Who owns mexico the country

In this case, each individual commuter constituted an open system: He or she could find a parking space by arriving early. But the group of commuters as a whole could not do the same. If everyone tried to get a space by arriving earlier, the garage would only fill up sooner!

Commuters as a group constituted a closed system, at least as far as parking was concerned. What does this have to do with business versus economics? Businesses—even very large corporations—are generally open systems. They can, for example, increase employment in all their divisions simultaneously; they can increase investment across the board; they can seek a higher share of all their markets.

Admittedly, the borders of the organization are not wide open. A company may find it difficult to expand rapidly because it cannot attract suitable workers fast enough or because it is unable to raise enough capital. An organization may find it even more difficult to contract, because it is reluctant to fire good employees. But we find nothing remarkable in a corporation whose market share doubles or halves in just a few years.

By contrast, a national economy—especially that of a very large country like the United States—is a closed system. Could all U. In those industries, one U. In industries that do enter into world trade, U. Any increase in their market share would therefore mean a move into trade surplus; and, as we have already seen, a country that runs a trade surplus is necessarily a country that exports capital. A little arithmetic tells us that if the average U.

If you think this is an implausible scenario, you must also believe that U. Businesspeople have trouble with economic analysis because they are accustomed to thinking about open systems. To return to our two examples, a businessperson looks at the jobs directly created by exports and sees those as the most important part of the story.

He or she may acknowledge that higher employment leads to higher interest rates, but this seems an iffy, marginal concern. And what about the effect of foreign investment on the trade balance? Again, the business executive looks at the direct effects of investment on competition in a particular industry; the effects of capital flows on exchange rates, prices, and so on do not seem particularly reliable or important.

The economist knows, however, that the balance of payments is a closed system: The inflow of capital is always matched by the trade deficit, so any increase in that inflow must lead to an increase in that deficit. Another way of looking at the difference between companies and economies may help explain why great business executives are often wrong about economics and why certain economic ideas are more popular with businesspeople than others: Open systems like companies typically experience a different kind of feedback than closed systems like economies.

This concept is best explained by hypothetical example. Imagine a company that has two main lines of business: widgets and gizmos. Suppose that this company experiences unexpected growth in its sales of widgets. How will that growth affect the sales of the company as a whole? Will increased widget sales end up helping or hurting the gizmo business? The answer in many cases will be that there is not much effect either way.

The widget division will simply hire more workers, the company will raise more capital, and that will be that. The story does not necessarily end here, of course. Expanded widget sales could either help or hurt the gizmo business in several ways. But such indirect effects of the growth of one part of the company on the success of the other are both ambiguous in principle and hard to judge in practice; feedbacks among different lines of business, whether they involve synergy or competition for resources, are often elusive.

By contrast, consider a national economy that finds one of its major exports growing rapidly. If that industry increases employment, it will typically do so at the expense of other industries.

If the country does not at the same time reduce its inflows of capital, the increase in one export must be matched by a reduction in other exports or by an increase in imports because of the balance of payments accounting discussed earlier. That is, there will most likely be strong negative feedbacks from the growth of that export to employment and exports in other industries. Indeed, those negative feedbacks will ordinarily be so strong that they will more or less completely eliminate any improvements in overall employment or the trade balance.

Because employment and the balance of payments are closed systems. In the open-system world of business, feedbacks are often weak and almost always uncertain. In the closed-system world of economics, feedbacks are often very strong and very certain. But that is not the whole difference. The feedbacks in the business world are often positive; those in the world of economic policy are usually, though not always, negative.

Again, compare the effects of an expanding line of business in a corporation and in a national economy. That is, a company that does well in one area may end up hiring more people in other areas. But an economy that produces and sells many goods will normally find negative feedbacks among economic sectors: Expansion of one industry pulls resources of capital and labor away from other industries.

There are, in fact, examples of positive feedbacks in economics. They are often evident within a particular industry or group of related industries, especially if those industries are geographically concentrated. For example, the emergence of London as a financial center and of Hollywood as an entertainment center are clearly cases of positive feedback at work. However, such examples are usually limited to particular regions or industries; at the level of the national economy, negative feedback generally prevails.

The reason should be obvious: An individual region or industry is a far more open system than the economy of the United States as a whole, let alone the world economy. An individual industry or group of industries can attract workers from other sectors of the economy; so if an individual industry does well, employment may increase not only in that industry but also in related industries, which may further reinforce the success of the first industry, and so on. Thus if one looks at a particular industrial complex, one may well see positive feedback at work.

But for the economy as a whole, those localized positive feedbacks must be more than matched by negative feedbacks elsewhere. Extra resources pulled into any one industry or cluster of industries must come from somewhere, which means from other industries.

Businesspeople are not accustomed to or comfortable with the idea of a system in which there are strong negative feedbacks. In particular, they are not at all comfortable with the way in which effects that seem weak and uncertain from the point of view of an individual company or industry—such as the effect of reduced hiring on average wages or of increased foreign investment on the exchange rate—become crucially important when one adds up the impact of policies on the national economy as a whole.

In a society that respects business success, political leaders will inevitably—and rightly—seek the advice of business leaders on many issues, particularly those that involve money. All we can ask is that both the advisers and the advisees have a proper sense of what business success does and does not teach about economic policy.

In , as the world slid into depression, John Maynard Keynes called for a massive monetary expansion to alleviate the crisis and pleaded for a policy based on economic analysis rather than on the advice of bankers committed to the gold standard or manufacturers who wanted to raise prices by restricting output. Keynes was right: Economics is a difficult and technical subject. It is no harder to be a good economist than it is to be a good business executive.

In fact, it is probably easier, because the competition is less intense. However, economics and business are not the same subject, and mastery of one does not ensure comprehension, let alone mastery, of the other. A successful business leader is no more likely to be an expert on economics than on military strategy. The next time you hear business-people propounding their views about the economy, ask yourself, Have they taken the time to study this subject? Have they read what the experts write?

If not, never mind how successful they have been in business. Ignore them, because they probably have no idea what they are talking about. There are actually two technical qualifications to this statement.

The other involves profits and interest payments from past investments. These qualifications do not change the main point. Strictly speaking, one should talk of companies that produce in the United States. It is certainly possible for companies based in the United States to increase their world market share by acquiring foreign subsidiaries.

You have 1 free article s left this month. You are reading your last free article for this month. Subscribe for unlimited access. Mexico's labor force comprises 20 percent agricultural workers, 24 percent industrial workers and 56 percent service workers. Agriculture accounts for 5 percent of Mexico's gross domestic product; industry, 26 percent; and services, 69 percent. Income distribution is highly inequitable -- approximately 40 percent of the population lives below the poverty line.

Mexico's main trading partner is the United States Mexico also negotiated free trade agreements with Costa Rica in , Nicaragua in , and Honduras, El Salvador and Guatemala in The official unemployment rate in Mexico in was 3.

However, the country's "underemployment rate" -- a measure that denotes employees earning less than the minimum wage or working fewer than 35 hours a week -- could be as high as 25 percent. Informal workers, such as street vendors and day laborers, are believed to total 10 million. Some sources suggest that as much as half of Mexico's workforce is unemployed or working informally.

All Rights Reserved. It is approximately three times the size of Texas, with a total landmass of 1,, square miles. Mexico has the largest reserves of silver in the world and is rich in other natural resources like gold, zinc and copper. In manufacturing, Mexico has the advantage of high labor productivity and free trade agreements with multiple nations. Rising wages in China also makes Mexico a more attractive destination for manufacturing. And natural gas prices tied to the U.

Through the twentieth century, Mexico transformed from an agrarian to an industrial economy. By the s, manufacturing was at the center stage and had become the engine of growth.

However, the services sector slowly started to assume a more important role and has now became a dominant force for the Mexican economy.

The graph below shows the contribution of services sector since to Mexico's gross domestic product based on the World Bank data. The financial sector in Mexico is largely foreign owned. For example, Banamex is a part of Citigroup Inc. The treaty not only created the largest free trade zone in the world, but also lay a foundation for the growth and prosperity of the United States, Mexico and Canada.

Since its introduction in , the U. Today, Mexico has a large, diversified and strong economy with its oil sector, remittances from United States, exports, agriculture, mining, tourism and industrial activity playing the most significant roles in its growth.

However, the country also suffers from problems like corruption , a huge informal economy, drug cartels and income inequality which need to be tackled to ensure sustainable growth. For related reading, see " 4 Economic Challenges Mexico Faces in ". Accessed Sep. The World Bank. Emerging Markets. Your Privacy Rights. To change or withdraw your consent choices for Investopedia. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page.

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GDP Composition. Services Sector. The Bottom Line. Article Sources.