The economy of Mexico is a developing market economy. It is the 15th largest in the world in nominal GDP terms and the 12th largest by purchasing power parity, according to the International Monetary Fund. Since the 1994 crisis, administrations have improved the country’s macroeconomic fundamentals.
Mexico was not significantly influenced by the 2002 South American crisis, and maintained positive, although low, rates of growth after a brief period of stagnation in 2001. However, Mexico was one of the Latin American nations most affected by the 2008 recession with its gross domestic product contracting by more than 6% in that year.
The Mexican economy has had unprecedented macroeconomic stability, which has reduced inflation and interest rates to record lows and has increased per capita income. In spite of this, enormous gaps remain between the urban and the rural population, the northern and southern states, and the rich and the poor. Some of the unresolved issues include the upgrade of infrastructure, the modernization of the tax system and labor laws, and the reduction of income inequality.
Tax revenues, altogether 19.6 percent of GDP in 2013, were the lowest among the then 34 OECD countries. As of 2020, the OECD has 37 members.
The economy contains rapidly developing modern industrial and service sectors, with increasing private ownership. Recent administrations have expanded competition in ports, railroads, telecommunications, electricity generation, natural gas distribution and airports, with the aim of upgrading infrastructure.
As an export-oriented economy, more than 90% of Mexican trade is under free trade agreements (FTAs) with more than 40 countries, including the European Union, Japan, Israel, and much of Central and South America. The most influential FTA is the United States-Mexico-Canada Agreement (USMCA), which came into effect in 2020, and was signed in 2018 by the governments of the United States, Canada, and Mexico.
Recently, the Congress of the Union approved important tax, pension, and judicial reforms. Reform to the oil industry is currently being debated. In 2016, Mexico had 16 companies in the Forbes Global 2000 list of the world’s largest companies.
The OECD and WTO both rank Mexican workers as the hardest working in the world in terms of the number of hours worked yearly – but pay per hours worked remains very low.
There were 4.9 million MSMEs registered in Mexico at the beginning of 2020, accounting for 78% of private-sector employment and 52% of total gross production. 96.6% of them were micro-enterprises.
Less than 10% of SMEs export to the international market, and 80.5% of SMEs exports’ value belongs to the manufacturing sectors, representing a 4.3% of the total value of manufacturing exports. Moreover, only 0.1% of SMEs are direct suppliers for multinational foreign corporations. SMEs participation in international trade has been limited by:
the lack of specialized and necessary knowledge and capabilities on entrepreneurship
the lack of knowledge on international trade and markets
non – tariff barriers, regulations, and cross-border trade procedures
the limited access to finance, specially trade finance
The smaller the company is, the more difficult it is for them to participate in international trade. Less than 2% of SMEs invest in innovation which leads to patent or brand registration.
Information on SMEs is primarily generated through the National Survey of Productivity and Competitiveness for Micro, Small and Medium Enterprises (ENAPROCE), which is conducted by the National Institute of Statistics and Geography (INEGI).