“Mexico’s Strategy is republished with permission of Stratfor.”

By George Friedman

A few years ago, I wrote about Mexico possibly becoming a failed state because of the effect of the cartels on the country. Mexico may have come close to that, but it stabilized itself and took a different course instead — one of impressive economic growth in the face of instability.

Mexican Economics

Discussion of national strategy normally begins with the question of national security. But a discussion of Mexico’s strategy must begin with economics. This is because Mexico’s neighbor is the United States, whose military power in North America denies Mexico military options that other nations might have. But proximity to the United States does not deny Mexico economic options. Indeed, while the United States overwhelms Mexico from a national security standpoint, it offers possibilities for economic growth.

Mexico is now the world’s 14th-largest economy, just above South Korea and just below Australia. Its gross domestic product was $1.16 trillion in 2011. It grew by 3.8 percent in 2011 and 5.5 percent in 2010. Before a major contraction of 6.9 percent in 2009 following the 2008 crisis, Mexico’s GDP grew by an average of 3.3 percent in the five years between 2004 and 2008. When looked at in terms of purchasing power parity, a measure of GDP in terms of actual purchasing power, Mexico is the 11th-largest economy in the world, just behind France and Italy. It is also forecast to grow at just below 4 percent again this year, despite slowing global economic trends, thanks in part to rising U.S. consumption. Read the rest of this entry »