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Home Publications Blogs Beat the Press More Affirmative Action for Mexico in Economic Reporting

More Affirmative Action for Mexico in Economic Reporting

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Wednesday, 28 November 2012 05:56

NAFTA may not have done much to improve Mexico's growth rate, but its approval sure did wonders for U.S. reporting on Mexico's economy. The Washington Post in particular has run several pieces touting Mexico's booming economy and rising middle class (e.g here and here). In fact, a 2007 Post editorial even claimed that Mexico's GDP had quadrupled in the years from 1988 to 2007. (The actual growth figure was 83 percent.)

The NYT appears to be getting into the act with an article discussing Mexico's changing relationship with the U.S. as it inaugurates a new president. The article told readers:

"Mexico fell into a deep recession in 2009 when American demand for Mexican-made imports collapsed. But the recovery under President Felipe Calderón has been notable, with growth expected to reach almost 4 percent this year, roughly twice that of the United States.

While Brazil is often thought of as Latin America’s economic marvel, Mexico’s economy outpaced Brazil’s last year and is expected to do so again this year. Business that had fled Mexico in favor of China has started to return, as the wage gap narrows and transportation and other costs rise."

A 4.0 percent growth rate is not especially rapid for developing countries. Furthermore, the fact that wages in Mexico have fallen sharply relative to wages in China is bad economic news for the vast majority of people in Mexico. Mexican workers used to be much better off than Chinese workers, the fact that this may no longer be the case is the result of Mexico's bad economic performance.

No one would seriously change their view of the relative performance of Latin American countries based on a single year's data. In fact, in terms of miracles, Argentina has done far better than Brazil and Mexico ranks dead last in per capita GDP growth in Latin America from 1996 to the present.

per-capita-gdp-09-2012

                                        Source: International Monetary Fund.

Comments (5)Add Comment
Mexico or Brazil?
written by Seth, November 28, 2012 8:40
Dean, it looks like Brazil ranks dead last, not Mexico.
Mexico is last but the graph doesn't make it clear
written by Roger Vance, November 28, 2012 1:12
The graph would have been clearer if it had shown the percentage change in per capita GDP, rather than the absolute amounts. The numbers shown in the IMF data that Dean linked to actually show that Mexico came in last for the period 1996-2011, if you make the calculation.
Mix up?
written by anon, November 28, 2012 8:57
I think maybe he just mixed up Brazil and Mexico in that last paragraph.
...
written by Brett, November 29, 2012 2:29
1. Mexico isn't exactly a super-poor country anymore. The GDP per capita is $14,700, and that's not counting all the economic activity that takes place unreported (Mexico's shadow economy is at least 25% the size of its official economy). A 4.0% growth rate is pretty good news under those circumstances, and without NAFTA it would probably be even lower.

2. The article didn't say that Mexican workers were becoming poorer - it said that the wage gap is shrinking between Mexican and Chinese workers, probably because Chinese workers are making bigger income gains than Mexican workers. Not surprising, when you consider how low GDP per capita China is.

...
written by Peter Schaeffer, December 04, 2012 12:12
The article is fine. However, the chart is in current International Dollars rather than constant International Dollars which overstates Latin American growth.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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