5 Things You Probably Didn’t Know About Mexico’s Economy

Why is the nearshore market in Mexico growing so quickly? If you look at the numbers, it’s keeping pace with the growing development talent pool and the economy. The last decade has brought technological advancements to the nation and unprecedented economic growth.

Everything started changing five years ago with the startup factor. Mexico is now one of Latin America’s fastest growing tech hubs with over $1 billion in venture capital investments in the country in 2015 alone. Since 2014 $120 million has been invested in nearly 300 Guadalajara start-ups according to the Washington Post. And most of these venture capital investments started right here in the United States.

Here are five things you probably didn’t know already about the world’s fifteenth largest economy:

1. Mexico is now one of America’s largest trade partners.

Due in large part to its membership in the North American Free Trade Association (NAFTA), Mexico has quickly become one of the United States’ largest trade partners. Mexico exports manufactured goods, automobiles, industrial goods, and technology. Its positive trade balance with the United States has made it one of the largest holders of U.S. treasury bonds.

2. The Mexican economy is comparable to Brazil’s.

Mexico’s $1.26 trillion economy, not only makes it the 15th largest economy in the world, it’s also the 11th largest when taking power purchasing parity into account. So while the nation falls just short of reaching G7 economy status, it is still a “middle power” and an economic force to be reckoned with.

With over 122 million inhabitants, Mexico’s GDP per capita is currently about $10,000, placing it in the “upper middle income” of countries. The GDP per capita is about 60% higher, at roughly $16,000 when adjusted for purchasing power, putting it at the same level as nations like Brazil, Turkey and Romania.

3. Unprecedented progress is fueling unprecedented growth.

Since President Enrique Peña Nieto started his term in 2012, his administration has been moving forward with what many experts are calling an “ambitious reform agenda.” This includes a complete overhaul of the tax system, reductions in government spending, and the liberalization of specific economic sectors, including energy and telecommunications.

And the economy and growth of the tech and IT market doesn’t appear to be slowing down anytime soon, with support from the Mexican government. Mexican President Pena Nieto committed to investing $300 billion in programs that accelerate the economy, including communications, infrastructure and transportation over his six-year term, ending late next year.

The government devoted $4.6 billion for port infrastructure through 2018, and the country is starting a massive, two-phase expansion of Mexico City’s airport. All of these advancements have helped to bring businesses and venture capital from abroad, especially from the United States.

4. This growth started before the tech boom.

Mexico is known as a commodities and manufacturing giant. The nation boasts the largest proven silver reserves in the world, and the tenth largest oil reserves. The state-owned oil giant, PEMEX, is one of the world’s largest oil providers with revenues of about $130 billion.

5. Mexico’s competitive edge among manufacturers continues advancing.

Driven by inflating wages and less beneficial trade terms in other countries, Mexico recently gained competitiveness as an automobile exporter. For years, businesses around the world have outsourced manufacturing work to Mexico. Almost every auto manufacturer has set up shop south of the border. General Motors, Ford, Toyota, Honda, Volkswagen, Audi, BMW, Mazda and Hyundai all manufacture their vehicles there.

Now the global tech giants are moving towards the country following the nation’s rapidly expanding talent base.

Mexico’s rapidly accelerated economic growth continues to propel advancements in education and technology and consequently, the nation’s powerful tech boom. The country is currently positioned to take the lead in the nearshore development market over Brazil and other standby industry alternatives.

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About Tiempo Development

At Tiempo, we are making the business of software development easier and more affordable with a unique combination of a nearshore business model, agile methodology, and advanced talent management. Our Development teams engineer powerful technologies that align with the goals and strategies of our customers for both their internal and public-facing development initiatives. Tiempo’s proprietary agile product-lifecycle management framework called Tiempo Quality System or TQS, is composed of principals and best practices that ensure productive client and team interactions. The result is efficient software development that enables Tiempo to support companies in launching software releases sooner – without draining important resources.