As we look around the world for the strong export economies, Mexico provides many important competitive advantages, which include:
- Macro-economic environment.
- Total manufacturing costs.
- Workforce quality.
- Engineering graduates per capita.
- Democratic system.
- Close location to the world's largest consumer market.
During 2016, global sourcing strategies faced serious challenges from ocean carrier service failures, countries’ political uncertainties, rising labor costs, and global supply chain visibility shortfalls. This is at a time of US hyper-competitive retail market dynamics' demands for fast, reliable, goods movement solutions.
Boston Consulting Group's recent Global Competitiveness Study identified in the past 10 years a dramatic shift in the cost competitiveness of the top 25 export economies. While China, Brazil, Russia, France, Italy, and others saw their competitiveness continue to deteriorate, Mexico is identified as a "rising star." The study pointed out the strong points in Mexico's competitiveness which include: moderate wage growth, sustained productivity gains, stable foreign-exchange currency rates, and energy advantages. Also, Mexico has a network of 12 free trade agreements and an Economic Partnership Agreement, granting it preferential access to 44 countries and more than 1 billion consumers.
Mexico does face some challenges. In terms of goods movement efficiencies, according to the World Bank's Logistics Performance index, it confirms what others are thinking, Mexico's transportaton connectivity, railroad service network, and other elements require major investments to bring them up to world-class standards. Good news: Mexico has committed to investing $100 billion over the next five years.
Will President-elect Trump's US-Mexico campaign action items derail Mexico's future? I believe after Trump tightens our immigration enforcement, and modifies a few elements of the North American Free Trade Agreement, he will revert to a pro-business stance on US-Mexico relations. Mexico's star will keep shining brightly in the global economy. Goldman Sachs is forecasting that Mexico will be the fifth-largest economy in the world by 2050.