1. Three significant transition happened in Mexico I. Replacing a primarily agricultural based economy to an industrial based economy. II. Shift from closed economy to an open economy. III. Increasing private ownership and reducing public ownership throughout the economy. 2. Mexico Current Status I. Unemployment 5.18% II. Inflation 4.15% III. 14th largest nominal GDP 3. Trade I. Trade is mostly done with the United States. II. Imports: Machines and Industrial equipment. III. Exports: Agricultural and manufactured goods IV. FDI in telecommunication and energy. 4. Trade Openness and Protectionism Today I. Experienced huge trade liberalization from 1989 to 2000 a. Widening the gap between rural and urban area. b. Diverse effect on wage rate c. Reduced poverty by about 3%; bringing 3 million individuals out of poverty. 5. FDI and Migration Policies I. One of Mexico’s main points in writing the NAFTA agreement is that an increase of FDI will decrease Mexican immigration to other countries. II. On average doubling of FDI will lead to 1.5 – 2% decrease in migration. III. Mexico doubled FDI from 2012 to 2013 with nearly 35.2 Billion. 6. Changes in Mexico’s Trade and FDI I. Past II. Present 7. Causation I. Market Structures - Liberalization and privatization of various industries II. Technologies - Have improved infrastructure immensely over the past 20 years III. Political Factors - Cartels have distorted the influence of their judicial system. 8. International Engagement I. Free trade Agreements (FTA) have been one of the primary reasons behind Mexico’s recent economic growth and emergence as a low supplier of goods. II. NAFTA - Increase trade and FDI between Mexico and the US