Mexican Production and Economics on the Rise

Mexican Production and Economics on the Rise

Thu, 2011-10-27

Economic analyst for the Fabricators and Manufacturers Association, Chris Kuehl, believes that Mexico is reaching a new heightened level of competiveness with China because of economic incentives in Mexico. Industrial production has gone up 3 percent over the last year for Mexico, and the amount of Mexican exports to the United States has increased 2 percent.

Kuehl states, “Part of the reason for that surge in trade activity is that since 2005 the cost of manufactured goods from China has risen by 40 percent.” He goes on to claim that, “wages in China have risen rapidly over the past five to six years and now they are almost the same as the wage rates in Mexico.” It has become increasingly less expensive to export goods across the U.S./Mexican border than to export them overseas to China. In addition, a number of factories who previously moved from Mexico to China because of economic incentives are now choosing to return to Mexico because of high fuel costs and political factors.

The head of the Otay Mesa Chamber of Commerce, Alejandra Mier y Teran, said, “We’re seeing a lot more activity along the border…and when factories open in Tijuana, that means more jobs for customs brokers, distributors and suppliers on this side of the border.” Therefore, with political instability on the front of China in terms of trade and economic development, Mexican production might benefit economically with a rise in business settlements in the region.