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Mexican economy poised to grow after election

Jennifer Collins Jul 2, 2012

Mexican economy poised to grow after election

Jennifer Collins Jul 2, 2012

David Brancaccio: The party that dominated Mexican politics for much of the last century is back in power. Enrique Peña Nieto of Institutional Revolutionary Party — the PRI — has taken the presidency. Successful — and, his opponents and supporters like to say, strikingly handsome — Peña Nieto inherits an economy that’s on the upswing. There are even indications that more of those “Made in China” items Americans buy may soon say “Made in Mexico” instead.

Reporter Jennifer Collins is in Mexico City. Jennifer, good morning.

Jennifer Collins: Good Morning.

Brancaccio: Give me a sense of what the Mexican advantage might be.

Collins: Well first it’s proximity — cheaper transportation to the U.S. because it’s closer. And second, it’s wages; they’ve actually stayed pretty low in Mexico, and they’ve been rising in China. So that’s attracting manufacturers to Mexico.

Duncan Wood is an economics professor here. He says Mexico needs to do more to compete — and he’s not talking about Peña Nieto’s handsome smile.

Duncan Wood: Peña Nieto is, I mean he’s not just a pretty face in an empty suit, but he’s not the brains behind the organization. But he has managed to gather an incredibly impressive team around him who will say if we want to improve levels of foreign direct investment, then we need to do these things.

So Peña Nieto is also promising cheaper energy and better ports and road.

Brancaccio: So cheaper energy, better infrastructure — could be expensive?

Collins: Yeah, that’s exactly the problem. Peña Nieto has to figure out how to pay for it while keeping costs low for investors. He’s promising better tax collection — but Duncan Wood is skeptical.

Wood: If we begin to raise production costs here that doesn’t just impact upon Mexican competitiveness that impacts upon regional competitiveness, i.e. the United States, as well.

And that’s because we import so many Mexican-made parts of things that eventually say: “Made in the USA.”

Brancaccio: Jennifer Collins in Mexico City, thank you so much.

Collins: You’re welcome.

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