Mexico

Introduction

Mexican exports to the U .S . account for almost a quarter of the Mexican GDP . This is the reason for high dependency of Mexican economy on U .S . As a result , Mexican economy is closely linked to the U .S . business circle . According to the reports of U .S . Department of State , Real GDP grew by 3 .0 in 2005 . Trade system of Mexico is one of the most open in the world , with free trade agreements with the U .S , Canada , the EU , and many other countries . Mexican governments have

improved the macroeconomic fundamentals of the nation since the 1994 devaluation of the peso . As of September 2006 , Moody 's Standard Poor 's , and Fitch Ratings had all issued investment-grade ratings for Mexico 's sovereign debt

Impact of Infrastructure Investment on Mexican Economy

Public investment was the driving force behind the general strategy usually known as Import Substitution Industrialization (ISI ) in Latin America during the post-Second World War era (Aschauer , 11 . Policymakers in the countries like Mexico realized that investment played the most significant role not only as a component of final aggregate demand , but also in terms of determining the size of a country 's capital stock and thus , its future source of growth and employment opportunities (Ramirez , 1 . According to a common view , private investors would be inevitable to channel needed resources in to key industrial projects because of the lack of social and economic infrastructure in the region , as well as the absence of the completely developed markets for information insurance and equity . Government investments in infrastructure and basic industry along with their attendant positive spillover effects were viewed as necessary by the policymakers for achieving the optimal rates of investment and growth in the country . With the onset and aftermath of the debt crisis in the year 1982 , most countries of the region , particularly Mexico , have radically changed their overall development strategy (Ramirez , 1 . The new growth model is more outward-oriented in nature , and more importantly , heavily reliant on market forces as evidenced by the ongoing deregulation of product and factor markets and the privatization of most state-owned enterprises Instead of concentrating on inward-directed growth , under the auspices of state-directed investments (Economic Perspectives September /October 1989 , 17 . The unparalleled streamlining of the public sector in countries like Mexico can be easily figured out to the limited external and internal resources available to their governments during the 1980s . Above all , it is the result of past in-efficiencies and failures caused by the attempt made by public sector in to undertake as many as possible investments in state-owned enterprises producing goods in which the private sector always had a comparative advantage , for example , industries like textiles , banking chemicals and fertilizers , steel , tourism services , trucks and buses , sugar and food processing (Journal of Monetary Economics September 1989 , 173

The Mexican state played an important role in the investment process during the post-Second World War period . It was the driving force behind the rapid economic growth...