Mexico and Brazil: Economy

Undoubtedly, Mexico and Brazil are the two most powerful economies in Latin America, both are Regional Powers, both are Members of the G20, and both are poised to continue growing and industrializing if their governments manage the economy in a good manner.

In the little time I have been in Brazil, I have observed several similarities with my home country, Mexico. As quick examples, both countries experience the same social problems and, as stated before, both countries have a rising industry. I started to wonder why our two countries do not enjoy a closer relationship in order to grow together. Both countries can benefit from trading and from a new Latin American integration.

Our countries currently do not have any trade agreement. Mexico is one of the most liberal countries regarding free trade. Mexico is an exports-oriented economy. It has free trade agreements with about 40 countries. Brazil, on the other side, is a bit more inwards-oriented, or more protectionist. In my time here I noticed a lot of products that stated “Industria Brasileira” on their labels. It appears that Brazil is trying to achieve a sense of self-sufficiency.

One problem that Mexico has is that most of its exports are sold to the United States; having a single customer for all of your sales is not a good idea. Mexico felt the 2008 financial crisis heavily. United States could not buy our products, and our industry felt the shock. Having several big trade partners and diversifying our sales are goods steps to improve our standing.

Mexico is an attractive market for Brazil too. Mexico has 110 million inhabitants, and a good purchasing power. Brazilian industries can flourish and grow in Mexico. One good market for Brazil is the oil industry. Mexico is right now doing deep-sea exploration in the Gulf of Mexico, trying to find more offshore oilfields. Brazil’s Petrobras can bid and win contracts for oil exploration. Petrobras is a world leader in such explorations.

Hopefully, it seems that our respective governments are taking notice of these factors too. Mexico’s President Felipe Calderón and Brazil’s President Luis Inácio Lula da Silva have set several agreements, which hopefully in a near future may lay the foundations for a Free Trade Agreement that will benefit us both.

-Juan Manuel Pintor