Can Mexico reclaim title as region's largest economy from Brazil?
Mexico was once Latin America鈥檚 darling, but in the past decade Brazil has far surpassed it as commodities drove economic growth. President-elect Pe帽a Nieto is eager to reposition Mexico.
Mexico was once Latin America鈥檚 darling, but in the past decade Brazil has far surpassed it as commodities drove economic growth. President-elect Pe帽a Nieto is eager to reposition Mexico.
Mexico鈥檚 President-elect Enrique Pe帽a Nieto has embarked on a diplomatic tour of six countries in Central and South America in an effort to reset rocky relationships and reestablish Mexico's position in the region.
Top talking points include the region鈥檚 shared security concerns, especially with Guatemala and Colombia, and smoothing trade relations with Argentina and Brazil, both of which have had recent commercial spats with Mexico. Mr. Pe帽a Nieto is also visiting Chile and Peru.
But Brazil looms especially large: Mexico, which in 2005 lost its status to Brazil聽as the region鈥檚 largest economy, is eager to reposition itself as an economic and political leader. If Pe帽a Nieto is going to secure those regional leadership credentials, he must reach out to the continent鈥檚 current giant.
Pe帽a Nieto, who will officially take office Dec. 1, is poised to return the Institutional Revolutionary Party, or PRI, to presidential power following 12 years of governance by President Felipe Calder贸n's National Action Party. Before 2000, the PRI ruled with near-authoritarian control.
On his first visit to Brazil, in which he met yesterday with business leaders and meets today with President Dilma Rousseff, Pe帽a Nieto offered a clean slate in terms of bilateral relations, strained in recent years by Brazil鈥檚 rise as a global powerhouse and Mexico鈥檚 more recent focus on its ties to its northern neighbor, the United States.
鈥淲e are constantly designated as being two economies that are in competition and occasionally in rivalry,鈥 Pe帽a Nieto said in a statement issued in Sao Paulo. 鈥淲hen, really, we should find an opportunity for better integration, for better commercial exchange between both countries.鈥
Duncan Wood, director of the international relations program at the Autonomous Technological Institute of Mexico, or ITAM, describes Pe帽a Nieto鈥檚 approach as 鈥溾楲et鈥檚 try to reset our relationship. Let鈥檚 treat each other as equals and see how we can help each other out.鈥欌
鈥淏ecause it鈥檚 a different political party than the last 12 years, I think it provides that opportunity,鈥 Mr. Wood says. 鈥淐an the rivalry be turned into a partnership now?鈥
Latin American giants
The relationship is not without tension. Mexico was once Latin America鈥檚 darling, but in the past decade Brazil has far surpassed it. Commodities drove economic growth, earning it a spot in the BRIC club (Brazil, Russian, India, and China) 鈥 the emerging economies to watch, while Mexico鈥檚 stable-but-sluggish growth seemed lackluster by comparison. As Mexico faces dwindling oil reserves, Brazil has made a giant oil find. As Mexico鈥檚 drug-related violence has been aired around the world, Brazil鈥檚 anti-crime initiatives in Rio de Janeiro have been applauded globally.
鈥淚 have the sense that we are a lot freer in Brazil,鈥 says Iolanda Villard, who works at the federal tax agency. 鈥淢exico is so dangerous because of the violence of drug traffickers.鈥
Mexicans lament the fact that, although Mexico is safer overall when compared with other countries in the region (including Brazil), media coverage tends to focus on the drug violence there.聽According to a 2011 United Nations report on global homicide rates, Mexico鈥檚 homicide rate stood at 18.1 homicides per 100,000 people, while Brazil鈥檚 hovered at 22.7 per 100,000.
Mexico's economy is also slated to grow at a faster clip than Brazil's this year. A survey of analysts by Mexico's central bank estimates GDP growth above 3.5 percent in 2012, while growth estimates for Brazil have been scaled back to just over 1.5 percent this year.
As Pe帽a Nieto鈥檚 team was trying to get him to the presidency, they recalled stronger economic growth in Mexico when the PRI was previously in power. A financial adviser bristled when a reporter questioned the rise of Brazil: He pointed to oft-cited statistics showing that Mexico鈥檚 economic growth could surpass that of Brazil. Mexico鈥檚 comparably low wages and proximity to the US market make the country increasingly attractive again to manufacturers as wages rise in China.
Lately financial analysts have started saying it is Mexico that is the 鈥渘ew鈥 Brazil.
But Brazilians disagree. "From an economic standpoint, Brazil is the leader," says Andre Delmonte, a civil engineer, working on the Maracana stadium that will be a venue for the 2014 World Cup. He agrees with Ms. Villard that Brazil has reduced violence in a globally noteworthy way.
He says he feels no rivalry with Mexico but understands their sensitivities about calling Brazil boss. "It is normal to want your country to be the leader," Mr. Delmonte says.
Mexico did recently earned one set of bragging rights over Brazil: Mexico鈥檚 men鈥檚 Olympic soccer team trounced Brazil 2-1, winning its only gold medal of the Games and blocking the five-time World Cup champion from the Olympic soccer gold it has yet to achieve.
Pe帽a Nieto plans to visit Europe in October and the US in November.