Mexico is using classic tools for managing this problem. Since poverty imposes limits to domestic consumption, Mexico is an exporter. It exported $349.6 billion in 2011, which means it derives just under 30 percent of its GDP from exports. This is just above the Chinese level and creates a serious vulnerability in Mexico's economy, since it becomes dependent on other countries' appetite for Mexican goods.
This is compounded by the fact that 78.5 percent of Mexico's exports go to the United States. That means that 23.8 percent of Mexico's export revenue depends on the appetite of the American markets. On the flip side, 48.8 percent of its imports come from the United States, making it an asymmetric relationship. Although both sides need the exports, Mexico must have them. The United States benefits from them but not on the same order.
Relations with the United States
This leads to Mexico's second strategic problem: its relationship with the United States. When we look back to the early 19th century, it was not clear that the United States would be the dominant power in North America. The United States was a small, poorly integrated country hugging the East Coast. Mexico was much more developed, with a more substantial military and economy. At first glance, Mexico ought to have been the dominant power in North America.
But Mexico had two problems. The first was internal instability caused by the social factors that remain in place, namely Mexico's massive, regionally focused inequality. The second was that the lands north of the Rio Grande line (referred to as Rio Bravo del Norte by the Mexicans) were sparsely settled and difficult to defend. The terrain between the Mexican heartland and the northern territories from Texas to California were difficult to reach from the south. The cost of maintaining a military force able to protect this area was prohibitive.
From the American point of view, Mexico -- and particularly the Mexican presence in Texas -- represented a strategic threat to American interests. The development of the Louisiana Purchase into the breadbasket of the United States depended on the Ohio-Mississippi-Missouri river system, which was navigable and the primary mode of export. Mexico, with its border on the Sabine River separating it from Louisiana, was positioned to cut the Mississippi. The strategic need to secure sea approaches through the Caribbean to the vulnerable Mexican east coast put Mexico in direct conflict with U.S. interests.
The decision by U.S. President Andrew Jackson to send Sam Houston on a covert mission into Texas to foment a rising of American settlers there was based in part on his obsession with New Orleans and the Mississippi River, which Jackson had fought for in 1815. The Texas rising was countered by a Mexican army moving north into Texas. Its problem was that the Mexican army, drawn to a great extent from the poorest elements of Mexican society in that country's south, had to pass through the desert and mountains of the region and suffered from extremely cold and snowy weather. The Mexican soldiers arrived at San Antonio exhausted, and while they defeated the garrison there, they were not able to defeat the force at San Jacinto (near present-day Houston) and were themselves defeated.
