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Mexican Middle Class In Ascent

By Expert Author: AlanRussell

As a result of a consistent economic opening and calibrated reforms, Mexico has joined the ranks of middle class countries over the course of the last decade. The Mexican middle class is on the rise.

Until relatively recent times, trade was regulated and limited, and oil accounted for three out of every four dollars of Mexican exports. The government controlled and owned businesses in many economic sectors from telecommunications to sugar to textiles. The result of what once was an economy driven largely by government was employment for about a million Mexicans. However, limited economic benefit was often accompanied by corruption, political party patronage, and an economy struggling under the load of overpriced goods, inefficient policies, and disruptive and repeated booms and busts.

In contrast to the aforementioned, over the last twenty years, Mexico has aggressively adopted open economic policies and signed many trade agreements, such as NAFTA. This has resulted in foreign trade composing sixty-five percent of overall GDP – a ratio higher than even many developed countries – and a higher standard of living for a growing Mexican middle class.

Long-term financial stability is a contributing factor in Mexico’s ascent, allowing the Mexican middle class to save, invest, and to better build its economic future. Additionally, the effects of NAFTA in the region include downward pressure on the price of consumer goods, which has enabled the Mexican Peso to purchase more for the average Mexican middle class family. Recently, increased access to credit has enabled millions of Mexicans to use credit cards, buy their own homes, and start new businesses or expand existing ones.

According to the World Bank, seventy-five percent of the country’s inhabitants live in cities. More and more women are going to work, and the average family size has decreased to four. These attributes are characteristic of developed countries with vibrant middle classes. The majority of workers in Mexico are no longer occupied in agricultural or oilfield activities. Instead, the average Mexican laborer is employed in Mexico’s growing manufacturing or service industries as an accountant, lawyer, engineer, line worker, taxi driver, or mid-level manager. Though Mexico is not yet fully developed, and does deal with its share of crime and violence, trends are changing, in this regard. The average member of the Mexican middle class is able to afford a lifestyle not significantly removed from that of the average citizen in a developed Western country. Nearly eighty percent of all Mexicans own a cell phone, fifty percent own a car, and approximately thirty percent own a personal computer.

Many have noted that it is not only the social and economic segments of Mexican life that have changed, but, in fact, Mexico’s politics have changed for the better – perhaps acting as the driving factor behind all others.

For decades, the PRI, or “Institutional Revolutionary Party,” held a virtual monopoly on Mexico’s government apparatus, saturating every level of the nation’s bureaucracy and keeping tariffs high, while heavily subsidizing domestically favored industries and government businesses. However, a growing middle class materialized as a potent political force in the 1990s and completely abandoned the PRI in favor of new freedoms, ideas and greater democratization. Yet it is PRI’s recent return to power, and the election of President Enrique Peña Nieto, that may surprisingly provide greatest impetus to Mexico’s economic outlook when looking forward.

As a resurgent party, the PRI now presides over a government structure that has more checks and balances in place than in the past, much more decentralization, and a bustling private sector. Peña Nieto’s aggressive reform agenda is setting the stage for continued growth and prosperity for the Mexican middle class by attracting significant amounts of foreign direct investment, and pursuing privatization strategies in areas that were once the exclusive domain of the government’s portion of the country’s economy.

K. Alan Russell, President and C.E.O. of the Tecma Group of Companies. Manufacturing Companies in Mexico, Mexico Supply Chain Management, Mexico Industries

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