Home to 130 million people and covering just shy of two million square kilometres, Mexico is a vast nation with tremendous economic potential. For decades, the country has been hotly tipped as an economy ready to boom, with experts predicting that Mexico could emerge as a global powerhouse as far back as the 1980s. Boasting abundant natural resources, a young labour force and enjoying a strategic location that is integrated with North America, Mexico is certainly ripe with economic opportunity. Its 3,000-kilometre border with the US means that it enjoys a lucrative trade relationship with its northern neighbour – worth over $650bn each year – while its impressive manufacturing capabilities make it the sixth biggest car producer in the world. In terms of sheer size, Mexico is among the 15 largest economies in the world, and ranks as the second largest economy in Latin America. So, if Mexico is such a force to be reckoned with, why does its economy continue to underachieve?
Over the past four decades, Mexico has struggled to achieve the levels of growth that economists had once excitedly predicted. Between 1990 and 2019, growth averaged just 2.4 percent per year – less than half of the expected rate for fast-growing developing economies.
“There are a number of deep-rooted and knotty issues that had prevented Mexico from achieving its full growth potential,” explained David Razú Aznar, CEO of Afore XXI Banorte. “From low productivity to a pervasive inequality and the prevalence of a large informal sector, the current administration has been forced to try innovative solutions to a long-standing history of socioeconomic challenges.”