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Sep 02

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Indeed, Mexico’s economy has a number of strengths. It is the 14th largest in the world. If you take into account purchasing power, it is the 11th largest economy– larger than Canada, Turkey, and Indonesia. It is projected to grow 4 percent this year, and even faster in the coming decade, a rate that the financial services firm Nomura says will lead to Mexico overtaking Brazil as Latin America’s biggest economy within 10 years, despite the fact that Brazil’s economy is currently twice as large.Still, there is a weakness in Mexico’s growth, as I saw for myself when I was there last month: the money hasn’t been trickling down. According to the Organization of Economic Cooperation and Development, Ugg insoles mens Mexico has the highest rate of poverty among the group’s 34 member nations. If you consider inequality, the OECD ranks it the second most unequal, with only Chile more unequal.

So although the headline numbers might surprise, Mexico presents something of a mixed bag. Yet this hasn’t deterred investors taking a growing interest in this Latin-but-North American country. In a special report on investing in Mexico, theFinancial Times went as far as to call its macroeconomy “virtually bulletproof.” Move over BRICs – Brazil, Russia, India, Ugg insoles mens China – it’s time for the MISTs – Mexico, Indonesia, South Korea, Turkey.Part of Mexico’s appeal to investors is tied into what I think may be the country’s key weakness: inequality. You see, at the lowest-end, labor remains cheap. The Economist points out that in 2003, Mexican pay was three times China’s rates; now it is only 20 percent higher. So Mexican manufacturing is poised for a boom. And while in the past few years Mexico banked on its proximity to the U.S. (lower transport costs) and trade deals like NAFTA to compete with China, it will now be able to manufacture and price products at an advantage.

The big question, of course, Ugg insoles mens is whether the export dollars will trickle down. But making this happen will require significant market reforms. In his recent bookBreakout Nations: In Pursuit of the Next Economic Miracles, Morgan Stanley’s Ruchir Sharma points out how the top 10 Mexican families account for more than a third of the country’s stock market value – an almost unheard of number. “Private cartels produce about 40 percent of the goods that Mexicans consume and charge prices that are 30 percent higher than international averages,” he writes. “Phones, services, soft drinks, and many foodstuffs cost more in Mexico than in the United States.”