Introduction

• Natural resources : petroleum, silver, copper, gold, lead, zinc, natural gas,
timber
• Natural hazards: tsunamis along the Pacific coast, volcanoes and destructive
earthquakes in the center and south, hurricanes on the Pacific, Gulf of
Mexico and Caribbean coasts
• Annual growth rate : 1.13%. (2009)
• Life expectancy at birth(years): total population: 76.06 years
male: 73.25 years
female: 79 years
• Administrative subdivisions: 31 states and a federal district.
• Literacy: Total Population: [91%] Male: [92%]; Female: [90%] 
 Cont’d
• Government type:  Federal republic
• Independence: First proclaimed September 16, 1810; republic established 1824.
• Constitution: February 5, 1917.
• Political parties: Institutional Revolutionary Party (PRI), National Action Party
(PAN), Party of the Democratic Revolution (PRD), Green Ecological Party (PVEM),
Labor Party (PT), and several small parties.
• Work force: Agriculture, forestry, hunting, fishing--21.0%; services--32.2%;
commerce--16.9%; manufacturing--18.7%; construction--5.6%; transportation
and communication--4.5%; mining and quarrying--1.0%.
• Mexico’s economy is part of the North American Free trade Agreement (NAFATA),
a trilateral trade bloc in the region comprising of the US, Canada and Mexico
 Infrastructure
• 253’666 km of paved roads
• 26’656 km of railways
• 57 international airports
• 28 national airports
• 108 seaports
Legal system: 
Mixture of US constitutional theory and civil law system; judicial review of
legislative acts; accepts compulsory ICJ jurisdiction, with reservations

Executive Branch:
 
Chief of state: President Felipe de Jesus CALDERON Hinojosa (since 1
December 2006)
note - the president is both the chief of state and head of government 

Cabinet: Cabinet appointed by the president

Elections: president elected by popular vote for a single six-year term; election
last held on 2 July 2006 (next to be held 1 July 2012)

Judicial branch: 
Supreme Court of Justice (judges are appointed by the president with
consent of the Senate)
• Political parties and leaders:
– Convergence for Democracy or CD [Dante DELGADO Ranauro]
– Institutional Revolutionary Party or PRI [Dulce Maria SAURI Riancho]
– Mexican Green Ecological Party or PVEM [Jorge GONZALEZ Torres]
– National Action Party or PAN [Luis Felipe BRAVO Mena]
– Party of the Democratic Center or PCD [Manuel CAMACHO Solis]
– Party of the Democratic Revolution or PRD [Amalia GARCIA Medina]
– Party of the Nationalist Society or PSN [Gustavo RIOJAIS Santana]
– Social Alliance Party or PAS [Jose Antonio CALDERON Cardoso]
– Workers Party or PT [Alberto ANAYA Gutierrez]
Monetary History
 Economy - overview
• Mexico has a free market economy in the trillion dollar class.

• It contains a mixture of modern and outmoded industry and agriculture,

increasingly dominated by the private sector.
• Trade with the US and Canada has nearly tripled since the
implementation of NAFTA in 1994.
• Mexico has 12 free trade agreements with over 40 countries including,
Guatemala, Honduras, El Salvador, the European Free Trade Area, and
Japan, putting more than 90% of trade under free trade agreements.
• The administration continues to face many economic challenges
including the need to upgrade infrastructure, modernize labor laws, and
allow private investment in the energy sector.
 Cont’d
• Mexico is also a major recipient of remittances, sent mostly from the U.S.
Remittances average around U.S. $21 billion per year, and are the country’s
second-largest source of foreign currency, after oil.
• The Mexican Government has implemented social development programs,
like Oportunidades, to address the Poverty and income inequalities
problems.
• Minimum wage is low in Mexico partly to help keep inflation under
control. In 2010 the average of Mexico’s three region-based minimum
wages is around U.S. $4.50 per day.
• Inflation and public sector deficits are under control, while the current
account balance and public debt profile have improved.
 Mexico GDP Annual Growth Rate
• The Mexico Gross Domestic Product is worth 1086 billion dollars or
1.75% of the world economy, according to the World Bank.

• Recent administrations have expanded competition in seaports, railroads,

telecommunications, electricity generation, natural gas distribution, and
airports.
 GDP
The Gross Domestic Product (GDP) in Mexico contracted at an annual
rate of 0.35 percent in the last quarter. Mexico Gross Domestic Product is
worth 1088 billion dollars or 1.75% of the world economy, according to the
World Bank. Mexico has a free market economy which contains a mixture of
modern and outmoded industry and agriculture, increasingly dominated by
the private sector. Recent administrations have expanded competition in
seaports, railroads, telecommunications, electricity generation, natural gas
distribution, and airports. As an export-oriented economy, more than 90% of
Mexican trade is under free trade agreements (FTAs) with more than 40
countries. Mexico is the second largest national economy in Latin America.
Mexico’s Exchange Rate System
 Trade

• The United States was the destination for about 80% of Mexico’s exports in
2009.

• Mexico is the second-largest export market for the United States . Top Mexican
exports to the U.S. include petroleum, cars, and electronic equipment.
• Mexico is an active and constructive member of the World Trade Organization
(WTO), the G-20, and the Organization for Economic Cooperation and
Development (OECD).
• The most significant areas of friction involve agricultural products such as
livestock and sweeteners as well as cross-border trucking
 Mexico Balance of Trade
• Mexico reported a balance of trade surplus equivalent to 178.8 Million USD
in May of 2010. Mexico is the biggest exporter and importer in Latin
America.
• Mexico’s major exports are: manufactured goods, oil and oil products, silver,
fruits, vegetables, coffee and cotton.
• Mexico imports mainly metalworking machines, steel mill products,
agricultural machinery and electrical equipment.
 Mexico Balance of Trade

Mexico reported a balance of trade surplus equivalent to 178.8 Million USD in May
of 2010. Mexico is the biggest exporter and importer in Latin America. Mexican trade
is fully integrated with that of its North American partners: close to 86% of Mexican
exports and 50% of its imports are traded with The United States and Canada.
Mexico’s major exports are: manufactured goods, oil and oil products, silver, fruits,
vegetables, coffee and cotton. Mexico imports mainly metalworking machines, steel
mill products, agricultural machinery and electrical equipment.
 Manufacturing and Foreign Investment

• The manufacturing sector, which accounts for about 30% of GDP, contracted
in real terms in 2009. Construction dropped by 7.5% in real terms in 2009.

• Foreign direct investment (FDI) in Mexico for 2009 was $11.6 billion, down
51% from the previous year.

• The Mexican Government estimate of FDI for 2010 is $15 billion to $20
billion.
 Taxation
• The main income taxes are those on legal entities, those on non-profit
organizations, those on individuals and those on the Mexican source of
income of nonresidents.
• The income tax rate on business legal entity resident income earners
(companies and possibly individuals) is 28%(*) of the net income
• The income tax rate is from 3% to 28%(*) of taxable income, after
deductions. Deductions can include minimum wage salaries, certain
dental and medical expenses, funeral expenses, certain donations to
certain public service or charity organizations.
 Official reserve assets
In Millions of US Dollars
1. Official reserve assets 103,861.09
(a) Foreign currency reserves 98,478.41
 Securities 67,772.28
 total currency and deposits 61,412.26
(b) IMF reserve position 904.01
(c) Gold 311.79
(d)SDRs 4,140.03
2. Other foreign currency assets 37.51
 Mexican Stock Exchange
• Bolsa Mexicana de Valores, BMV Mexico's only stock exchange.
• It is the second largest stock exchange in Latin America after Brazil's
BM&F Bovespa.
• The total value of Mexican Stock Exchange is estimated to be over US
$600 billion.
• BMV is now a public company following its IPO in June 2008, and its
shares are traded on the BMV equities market.
• The exchange trades:
– Debt instruments including Federal Treasury certificates (CETES)
– Federal Government Development bonds (BONDES),
– Investment Unit bonds, Bankers acceptances, promissory notes,
commercial paper and development bank bonds.
– In addition, it also trades stocks, debentures, mutual fund, shares, and
warrants.
• Settlement is T+3, and trading hours are 8:30 a.m. to 3 p.m. for the capital
markets and 8 a.m. to 2:30 p.m. for debt instruments (Monday through
Friday).

• The BMV calculates 13 indices of stock prices.

• The main benchmark stock index is called the IPC, which stands

for Índice de Precios y Cotizaciones, and is the broadest indicator of the
BMV's overall performance.

• The IPC's value is related to the previous day's value, rather than the base
date of October 30, 1978
 Country’s Risk Analysis
• Political Analysis (MODERATE)
– Mexico’s ties with large developed countries are very strong. Most notably, in
addition to NAFTA, Mexico is a member of the Organization for Economic
Cooperation and Development (OECD).
– Social instabilities in the southern states, violence related to the narcotics trade
and corruption weigh on Mexico’s prospects as an investment destination.
– Government income is overly reliant on the oil sector, so public finance is
experiencing a crisis during this period of economic downturn and lower
energy prices.
• Economic Analysis (LOW)

– Mexico has the second largest economy in Latin America, behind Brazil.
However, it is the smallest member of NAFTA (North American Free Trade
Agreement).
– The Mexican economy is highly reliant upon that of the United States. In
conjunction with the US-led global financial crisis, weak growth in Mexico in
2008 was followed by a contraction of approximately 3.7% in 2009. Modest
growth will return in 2010.
– Inflation pressures are easing quickly, allowing for more expansionary
monetary polices in 2009.
• Financial System Analysis (MODERATE)
– The insurance industry is regulated by the National Commission of
Insurance and Finance (CNSF).
– Mexico, together with Brazil, represents approximately two thirds of all
insurance premiums written in Central and South America.
– The Mexican banking system has become more stable over the past ten
years, reflecting the results of the imposition of rules-based frameworks
intended to strengthen bank balance
Peso Crisis
 Doing Business in Mexico
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Why invest in Mexico?
 Frauds and complaints
Top 4 Complaint Categories from New Mexico
• Auction Fraud 73.7%
• Non Delivery of Merchandise /Payment 12.7%
• Credit Card Fraud 3.5%
• Check Fraud 1.5%

Amount Lost by Fraud Type for Individuals Reporting Monetary Loss

• Complaint Type % who reported a loss Median loss per complaint
• Auction Fraud 96.9% $235.00
• Non-delivery 97.0% $305.00
• Credit Card Fraud 77.8% $101.85
• Check Fraud 50.0% $5150.00