just under 3% of GDP each year and also a higher level of remittances on some other sides a couple of things I really want to focus on one is that the there was a significant gender gap in Mexico less than two-thirds of females have at least some second education again this is in a country that's in part of the OECD and the country only collects 13% of GDP for tax purposes that's the lowest of any country that's part of the OECD it's also lower than tax collection levels in most of Latin America and that means there's little room for the Mexican government to have the money in the funds to invest in infrastructure health of education renewal energy consumption is also a very low so a small percentage of total final energy consumption less than 10% unemployment in Mexico is very low in fact at the end of last year 2018 average unemployment just three point three percent the fourth lowest amongst the leading advanced countries in the world only the Czech Republic Japan and Ireland had lower unemployment and you can see that the rate of unemployment has come down substantially obviously always during the last recession and 2008-2009 though has come down heading back towards 3% it has been lower about 20 years ago inflation is now firmly under control Mexico has had a history particularly the mid 80s in the mid nineteen nineties of very high rates of inflation certainly well above 100% they have an inflation target of three percent the Mexican Central Bank has been lifting interest rates to help curb demand pull and cost push inflation air pressure but inflation is now back down towards its close towards its target level as you can see it's been significantly higher particularly mid eighties and also again in the mid 1990s but the growth rate of Mexico is the thing we're going to focus on in this video it can be growth over the last 10 years or so including a forecast for the next year 2020 you can't make growth in Mexico has been only just two and a half percent now once you factor in population growth that of course means that per capita income growth is much slower giving rise to the view that Mexico perhaps is slowing down just at the moment it needs to ramp up its growth rate to reach high income status the middle income trap by the way is an important concept we have a video on the middle income trap and it exists for some countries that make big significant progress in cutting extreme poverty and experiencing structural change in growth but they then find it difficult they find it tough to make that climb from being a middle-income country to achieving high income fully developed status what tends to happen is that grow through it slow down and a country can struggle to maintain their their global competitiveness here's the growth story for Mexico some people that see suggesting they could even be a recession in 2019 but certainly growth of less than less than 3% in recent years and another way of looking at it look at Mexico's growth compared to other if you like emerging market middle income countries some of whom including the South Korea have made the leap they've made the step up to being a high-income fully developed country so Mexican growth if you look to take the figure from 1980 to 2016 their average growth is well below countries such as South Korea Malaysia Thailand turkey and Chile that is a major issue for the Mexican government how can they lift their trend go through it but over the background the peso is their currency and crucially Mexico has a free floating exchange rate it's had it for about 20 years so if you get a question on floating exchange rates in the exam use Mexico as a contextual example it has it's a country committed to free trade in many ways in fact they've got more free trade agreements than any other country in the world they've got free trade agreements with you with Japan they're part of the Pacific Alliance formed by Chile Colombia Mexico and Peru Mexico is of course and committed to free trade and has just recently we signed the Mexico United States Canada agreement corporation tax pretty high they're in the top 50 for competitiveness but look at that corruption perception ranking a hundred and thirty eight thousand hundred eighty countries a relatively good on ease of doing business although they they dipped again in 2018 crucial to understanding the Mexican economy I think is to is to be aware of the changing structure of their GDP if we go back nearly 40 years now to 1980 fuel oil accounted for nearly 40% of their national output that was changed so in Figure 2 2016 its machinery and transport accounted for 60% of the GDP attempt to their industrial output and things so Mexico has made a significant structural change it has been industrializing for their trade pattern it's the ninth largest economy in the world in terms of exports and the twenty-first most economically complex in other words they have the capacity and the capabilities to produce a wide range of products and the blue dominates here suggesting that Mexico has become or has developed a comparative and a competitive advantage in things like assembling cars video screens telephones computers and other forms of manufacturing items oil accounts for less than 5% now of their exports beer less than 1% those who are fans of Mexican beer now one of the key aspects of Mexican trade is that it is so highly dependent on the United States of course it borders the United States and gravity theory suggests that you trade more with countries in close proximity gravity through would suggest that about a third of exports would go from Mexico to the United States the actual figure is 72% as shown by the chart on 76% are shown on the chart on the right hand side for 2018 so as a result of close trade integration in North America with United States in Canada certainly in New Mexico and the u.s. it comes to become much more closely synchronized this means that Mexico is exposed to shocks I want to pick out three shocks for you clearly protectionism is that one of the big current issues I'm sure you're following this president Trump dislikes the fact that the United States has quite a sizeable trade deficit with the rest of the world but particularly with China and also with Mexico and of course there is hugely controversial issues about migration across borders so then I'll assess of course who threatened to impose tariffs on Mexico and the of measures to curb migration Mexico is still exposed to the world all market panics that could beat Mexico's biggest company is the most heavily indebted company on the planet their debts alone about 9% of Mexican GDP so what happens to Pemex will have a big impact on Mexican economic fortunes and crucially Mexico is a country highly exposed to natural disasters earthquakes droughts floods hurricanes except a particular course in the coastal areas so Mexico a country with a global manufacturing capacity but exposed to trade tensions the world economic cycle and climate change just want to spend a couple of minutes looking at two particular aspects of Mexico that you might want to use in your exams one is remittances classical exam question exam examine the importance of remittances to a country such as Mexico well Mexico is the third largest remittance recipient in the world it's just overtaken the Philippines I think there were over 270 million migrants in the world and Mexico is the second country in the world with more migrants there were for example something like 12 million Mexicans migrants living and working that it states for this sending money home so the flow of admittances over thirty five billion dollars in 2018 is strongly associated with the performance in the US economy interestingly if the peso depreciates against the dollar that increases the dollar value of remittances when they when the cash back into into peso and there's a an entire industry the moment involved in trying to improve the efficiency of mobile money transfers from the United States to Mexico to bring down the cost of a mittens transfer give you a sense of context for mittens is worth around 3% of Mexican GDP every year put that in another way it's about children $30 per person the vast majority come from United States and you can see that Mexico is right up there in terms of remittances as a percentage of GDP another big aspect of Mexico worth understanding worth knowing about is FDI it's a great example of a country to mention in an essay the context of a country that's achieved significant inflows of foreign direct investment in fact on average over 28 billion dollars a year again 3 percent of their GDP or 12% of total investment over the last 15 years partly because they're doing pretty well in terms of Ease of Doing Business a lot of the investment is concentrated on towns enabling the US border all of assembly factories just the other side of the US border and somehow household names have invested in Mexico including IBM coca-cola Walmart and lo er foreign direct investment into Mexico expanded from just 1% of GDP in 1998 as then over 3% in 2016 so Mexico is a good example of a country that has become more integrated into the regional and global value chains especially especially in in the vehicle sector so I think motor vehicles cars trucks vans etc accounted for 2/3 of total investment now some critics argue that much of this FDI has centered around just the Assembly of manufactured products rather than FDI which is a catalyst for increased research and development in innovation so a lot of this investment coming in is essentially to build assembly capacity to react sport to the United States and if actually in counseling to behalf of FDI of course a lot of that will be in the car sector and other services but there's a big debate about whether that FDI has been sufficiently transformative is it just simply building capacity to assemble or is it is it investment which genuinely lifts the level of research and innovation in the Mexican economy which would then take it towards high income levels just want to take you as you get towards the end of this presentation towards a few good examples of barriers to growth and development in Mexico things which are essentially holding the Mexico economy back a little bit in terms of they grow through it one is that Mexico has a fairly low rating for research and development this chart shows the global innovation index score Switzerland comes top I think it always has to United States is up there Finland South Korea the UK doing pretty well on the y-axis and GDP per capita in 2016 real GDP per capita PPP adjusted on the x-axis and you can see that Mexico is is in the bottom left-hand quadrant there China for example similar per capita income is a much higher global innovation score so for Mexico to grow they really need to ramp up their research and development and innovation capabilities financial sector is a barrier to growth as it is in many countries that your study the informal economy is huge in Mexico cash remains the dominant means of payments big part of the informal economy of course but it means the government gets less in tax revenue there's limited competition in the banking sector that increases the cost of loans for smaller businesses and also there's evidence have fairly low financial literacy amongst millions of Mexicans which obviously is a constraint as well notice for example that only 1/3 of adult and Mexicans had a bank account in 2017 that's the chart on the Left Mexico down there with the Philippines and Peru compared to countries like Poland and Thailand and China what's now above 80% and less than 2% of adult Mexicans had insurance insurance penetration is the ratio of debt to gross premiums to GDP so it's sorry 2% of insurance premiums relative to GDP insurance is it's very limited it's not pervasive and widespread in the Mexican economy Mexico also has a fairly underdeveloped welfare system so if you look on the left hand side these are the OECD countries and in terms of social spending be it pensions health care labor market assistance for the unemployed Mexicans bottom Maxo comes bottom of this chart in terms of social assistance less than 10% of GDP in other countries like France and Finland and Denmark of course it's getting on to a third of Chile people so many many people in Mexico rely on remittances and they also rely on the informal economy for extra income and also inequality is pretty high you know the Gini coefficient in Mexico again these in the OECD countries is amongst the highest amongst the OECD countries to what extent does income inequality of that kind of scale act as a barrier to growth and development Pisa stands for program for international student assessment and again Mexico doesn't score particularly well in terms of top performance in maths science and reading according to the World Bank the piece of rankings of 2015 and the latest figures came out a few weeks ago show that only half of 15 year-olds in Mexico obtain the necessary skills to participate effectively and productively in society and in the labor market and another really important aspect a great example to put in your notes is that labor market participation amongst women in Mexico is extremely low it's one of the lowest of any country that wants to be an advanced economy only turkey comes lower in terms of the OECD data more than 1/3 of women in Mexico drop out of school and I'm not in jobs education or training most Mexican women work in the informal economy childcare maternity paternity bent benefits remain well below pay levels in the OECD that needs to be changed in Mexico to lift their growth rate so what is Mexico doing to try to stimulate growth to try and catalyze if you like the growth of the economy which is stuck at around two two and a half percent per year well a lot of things are trying to do investment in modernizing infrastructure particularly improving highways and expanding the Train Network urbanization of course is a major challenge you get it white it's a big boost to productivity and growth we can apply with all sorts of problems of density in terms of crime and and disease and low economic activity so big need increase investment in urban infrastructure improve housing quality current policy objectives include promoting tourism Mexico well place for that and expanding microcredit the government's recently increased the minimum wage now that's in theory lifts the lifts the disposable incomes of people involved in low value adding manufacturing assembly although of course that raises a question about unit labor costs compared to emerging Asia they've also introduced on the farming si e guaranteed minimum prices for small-scale farmers producing five select agricultural products an attempt to lift five farm incomes and address war poverty and we mentioned that renewable energy is less than ten percent of energy consumption in Mexico well they already have a carbon tax but the Mexican government this year is planning to introduce a carbon emissions trading scheme to try and increase investment in clean energy how can you use Mexico finally as context new examples I think this is a great country to use the Mexico is a has developed into a manufacturing hub $17,000 per capita GDP it's deeply integrated into the world economy it's been part of the process of globalization but key questions is Mexico a country that will get stuck in the middle income trap our remittances of the scale we've seen three percent of GDP are they good or bad for Mexico in the long term how can well what are the causes for very low female labor market participation what's the impact on growth what can Mexico do to improve that is the very large informal economy a barrier to growth Mexico has a free floating exchange rate the peso evaluate the benefits and drawbacks of a floating exchange rate why is a low tax to GDP ratio of only 13% probably bad news for the Mexican economy what can they do to address corruption certainly the perceived in the highest in most developed countries and crucially is it good to be so dependent on one country last year nearly 40% of FDI came to the United States the 75% of exports and 94% of remittances is Mexico to dependent on the United States does it need to try and diversify the geographical pattern of its investment is trade and its remittance influenced so much to look at with Mexico some of those great countries I think could be a superb contextual example for your exams please do download this presentation I'll provide a link in the comment section of the video and look out for some more growth and development profiles in the weeks to come thank you