A few years ago, I wrote about Mexico possibly becoming a failed state because of the effect of the cartels on the country. Mexico may have come close to that, but it stabilized itself and took a different course instead -- one of impressive economic growth in the face of instability.
Mexican Economics
Discussion of national strategy normally begins with the question of national security. But a discussion of Mexico's strategy must begin with economics. This is because Mexico's neighbor is the United States, whose military power in North America denies Mexico military options that other nations might have. But proximity to the United States does not deny Mexico economic options. Indeed, while the United States overwhelms Mexico from a national security standpoint, it offers possibilities for economic growth.
Mexico is now the world's 14th-largest economy, just above South Korea and just below Australia. Its gross domestic product was $1.16 trillion in 2011. It grew by 3.8 percent in 2011 and 5.5 percent in 2010. Before a major contraction of 6.9 percent in 2009 following the 2008 crisis, Mexico's GDP grew by an average of 3.3 percent in the five years between 2004 and 2008. When looked at in terms of purchasing power parity, a measure of GDP in terms of actual purchasing power, Mexico is the 11th-largest economy in the world, just behind France and Italy. It is also forecast to grow at just below 4 percent again this year, despite slowing global economic trends, thanks in part to rising U.S. consumption.
Total economic size and growth is extremely important to total national power. But Mexico has a single profound economic problem: According to the Organization for Economic Co-operation and Development, Mexico has the second-highest level of inequality among member nations. More than 50 percent of Mexico's population lives in poverty, and some 14.9 percent of its people live in intense poverty, meaning they have difficulty securing the necessities of life. At the same time, Mexico is home to the richest man in the world, telecommunications mogul Carlos Slim.
Mexico ranked only 62nd in per capita GDP in 2011; China, on the other hand, ranked 91st. No one would dispute that China is a significant national power. Few would dispute that China suffers from social instability. This means that in terms of evaluating Mexico's role in the international system, we must look at the aggregate numbers. Given those numbers, Mexico has entered the ranks of the leading economic powers and is growing more quickly than nations ahead of it. When we look at the distribution of wealth, the internal reality is that, like China, Mexico has deep weaknesses.
The primary strategic problem for Mexico is the potential for internal instability driven by inequality. Northern and central Mexico have the highest human development index, nearly on the European level, while the mountainous, southernmost states are well below that level. Mexican inequality is geographically defined, though even the wealthiest regions have significant pockets of inequality. We must remember that this is not Western-style gradient inequality, but cliff inequality where the poor live utterly different lives from even the middle class.
