What is the global economy?
When the connection of the economic activities between several countries is intertwined, it affects several other smaller nations as well. The effect can be negative or positive. Back in 2008 when the global economy had been struck as the stock markets around the world went down, India’s market was still standing. It did not have a negative impact on the country’s market. So yes, things can be different, and can leave a lasting impression.
The global economy is the world’s economy. Also known as the world economy, it is the compilation of all the economies of the world in one huge unit. Thanks to globalization today, the global economy is also the system that manages and looks after the trade and industry across the world. So basically, the world economy is the way according to which all the economies of all the countries across the globe have been developing and have developed so far to work as a single system.
Yet, all in all, the global economy has two definitions:
- It is the global GDP or the global Gross Domestic Product. (Or in other words, it is the economy of the entire world, as previously mentioned.)
- It is also the economy of the world as we see it today. Because all the economies are linked together and are interdependent, it appears that the world economy is the one whole unit on which each of them depends.
While talking about the global economy, one must remember that it must be measured separately from the national economies of each country. In a way, it is nothing but an average of the economy of all the countries’ economy. They must not be interchanged, and this difference must be kept in mind every time.
According to the definition of the global economy mentioned above, it is quite obvious that the Mexican economy is the economy of Mexico. According to the International Monetary Fund, it is the 15th largest economy in the world in nominal terms, and it is also the 11th largest by purchasing power parity.
(The Mexican currency is a Mexican peso.)
Now as far as the 2017 analytics are concerned, Mexico had a gross domestic product of $2.4 trillion. This GDP was of course, very low as compared to the GDP of the United States and we all know how the United States was a significant (and, in fact, chief) trading partner back then. It had a GDP of about $17.9 trillion. Yet, Mexico’s GDP was so much more than that of Canada, another of its North American Free Trade Agreement Partner. Canada’s GDP was only $1.6 trillion.
Despite all of this, however, Mexicans contribute about five times more than the other country people who have a GDP similar to it from back in 2017.
Mexico and trade
It must be kept in mind that Mexico is the 13th largest exporter in the world. And because of these exports alone, Mexico has unusual trading with other countries. In fact, this particular country has an agreement for exports with 44 countries in the world. That alone is more than any other country. Mexico thus is quite successful because of its agreements.
If you learn about Mexico, you will realize that it is the world’s eighth largest producer of oil. It produces almost 3 barrels of it each day. This amount is quite more than that of other big exporters like Brazil, Kuwait or Nigeria.
Other than its exports, Mexico also imports quite a few things, for example, machines for agriculture and metal work, electrical equipment, steel mill products, aircraft parts, and even automobile parts.
And yet, people are investing in its economy. The primary reason for that could be that the nation is now one of the leading manufacturing centers for electronics. Sure, it imports parts of the equipment, but the final product is brought together here. LCD television sets that adore almost every American’s wall are manufactured here and then sold to the United States. Mexico is also known for producing aerospace (aircraft) parts and medical devices.
Similar to almost every other economy, the Mexican economy faces a number of challenges, too, including the past and the present. However, these challenges are entirely different from that of the rest of the world. For example, the major challenge the Mexican economy faces is to get rid of the “drug overloads” or the drug cartels. They are everywhere in the country. In fact, Mexico is probably the only country that is impacted in such a massive way by the drug cartel in the present time.
The biggest problem with these cartels is how they might react if they are asked to leave. It is their whole life and their family’s most significant standing legacy, and no matter how much of a bad thing it is, everyone will still try to protect their family’s legacy. Moreover, every time in the past that such an effort has been made, the cartels have retaliated by harming the ordinary public, the civilians. This is what worries the people high up there, and this is also why it is so hard to take over them.
Then there is the education system of the country as a whole that poses a challenge to the economy. The education system of Mexico is weak. The future of this beautiful nation is not entirely safe, thanks to its weak roots in education and this is bound to leave a lasting impression on the country as a whole. However, like most other nation people, Mexicans too believe that investing in the US is more beneficial than investing in the education system. Many even believe that it would be better to quite an education and studying after the high school than invest in it further and get a degree. Now, think about it and how that is better. You’ll get your answer.
Emerging markets are the main markets in those countries that are neither fully developed yet and nor are they developing according to the economic and social factors that define the word “developed” today. These emerging markets do not have any strict rules yet. They have little to no market efficiency, and well, the regulations that are needed to be a part of the advanced economic market are not present. The only thing that is present in the basic foundation. This includes the banks and stock exchange.
The significant risk here is the political instability of the investors. This restricts them to ordain their money. The currency volatility and the domestic infrastructure problems are another bunch of things that create limited opportunities. And because the outside investors cannot invest in the local stock exchanges of these emerging markets, there is little or no exposure from the outside world.
And this is mainly what the Mexican economy is about and how it impacts the global economy. To know more about the Mexican economy and how that fares with respect to the global economy, one can take a look at Dr. Teodoro Lavin Sodi notes on the subject. He is a professional economist and is brilliant in his field and his view of the market, the Mexican economy is something worth being looked at.