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Not really, but you HAVE to pay attention.

ECON IS FUN!. Not really, but you HAVE to pay attention. A snapshot via Economic Indicators. Mexico= Solid middle class nation Conclusions from chart A CPA has gone up Debt has risen Inflation has been controlled. Continue…. Chart B Poverty has decreased in general

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Not really, but you HAVE to pay attention.

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  1. ECON IS FUN! Not really, but you HAVE to pay attention.

  2. A snapshot via Economic Indicators • Mexico= Solid middle class nation • Conclusions from chart A • CPA has gone up • Debt has risen • Inflation has been controlled

  3. Continue… • Chart B • Poverty has decreased in general • Gini coefficient=Mexico is less unequal but it needs to improve.

  4. Continue II… • Chart C • Exchange compared to the world • Third line=accumulation of foreign funds into the country net of outflow. • Deposit rate= a fee, paid on borrowed capital

  5. Organization of the Economy and Government Policy • Member of the OECD • Predicts Mexican population=105 million 2005 • 76.5% of population was urban in 2005, in 2000, 74.6% population was urban

  6. No Taxes = Po’ Mexicans • Less than 20% of the labor force is registered with tax authorities. • OECD predicts over 43% of jobs

  7. Employment • Big Companies<Small Companies • But more people work in big companies. • Shift from agricultural work to manufacturing

  8. Dirty Rich Man! • Carlos Slim, example of economic extremes.

  9. Financial Organization and Monetary and Foreign Exchange Policy • Mexican financial system reflects economic booms and busts from the past • Financial liberalization was gained by diminishing direct role of government institutions, but these institutions gained a new role.

  10. Center of Mexican Moolah • Bank of Mexico • A.K.A. Banco de Mexico or Banxico • Independent since 1993 • Manages monetary, foreign exchange policy • Wants= minimize inflation, maximize macroeconomic stability • -Lowering inflation is the skinny jeans of economists • Banxico and Financial Ministry work to set value of peso • Supply and demand for peso affects its value • -Banxico not so independent from the government

  11. Look at all the failure! • CNBV, the Insurance Commission, the Pension Funds commission • still not stable, but working on it since the 1994/1995 crisis • dependent on the Financial Ministry • Mexican banks nationalized in 1982, privatized in 1991

  12. Continuation… • Mexican Stock Exchange=Bolsa. • Medium business=hard to find financing • Microenterprises= microcredit institutions (small loans) are different from banks. • Government tries to be as transparent as possible to gain trust=more developed market in future.

  13. Mexico Loves Foreigners • FDI (foreign direct investing)= foreign nations bring technology, money, jobs, econ activity to Mexico. • Brings $18 billion to Mexico, 16,000 foreign firms, and $210 billion in stocks.

  14. People use MoneyGram, in case you don’t know. • Remittances= money sent to Mexico from a foreign land to citizens. • IADB (Inter-American Development Bank) estimated in 2006, remittance to Mexico= $23 billion. • CONTROVERSY!

  15. Trading Partners and Trade Policies • NAFTA= developed b/c of close relations Mexico & USA had for years. • Boomed FDI • Secret economy abolished, everything became transparent and known.

  16. Continued… • ALADI / LAIA (Latin American Integration Association) more trade in Central America • EU= negotiated free trade with Mexico. • Mexico is in two of the biggest markets in the world. • China becomes a threat after joining the WTO

  17. Fiscal Policy • Fiscal Policy= government spending/revenues, needs reforms • Should be counter cyclical (economy) economists say • Spend money/cut taxes in bad times • decrease gov. spending when economy is good b/c of the private sector.

  18. Continued… • Income tax and value added sales tax and Pemex (Petroleos Mexicanos) revenues=gov. revenue • Mexico is subject to Pemex’s ups and downs since most revenue comes from it, though not a lot. • informal economy=weak tax system

  19. Continued II… • Mexico’s president, Felipe Calderon, wants to but cannot privatize oil b/c it is protected in the Mexican constitution. • Lack of oil=lack of money

  20. Mexico’s New Econ Policies • Budgetary stabilized plan= revenues from high oil prices are saved for future counter spending cycles. • Used to stimulate economy in hard times • It is working for Mexico and economy is getting better

  21. Continued… • Oportunidades or Progresa • Money is spent on needy if they follow rules ex. Immunizing children, taking them to school

  22. Just Small Details • Immigration in the North • NAFTA • Pollution

  23. YOU ARE FREE FROM THE ECONOMICS MONSTER!

  24. For now…

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