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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

June 14, 2012 at 9:55 AM

Opportunity and enigma in Mexico

How much can a country stand and still go on with daily life? Mexico is a prime example. An estimated 50,000 people have been killed since President Felipe Calderon began waging an aggressive fight against the drug cartels — which supply our appetites. At the same time, Mexico is building a middle class that is becoming its majority.

So it’s no surprise that Costco Wholesale is buying out its partner in its Mexican division for $760.4 million. With 112 million people becoming a middle-class nation, that’s plenty of customers. Wal-Mart thinks so, too — enough for the company to face allegations of corrupt business practices. Thus the enigma of Mexico: A rapidly developing country, not least thanks to NAFTA and its displacement of American workers, and yet much corruption in government and business.

Mexico accounted for nearly $1.4 billion in Washington exports in 2011 (It is the state’s 13th largest trading partner and America’s second largest, totaling $280 billion. The recession and anti-immigrant hysteria have slowed the illegal immigration rate; in many cases opportunities are greater at home. The U.S. still imports substantial Mexican oil, although the big fields there, especially Cantarell, are in decline.

“As hard as it is for many of us to accept, Mexico is now a middle-class country, which means we don’t have any excuse anymore. We have to start acting like a middle-class country,” Luis de la Calle, an economist and former undersecretary of trade in the Mexican government told the Washington Post. It will be hard for many Americans to accept it, too. But as long as the cartels leave their bloody trail, Mexico will face tremendous uncertainty. As the gangster says in Cormac McCarthy’s Cities of the Plain, “No one knows this country.”

And Don’t Miss: An institutional flaw at the heart of the Federal Reserve || Baseline Scenario

Today’s Econ Haiku:

When will a Chase sign

Be put up at the Senate?

Talk about branded

Comments | More in Costco Wholesale, Global economy, International economy, Mexico, Northwest companies, Trade

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