U.S. Shale Driving Mexican Renaissance

There are three reasons for this positive and welcome development. First, Mexico didn’t drink the left populist Kool-Aid that has laid low several other Latin countries—Brazil, Argentina and above all Venezuela quickly come to mind. Second, diversification: Mexico opened its economy and built a strong manufacturing sector. Using access to the U.S. under NAFTA and going for foreign investment, Mexico is becoming a major manufacturing center, and is following a development path that in some ways looks more Asian than Latin American. Third, Mexico’s geographical position, and its courageous decision to deregulate the energy sector—something that the Mexican left has hated and feared for years—means that cheap U.S. shale gas is flowing through new pipelines to Mexican electric plants, reducing energy costs and boosting the competitiveness of Mexican manufacturing at a critical time.