By TBY | Mexico | Oct 29, 2014
There are obviously positive aspects to having different related operations grouped around regional clusters—aggregate economies reinforce each other, there is knowledge exchange between different aspects of the production chain, and […]
There are obviously positive aspects to having different related operations grouped around regional clusters—aggregate economies reinforce each other, there is knowledge exchange between different aspects of the production chain, and both productivity and efficiency are bolstered. A snapshot overview of several regional economic clusters illustrates this point.
THE US-MEXICO BORDER: CHIHUAHUA & COAHUILA
Centered around the northern and central states of the country, one of the most important economic sectors in Mexico is the automotive industry. Recently, Mexico’s auto industry gained attention from investors as Mexico became the world’s eighth largest producer of automobiles in the world. Many major car manufacturers have set up their operations in Mexico’s states, including the obvious American giants like General Motors, Ford, and Chrysler, but also a number of European and Asian players such as BMW, Toyota, Honda, Volkswagen, and Mercedes-Benz. The Mexican automotive industry has also gradually become more advanced—moving from its past as entirely an assembly manufacturer to becoming a center for research, development, and innovation.
Another industry concentrated mainly in the northern states, is the electronics industry. All along the US-Mexico border, the state and federal authorities have established export-oriented maquiladoras specializing in electronics. The electronics industry has also witnessed a rapid expansion in Mexico in the last decade. Mexico is currently the second largest supplier of electronics to the US, after China, and has also become the world’s largest producer of televisions and smart phones. Investment in the electronics industry has largely been concentrated in the northern states close to the US border where most maquiladoras are located, and in Mexico City, and surrounding states, where most of the headquarters of these companies are located. According to the Secretariat of the Economy, Mexico is also currently the top destination for aerospace manufacturing investments in the world.
Some regions, naturally, have certain built in advantages. In the case of Durango, its comparative advantage lies in its natural mineral wealth. However, there are also a number of other overlapping specializations. José Antonio Rincón Arredondo, President of the Economic Development Council of Durango, tells TBY that: “There are four main axes for the economic and industrial development of Durango; the mining sector, the forestry industry—we are the state with the largest forestry resources, at over four million hectares—agribusiness, and tourism.” Mining in the state of Durango accounts for 13.3% of the total domestic gold production, 12.5% of the silver production, 10.4% of zinc production, and 11.1% of the total lead production. Moreover, tourism has an especially strong potential in Durango, as it is a historic state capital with a noteworthy old town and a great deal of space for development in the sector.
At about $27,000, Nuevo León has the highest GDP per capita (PPP) of any Mexican state, with the exception of the Federal District of Mexico City, and was higher than the Mexican national average; according to the National Institute of Statistics and Geography (INEGI) the 2013 PPP national average was $15,700. Regional leaders will often cite the numerous universities and their students, essentially the emerging knowledge economy, as being the main local engine for growth. Margarita Arellanes, the Mayor of Monterrey, describes it this way: “Monterrey has an established tradition when it comes to developing skillful and qualified human resources. In this context, universities have played a vital role in achieving this. We live in a global world in which every country offers opportunities, and have managed to keep local talent here, thanks, in part, to our universities.”
Known traditionally as a tourist destination for visitors from North America, the real estate industry is also starting to show robust growth. Currently underway is a territorial classification plan, which will map different local areas for development, and will run from 2013-2030. Paul Michell Carrillo de Cáceres, the Mayor of Benito Juárez (Cancún) says the plan will help develop areas that are further inland from the usual coastal spots. “These new projects we want to push forward will also help us to reach to other segments of the sector; basically, the plan will involve the development of the city and its hospitality industry.”
BAJA CALIFORNIA PENINSULA
The two states of the Baja peninsula, Baja California and Baja California Sur, are traditionally know for wine production and fishing, with recent developments in real estate, construction, and tourism. Oscar Jesús Escobedo Carignan, Secretary of Tourism of Baja California, tells TBY about attempts to develop the tourism sector: “We have just recently signed new contracts with cruise lines. Ensenada will be the second most-visited port in Mexico in 2014, and we are poised to build a new port between Ensenada and Los Cabos, which should help the cruise industry in the near future.” The state authorities are developing projects to transform Baja California into a world-class tourist destination.