Laying on the Tracks

“What’s that Sound?” is a pretty good article written by Thomas L. Friedman about the Mexican economy.
It’s becoming a more and more apparent problem according to Friedman, that Mexico is losing it’s small corner of the American and world markets. “Will Rogers said it a long time ago: "Even if you're on the right track, you'll get run over if you just sit there." Mexico has put itself on the right track. But for the moment, it's just sitting there. If it doesn't start moving again, it's going to get run over by China, India, America — or all of the above.”

It seems Mexico hasn’t made the necessary upgrades to its country to be a formidable competitor in the world market. The Mexican Government has laid out a plan of action including five main “micro reforms” that will grease up the squeaky hinges of this country. In no particular order; Fix the Labor Markets, Tax Collection, the Judiciary System, the Constitution & Electoral System, and open the Energy & Electricity Markets to foreign markets. Sounds like the micro reforms aren’t so micro after all and what happened to education? Shouldn’t that be up there somewhere? I’ve talked to many friends that have lived in Mexico for years and according to them the education system is all but “Up-to-Par”.

The main reason that countries like China and India are working over Mexico is because of the highly educated human capital these countries are producing. Mexico has been trying however but not doing good enough to make the needed reforms. “While Mexico has upgraded its competitiveness, notes the analyst Daniel Rosen in the journal The International Economy, China upgraded worker education, infrastructure, management skills, technology and quality controls even faster.”

It sounds like Mexico needs to stop sitting on the track and start running full steam ahead or get run over!


Boris said...

I agree with C-Dizzle on the topic that Mexico needs to switch its reform priorities around. I feel that Mexico has placed very little emphasis on increasing its human capital. To me, human capital is the most important asset that a country and its economy can have. Even if they do accomplish all of their other tasks, without the people to keep the system going, it will be completely worthless. A country is only as good as the people that compose it.

Senator Miller said...

This is a really important concept I think. I feel the value of human capital and the capacity to use it to full potential is a goal that all economies should take into priority. Also, as I was reading in the text, I read a section that commented about some countries education that don't promote creative thinking. Is it any wonder that so many creative thinkers and inventions have come from countries that promote and nurture these things? Mexico definitely has their hands full I'd say with all those improvements. I think they'll find their way back into improvement of their economy though.

Lizzie said...

I agree with Skip’s comment to a point. True, “a country is only as good as the people that compose it.” But, growth compatible institutions are necessary and will help just as much, if not more, than strictly human capital. The skills that are embodied in workers through experience, education, and/or on-the-job training will definitely do a lot for Mexico, but the “micro” changes, I think, will include human capital; consequently, making human capital a part of the solution and not the whole solution.

Lizzie said...
This comment has been removed by a blog administrator.
kamm said...

If Mexico is ever going to catch up in the race, or at least make new strides in that direction, I agree with C-dizzle that they have to do something about their educational system. I lived in El Salvador (a third-world country just south of Mexico) for a couple of years and they had the same problem. Their schools had many unqualified teachers or sometimes a shortage. If the people could get a better education, they would be taking those big strides in the right direction. The certainly have enough resources and could take advantage of the technological advancements that many other countries are taking.

Dr. Tufte said...

I have heard the argument that Mexico has not capitalized on the great opportunity presented to it with NAFTA.

However, I also read something the other day that the Mexican government has figured this out and is going in the right direction according to the hard data (I'll see if I can remmeber where I saw this).

Keep in mind that China slso has an educational system which has huge problems at the bottom which will affect their economy in the future.

Jules said...

I agree with what's been said so far about Mexico needing to improve their educational system. However, didn't we also talk in class about the difference in the work ethic between people in Mexico and some other countries that are growing faster? I don't think that the work ethic can be improved by the educational system unless the educational system focuses on rigid structure and rules. People with a lower work ethic probably aren't going to succeed in a rigid educational system. If Mexico gets moving again on the right track with improved education I think it will still be a long road ahead for growth.

Rolf Tiblin said...

C-Dizzle has a good post here.
I thought I would do a little homework of my own. The World Factbook
http://www.cia.gov/cia/publications/factbook/rankorder/2004rank.html ranks countries by GDP per capita.
I was a little shocked to find that the United States is not the leader in GDP per capita. The United States for 2003 showed $37,800, while Mexico in 2003 ranked as the 85th country in the world with a $9,000 per year GDP per capita. I have to agree with C-Dizzle’s observation that education in Mexico isn’t very high on the priority list and also with Dr. Tufte’s in class observation of the lack of motivation in Mexico. One must however remember that there are some citizens of Mexico that do get it. The regularly risk their lives to come to this country seeking opportunity and wealth. Because of their status they work hard, are motivated, don’t complain and don’t come up with excuses as to why they can’t work.. They take jobs that require little or no education and that’s the part that seems odd, surely Mexico has the same type of jobs so why can’t they seem to raise their GDP if they did the same thing at home?

micahnay said...

Human capital is exremely important to a courties growth. If you need an example of this, look at Hong Kong, this is a country that has very limited resources. This country just a few short years ago, resembled India and other coutries that aren’t able to grow because of too much government intervention and the lack of education. Since the British took over and emplemented laws that made it possible for people to make up ideas for business and inventions and made it possible for people to get an education, the country is thriving. It is growing faster that any other counry than we have seen before. Even though they don’t have hardly any resources, they are a major compeditor because of their human capital. Mexico needs to realize that it’s most important asset is it’s people and stop trying to figure out ways that the government can step in and control it’s entire economy. That is what happended in India…where they sat around debating if they should allow KFC to do business in India because they were afraid that it wasn’t healthy enough…in a counry in which half the population is starving!

metromut said...

All comments seem to make sense. It is education that gets you moving. I like what Dr. Tufte said... with poor education comes future problems in the economy. They may be trying to figure our how to keep moving but if they can't teach that to younger generations then they are just wasting their time.

Dr. Tufte said...

Spelling problems in MicahNay's comment.

Mexico definitely has problems with education and the accumulation of human capital. But, so does China.

WRT Rolf Tiblin's comment, the U.S. does not have the highest per capita real GDP. But, that depends a lot on how you deflate nominal GDP. Purchasing power parity methods put us closer to the top (but still behind places like Kuwait). One problem with this measure is that it is an average - which can be inflated by a few rich people at the top. A median would work better, but to my knowledge has never been calculated.