Macroeconomía: To BRIC or not to BRIC

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* Un rápido crecimiento económico no implica necesariamente una oportunidad de negocio
* México tiene ventajas clave sobre los BRIC´s
* Los BRICs y México tienen en común 2 situaciones: corrupción y fragilidad institucional
* Los hogares mexicanos tienen mayor poder adquisitivo
* La economía se vuelve cada vez más sofisticada
* El ambiente para hacer negocios en México es relativamente mejor
* Un mercado con gran densidad de población y un ingreso relativamente mayor es más atractivo que un país con ingresos relativamente menores, incluso si la población de éste crece rápidamente

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Macroeconomía: To BRIC or not to BRIC

  1. 1. To BRIC or not to BRIC?
  2. 2. To BRIC or not to BRIC? • Sheer size and rapid growth do not necessarily equate good business • Mexico has key advantages over BRICS – Richer households – Increasingly sophisticated economy – Better business environment across the board • BRICs and Mx share corruption and poor institutions
  3. 3. Sheer size & Rapid growth don’tequate good business
  4. 4. BRICs are much larger than MxDB Research: BRIC Capital Markets Monitor June 2010.
  5. 5. BRICS are growing faster than Mx Urban population (% of total) 14% Brazil 12% 10% Russian Federation 8% India 6% China 4% 2% Mexico 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 -2%World Bank. World Development Indicators
  6. 6. But Mexicans are still richer GDP per capita (current US$) $14,000 $12,000 $10,000 RUS $8,000 MEX BRA $6,000 CHN $4,000 IND $2,000 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008World Bank. World Development Indicators
  7. 7. Mexico’s key advantages
  8. 8. Demographics andpurchasing power ofhouseholds are key
  9. 9. Richer people earn and spend morePurchasing powerPeople’s income R M People’s Income (GDP) B Purchasing Power (ex. wages) I C Russia Mexico Brazil India China
  10. 10. Household final consumption expenditure(% GDP) 80% 70% 60% 50% BRA RUS 40% IND 30% CHI MEX 20% 10% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008World Bank. World Development Indicators
  11. 11. Household final consumption expenditure per capita (current 2000 US$) $6,000 $5,000 $4,000 BRA RUS $3,000 IND CHI $2,000 MEX $1,000 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008World Bank. World Development Indicators
  12. 12. Mxs are Better communicated Mobile cellular subscriptions (per 100 people)World Bank. World Development Indicators
  13. 13. …more connected, Fixed broadband Internet subscribers (per 100 people) 8 7 6 5 BRA RUS 4 IND 3 CHI MEX 2 1 0 2000 2001 2002 2003 2004 2005 2006 2007 2008World Bank. World Development Indicators
  14. 14. … and more urban Urban population (% of total) 90 80 BRA 70 RUS 60 Do BRICS even belong in the same club? 50 IND 40 CHN 30 MEX 20 10 0 2000 2001 2002 2003 2004 2005 2006 2007 2008World Bank. World Development Indicators
  15. 15. The Mexican economy ismore manufacture orientedthan most BRICS
  16. 16. Oil economy?…been there, done that Exports by main commodity group & services, % of total exports 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Brazil Russian Federation India China Mexico Manufactures Fuels and mining products Services Agricultural Products OtherWorld Trade Organization . Statistics Data Base & DB Research: BRIC Capital Markets Monitor June2010.
  17. 17. Mx’s Export Evolution Millions (current US$)$300,000$250,000$200,000$150,000$100,000 $50,000 $- 1980 1985 1990 1995 2000 2005 Agricultural products Fuels and mining products Manufactures Services Total ExportsWorld Trade Organization . Statistics Data Base
  18. 18. BRICs and Mexico sharecorruption and institutionalproblems…
  19. 19. México Brazil Russia India ChinaÍndice General IMCO (48) 32 31 33 43 38• Sectores económicos en vigorosa competencia 32 29 25 48 35 41 39 38 17 32• Relaciones internacionales benignas• Gobiernos eficientes y eficaces 32 28 36 38 35• Sectores precursores de clase mundial 34 45 32 48 41• Mercados de factores eficientes 43 34 32 41 33• Sistema político estable y funcional 38 34 44 31 48• Macroeconomía estable 30 33 34 29 15• Sociedad incluyente, preparada y sana 30 40 23 47 31• Manejo sustentable del medio ambiente 45 27 35 47 36• Sistema de derecho confiable y objetivo 33 29 46 38 45
  20. 20. Corruption across the board Corruption Perception Index Ranking (out of 180) Country Score (out of 10) 1 New Zealand 9.4 5 Switzerland 9.0 19 United States 7.5 75 Brazil 3.7 79 China 3.6 84 India 3.4 89 Mexico 3.3 146 Russia 2.2 Comparable countries: Colombia (3.7), Burkina Faso (3.6), Thailand (3.4) Rwanda, Malawi, Moldova, Morocco (3.3), Albania (3.2), Sierra Leone (2.2)Transparency International. Corruption Perception Index 2009
  21. 21. World Economic Forum: Public Institutions Ranking: 133 countries Mexico Brazil Russia India ChinaPublic Institutions 101 97 110 55 461. Property Rights 86 76 119 55 431.01 Property Rights 86 70 121 54 391.02 Intellectual Property Protection 81 92 102 61 452. Ethics and Corruption 100 125 99 73 432.01 Diversion of Public Funds 100 121 106 58 552.02 Public trust of Politicians 94 127 80 79 263. Undue Influence 89 72 111 44 503.01 Judicial Independence 91 78 116 37 623.02 Favoritism in Decisions of 85 74 96 54 35Government Officials The Global Competitiveness Report 2009-2010
  22. 22. World Economic Forum: Public Institutions Ranking: 133 countries Mexico Brazil Russia India China4. Government Inefficiency 89 120 110 43 374.01 Wastefulness of government 69 129 81 55 35spending4.02 Burden of government regulation 117 132 124 95 214.03 Efficiency of legal framework in 94 95 109 37 43settling disputes4.04 Efficiency of legal framework in 80 81 111 21 57challenging regulations4.05 Transparency of Government policy 75 96 114 43 32making The Global Competitiveness Report 2009-2010
  23. 23. World Economic Forum: Public Institutions 133 countries Mexico Brazil Russia India China5. Security 125 93 94 70 535.01 Business cost of terrorism 91 5 80 117 665.02 Business cost of crime and violence 124 118 71 50 435.03 Organized Crime 129 111 96 63 715.04 Reliability of Police Services 124 89 112 52 49 The Global Competitiveness Report 2009-2010
  24. 24. Índices clave (0 peor – 100 mejor)Sistema Político IMCO México Brazil Russia India China• Índice de Estabilidad Política 35 46 29 21 43• Índice de control de la corrupción 41 22 3 18 10• Probabilidad de ataque terrorista 73 18 73 62 35• Interferencia Militar 64 73 64 45 73• Libertad de prensa 52 58 25 65 16
  25. 25. All in all… Mx’s Business environment is relatively better
  26. 26. Ease of Doing Business Ranking (out 183) Brazil Russia India China Mexico Ease of doing business 129 120 133 89 51 Starting a business 126 106 169 151 90 Dealing with construction 113 82 175 180 37 permits Employing workers 138 109 104 140 136 Registering property 120 45 93 32 99 Getting credit 87 87 30 61 61 Protecting investors 73 93 41 93 41 Paying taxes 150 103 169 130 106 Trading across borders 100 162 94 44 74 Enforcing contracts 100 19 182 18 81 Closing a business 131 92 138 65 24Doing Business Report 2010
  27. 27. Difficulty of Doing Business Ranking (183) Brazil Russia India China Mexico Ease of doing business 129 120 133 89 51 Starting a business 126 106 169 151 90 Dealing with 113 82 175 180 37 construction permits Employing workers 138 109 104 140 136 Registering property 120 45 93 32 99 Getting credit 87 87 30 61 61 Protecting investors 73 93 41 93 41 Paying taxes 150 103 169 130 106 Trading across borders 100 162 94 44 74 Enforcing contracts 100 19 182 18 81 Closing a business 131 92 138 65 24Doing Business Report 2010
  28. 28. To BRIC or not to BRIC?
  29. 29. To BRIC or not to BRIC? • Sheer size and rapid growth do not necessarily equate good business • Mexico has key advantages over BRICS – Richer households – Increasingly sophisticated economy – Better business environment across the board • A highly populated market with a relatively high income seems more compelling than a relatively low income country, even if growing rapidly

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