Mona Ragodos

1

• Mona Ragodos
• Michelle Izawa
• Noriko Miyazawa
• Nathan Schupp
• Tyra Ito

2
World
3
Map of Mexico
4
31 States of Mexico
5
Mexico Flag
6
Mexicos Time Line
-1510
1492-1521
1810-1821
1855-1910
1910-1917
7
The People of Mexico
8
Mexicos Mix

• Mestixo (Spanish American) 60
• Amerindian 30
• White 9
• Other 1

9
Population 1970-1997
10
Religion

• Roman Catholic 89
• Protestant 6
• Other 5

11
Holidays

• January 1 - New Year's DayFebruary 5 -
  Constitution DayFebruary 24 - Day of the
  FlagMarch 21 - Anniversary of Benito Juárez's
  birthMarch/April - Good Friday-Easter SundayMay
  1 - Labor DayMay 5 - 1862 Victory Celebration
  Cinco de Mayo
• September 16 - Día de la IndependenciaOctober 12
  - Día de la RazaNovember 20 - Día de la
  RevoluciónDecember 25 - Día de Navidad

12
Culture
13
Culture
14
Government

• Federal Republic
• Political System
• Presidential
• Bicameral (Senate and Chamber of Deputies)
• Federal (32 states)
• President- Vincente Fox Quesada

15
Money

• Noriko Miyazawa

16
Overview of Mexicos Economy

• 1994 The Mexican Peso Crisis Erupted
• The annual average value US.29/peso
• GDP fell by 6.6
• Recession
• 1996-1997 Economic Recovery
• Trade contributed economic transformation
• Since 1998 Economic Stability
• The exchange rate and inflation rate has largely
  stabilized

17
Exchange Rate

• Mexico Peso (per USD)
• 9.965 October 24, 2002 (Close of Day)
• The flexible exchange rate system was adopted in
  1994.

18
Interest Rate
The lower interest rates help to increase
consumption especially, in the telecommunication
industry and the manufacturing industry
19
Inflation
Consumer Price IndexAnnual Rate
20
Tax Policy

• Mona Ragodos

21
Taxation

• Principal Taxes (everyone)
• Federal Taxes
• -income tax
• -value-added tax
• -import and export taxes
• -payroll taxes
• Local Taxes
• -real property
• -employer tax on salaries
• -acquisition of real property

22
Classes of Taxpayers

• Resident Corporations and Other Associations
  Taxable as Corporations
• Resident Individuals
• Non-Resident Corporations and Individuals
• Non-Profit Organizations

23
Taxes on Corporate Income

• Federal Income Tax 35
• No tax on distributed dividends
• Eliminate double taxation
• Minimum Tax 2 (asset tax)
• State Taxes
• No state taxes on corporate net income

24
Corporate Income Tax

• Tax Year calendar year
• -Newly formed corporations have a short
  taxable year from the date of incorporation till
  Dec. 31
• -For existing corporations, taxable year begins
  when liquidation procedures commence
• Corporations and Shareholders
• -Corporate earnings only taxed once 35
• -Double taxation reduces the overall tax burden
  of domestic or foreign investors return on
  investment

25
Government Finance 2000

• Government Spending Total Tax
• GOVERNMENT BUDGET
• Pesos (mil) 945871 866231 83815
• US (mil)
• 8,891,187,400 8,142,571,400 787,861,000

26
Economy

• Nathan Schupp

27
EconomyGDP

• GDP Numbers in Years 1981-2001
• 1981- 306.4
• 1991- 314.5
• 2000- 580.1
• 2001- 617.8
• All numbers in US billions

28
EconomyGDP

• GDP Growth Rate Changes over the years 1992- 2003
• years 2002 and 2003 are projected numbers by IMF

29
EconomyGDP

• Change in Growth of Investment
• Change in GDP

30
Structure of the Economy

• of GDP

• 1981 1991 2001
• Agriculture 9.0 7.5 4.4
• Services 57.9 64.4 68.0
• Private Con. 64.4 70.5 70.1
• Government Con. 10.8 9.1 11.6
• Imports of Goods
• And Services 12.9 19.3 30.0
• Industry 33.2 28.0 26.8
• Manufacturing 21.9 20.6 19.4

31
Structure of the Economy

• Average Annual Growth

• 1981-1991 1991-2001
• Agriculture 0.7 1.7
• Services 1.5 3.0
• Private Con. 1.8 2.7
• Government Con. 2.1 1.6
• GDI -1.2 4.6
• Imports of Goods and
• Services 5.2 12.1
• Industry 1.5 3.8
• Manufacturing 2.1 4.4

32
Trade

• Michelle Izawa

33
Mexicos Comparative Advantage in Trade

• Jalisco Mexican Silicon Valley and is host to
  some of the worlds high-tech players
• Aguascalients Auto parts production attracts
  suppliers to the main automobile manufacturers in
  Mexico.
• La Laguna, Puebla, and Tlaxcala Powerful textile
  and apparel exporters. They export 280 million
  pairs of jeans to the US every year.

34
Comparative Advantage

• Baja California and Chihuahua Worlds largest
  centre for television and electronics
  manufacturing.
• Coahuila and Monterrey Premier centres for the
  metal mechanic industries, including automobile
  manufacturing.

35
...Exports and Imports

• Major Export items include
• Manufactured Goods
• Oil and Oil Products
• Silver
• Fruits
• Vegetables
• Coffee
• Cotton

• Major Import items include
• Metalworking Machines
• Steel Mill Products
• Agricultural Machinery
• Electrical Equipment
• Car Parts for Assembly
• Repair Parts for Motor Vehicles
• Aircraft
• Aircraft Parts

36
Change in Exports and Imports
Exports
Imports
37
Trade Balance

• Exports Imports Trade Balance
• Jan.-Aug. 2002 change from 2001
• 105.97 - 110.23 -4.26 billion

38
(No Transcript)
39
(No Transcript)
40
Timeline of Trade Agreements

• 1998 GATT (WTO)
• 1992 FTA Chile
• 1994 NAFTA (US, Canada, Mexico)
• 1995 FTA (Columbia Venezuela), (Bolivia),
  (Costa Rica)
• 1998 FTA Nicaragua
• 2000 FTA (Guatemala, Honduras, El Salvador),
  (European Union), (Israel)

41
(No Transcript)
42
N.A.F.T.A.

• Canada United States Mexico

43
NAFTA Results

• North America has become the most dynamic trading
  area
• Mexico has become the U.S. second largest
  trading partner
• Mexico-Canada trade has doubled
• Mexico has become the eighth largest exporter in
  the world
• Mexico has become the largest recipient

44
Expansion of Trade

• March 2000, Mexico-EU FTA
• 1st agreement with a Latin America country
• Arose out of common objective
• Mexico is 32nd largest supplier to EU

45
Expansion

• 2000 Israel FTA
• 1st FTA with Middle Eastern country
• Allows Mexico to further diversify its export
  market and help the country attract greater
  investment from Israel (high tech and
  agricultural technology Israel is global leader
  in these areas)

46
Expansion

• Recently Guatemala, Honduras, and El Salvador
  FTA
• Allows Mexico to stimulate investment with
  Central America neighbors and strengthen
  partnerships within Latin America.

47
Exports and Imports

• Mona Ragodos

48
Top Export Partners 2001

• United States 88.4
• Canada 2
• Germany 0.9
• Spain 0.8
• Netherlands Antilles 0.6

49
Top Exports 2001

• Manufactured Goods
• Oil and Oil Products
• Silver
• Agricultural Products
• Cotton

50
Top Import Partners 2001

• United States 68.4
• Japan 4.7
• Germany 3.6
• Canada 2.5
• China 2.2

51
Top Imports 2001

• Metalworking Machinery
• Steel Mill Products
• Agricultural Machines
• Electrical Equipment
• Car Parts for Assembly

52
Why Are They Partners?

• Free Trade Agreements (FTA)
• World Trade Organization (WTO)
• Foreign Direct Investment (FDI)
• Foreign Investment Law (FIL)
• Bilateral Investment Treaties (BIT)
• Company Partnerships

53
FDI
54
FDI and BIT in Mexico

• Trade Partners
• United States
• Canada
• Germany
• Spain
• Netherlands
• France
• European Union

55
Recent Activity

• Financial (Citi Group and Banamex)
• Telecommunications (ATT, Nextel)
• Industry (Pepsi, Anheuser-Busch)
• Computers and Electronics (HP, Xerox)
• Automotive (Ford, GM, Volkswagen)
• Transportation-Railroads (Kansas City Southern
  Railway Co.)

56
GRACIAS!