Mexico Now Growing Faster Than Brazil

Mexico Now Growing Faster Than Brazil

Moneybox
A blog about business and economics.
June 18 2012 1:23 PM

Mexico Now Growing Faster Than Brazil

My least-favorite acronym of all time was BRICs, which just stood for "Brazil, Russia, India, and China," which are the names of four countries that don't have anything in common except that they happened to be growing rapidly at roughly the time the acronym was coined.

Now it turns out that Mexico is growing faster than Brazil, so maybe we need RIMCs instead.

Advertisement

The real story, however, is that Brazil's economy is largely complementary with rapid growth in China. Brazil does agricultural commodity exports and also builds airplanes. Mexico, by contrast, is more of a direct competitor with China as a platform for low wage manufacuring bound for the United States. As China started blowing up, that displaced some U.S. manufacturing activity but it displaced even more Mexico-based manufacturing activity. But China has started to run into the limits of "turn peasants into factory workers and keep paying them like peasants" as a growth strategy. That means rising wages for Chinese workers, which is good for them, and also new opportunities for other countries to regain manufacturing competitiveness. Hence the good news for Mexico, whose economy looks to be in solid shape notwithstanding the continued drug violence.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

  Slate Plus
Politics
May 22 2015 11:14 AM What Happened at Slate This Week? Assistant interactives editor Andrew Kahn on the best of Slate, from the history of slavery to Mad Men.
  Health & Science
Science
May 22 2015 11:56 AM Spider Skies Why are millions of Australian spiders climbing to high points and jumping?