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Friday, 15 November 2013

A Mexican moment?

When I was last in Mexico four years ago, it was a country on the brink of collapse. The US economic crisis had thrown thousands of Mexican migrant labourers out of work; a flu epidemic had dried up the flow of tourists to its magnificent beach resorts; and the government’s war against powerful drugs gangs was making some parts of the country among the most violent anywhere in the world.

I’ve just been back, and on the surface at least, much has changed. The economy is booming, thanks to a steady flow of major foreign investors opening up new plants, and a growing middle class with money to spend. And the government of President Enrique Pena Neto says it has drastically reduced the level of drugs-related murders.

So the question being asked is: Is this the Mexican moment? Is the country about to emerge as a strong, stable economic power, ideally placed just to the south of the US to feed the demands of the biggest market in the world?

At a huge new industrial park in the centre of the country, with more than 75 factories employing 12,000 people, they are confident that the answer is Yes. More than half of the companies that have opened up are Japanese, most of them making components for the major Japanese car manufacturers – Nissan, Toyota, Honda – that are expanding their Mexican operations to take advantage of the country’s low labour costs.

Within the next year or so, it’s estimated that rising wage levels in China will make average wages in Mexico even more attractive to foreign investors. Add low wage costs to geographic proximity to the US and a government that says it welcomes foreign investment, and you get a mix of ingredients that could propel Mexico into a bright economic future.

But it’s not a certainty. For one thing, some of the promises that the government made when it was elected nearly a year ago -- to introduce a wide range of reforms and to change the constitution to allow foreign investors to move into the country’s energy market – are running into trouble. There have been massive protests against some of its proposals, and some analysts say the government’s reform programme may already be running out of steam.

For another thing, parts of the country still suffer from grotesquely high levels of violence because of the powerful drugs gangs, or cartels, that control the distribution of cocaine and other drugs through Mexico into the US. The new government has promised a new approach to dealing with the cartels, but most Mexicans I spoke to said they hadn’t noticed much difference.

A businessman from the state of Michoacan told me he has to pay monthly extortion payments to the gangs to be able to stay in business. He no longer dares to spend more than a few days a month in his home state for fear of being kidnapped. A friend’s son was abducted, and when his father could raise only half the ransom demanded, the kidnappers dumped half his son’s body outside his front door. The note read: “You paid half what we asked for, so here’s half your son.”

For decades, millions of Mexicans crossed the border into the US, some legally, but most of them illegally, looking for work. Now with the US economy sluggish and the Mexican economy booming, the traffic has reversed direction. More migrants are heading south into Mexico than north into the US.

And with Europe also in the doldrums, young entrepreneurs from countries like France and Spain are also moving to Mexico. One of them, Guillaume Pace from France, told me how he decided to open an advertising agency in Mexico City because there are so many more opportunities than back home. As soon as he meets the residency requirements, he intends to apply for Mexican citizenship.

So it’s a mixed picture. The economy has been doing well, but there are questions over the future of the government’s economic liberalisation programme. The murder rate is down, but the number of kidnappings has rocketed. The middle class is growing, but in rural areas, people say they have seen none of the benefits of recent economic growth.

A Mexican moment? Perhaps. In the words of one analyst I spoke to: “Next year could either be the moment when Mexico really takes off – or it could be when everything comes unstuck.”

We hope to broadcast our reports from Mexico and Peru later this month, on both The World Tonight and the BBC World Service. I’ll also try to post some of the wonderful pictures taken by my friend and colleague, the multi-talented producer-photographer Beth McLeod.

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