How Mexico Got Back Into the Game
Published: February 23, 2013
MONTERREY,
Mexico
IN India, people ask you about China, and, in China,
people ask you about India: Which country will become the more dominant
economic power in the 21st century? I now have the answer: Mexico.
Impossible, you say? Well, yes, Mexico with only about
110 million people could never rival China or India in total economic clout.
But here’s what I’ve learned from this visit to Mexico’s industrial/innovation
center in Monterrey. Everything you’ve read about Mexico is true: drug cartels,
crime syndicates, government corruption and weak rule of law hobble the nation.
But that’s half the story. The reality is that Mexico today is more like a
crazy blend of the movies “No Country for Old Men” and “The Social Network.”
Something happened here. It’s as if Mexicans subconsciously
decided that their drug-related violence is a condition to be lived with and
combated but not something to define them any longer. Mexico has signed 44 free
trade agreements — more than any country in the world — which, according to The
Financial Times, is more than twice as many as China and four times more than
Brazil. Mexico has also greatly increased the number of engineers and skilled
laborers graduating from its schools. Put all that together with massive cheap
natural gas finds, and rising wage and transportation costs in China, and it is
no surprise that Mexico now is taking manufacturing market share back from Asia
and attracting more global investment than ever in autos, aerospace and
household goods.
“Today, Mexico exports more manufactured products than
the rest of Latin America put together,” The Financial Times reported on Sept.
19, 2012. “Chrysler, for example, is using Mexico as a base to supply some of its Fiat 500s
to the Chinese market.” What struck me most here in
Monterrey, though, is the number of tech start-ups that are emerging from
Mexico’s young population — 50 percent of the country is under 29 — thanks to
cheap, open source innovation tools and cloud computing.
“Mexico did not waste its crisis,” remarked Patrick Kane
Zambrano, director of the Center for Citizen Integration, referring to the fact
that when Mexican companies lost out to China in the 1990s, they had no choice
but to get more productive. Zambrano’s Web site embodies the youthful zest here
for using technology to both innovate and stimulate social activism. The center
aggregates Twitter messages from citizens about everything from broken
streetlights to “situations of risk” and plots them in real-time on a phone app
map of Monterrey that warns residents what streets to avoid, alerts the police
to shootings and counts in days or hours how quickly public officials fix the
problems.
“It sets pressure points to force change,” the center’s
president, Bernardo Bichara, told me. “Once a citizen feels he is not
powerless, he can aspire for more change. ... First, the Web democratized
commerce, and then it democratized media, and now it is democratizing
democracy.”
If Secretary of State John Kerry is looking for a new
agenda, he might want to focus on forging closer integration with Mexico rather
than beating his head against the rocks of Israel, Palestine, Afghanistan or
Syria. Better integration of Mexico’s manufacturing and innovation prowess into
America’s is a win-win. It makes U.S. companies more profitable and
competitive, so they can expand at home and abroad, and it gives Mexicans a
reason to stay home and reduces violence. We do $1.5 billion a day in trade
with Mexico, and have been spending $300 million a day in Afghanistan. Not
smart.
We need a more nuanced view of Mexico. While touring the
Center for Agrobiotechnology at Monterrey Tech, Mexico’s M.I.T., its director,
Guy Cardineau, an American scientist from Arizona, remarked to me that, in
2011, “my son-in-law returned from a tour of duty in Afghanistan and we talked
about having him come down and visit for Christmas. But he told me the U.S.
military said he couldn’t come because of the [State Department] travel
advisory here. I thought that was very ironic.”
Especially when U.S. companies are expanding here,
which is one reason Mexico grew last year at 3.9 percent, and foreign direct
investment in Monterrey hit record highs.
“Twenty years ago, most Mexican companies were not
global,” explained Blanca Treviño, the president and founder of Softtek, one of
Mexico’s leading I.T. service providers. They focused on the domestic market
and cheap labor for the U.S. “Today, we understand that we have to compete
globally” and that means “becoming efficient. We have a [software] development
center in Wuxi, China. But we are more efficient now in doing the same business
from our center in Aguascalientes, [Mexico], than we are from our center in
Wuxi.”
Mexico still has huge governance problems to fix, but
what’s interesting is that, after 15 years of political paralysis, Mexico’s
three major political parties have just signed “a grand bargain,” a k a “Pact
for Mexico,” under the new president, Enrique Peña Nieto, to work together to fight
the big energy, telecom and teacher monopolies that have held Mexico back. If
they succeed, maybe Mexico will teach us something about democracy. Mexicans
have started to wonder about America lately, said Bichara from the Center for
Citizen Integration. “We always thought we should have our parties behave like
the United States’ — no longer. We always thought we should have the government
work like the United States’ — no longer.”
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