globalEDGE Blog: Mexico's New Middle Class

Mexico's New Middle Class

File under: Mexico, NAFTA, Economy,

Mexico has reached a tipping point; it is no longer the poor nation it once was a generation ago. But, it also has a long way to becoming rich. The nation’s economy is the 13th largest in the world, but many experts claim that Mexico has been running under the radar in respect to a strong business investment for many international business investors.

The new investments in business come from many corporations setting up manufacturing facilities in Mexico and the new free trade policies set up by the government. Together, Mexicans and U.S. workers manufacture airplanes, automobiles, computers and space satellites. Due to this investment, it has brought many middle class jobs to the country, building the base for consumer spending, and helping Mexico build more infrastructure, schools, and small businesses. Many are relating the current manufacturing jobs in Mexico to the auto maker’s jobs of the 1960’s in Detroit.

The middle class in Mexico has come to fruition, thanks in part to the booming trade from its neighbor to the north, USA. Many goods the new middle class are buying are coming from the trade partnership with the United States. Exports from the United States to Mexico have increased 17% in 2011, with Texas, California, and Michigan leading the way.  All those Wal-Marts, Costcos, and Sam’s Clubs that are sprouting up are for the new middle class in Mexico.

All of this new progress for Mexico is great, but there are still obstacles to overcome. The income disparity is still horrific, with the top 1% earning 36% of the income. The informal economy is also taking a toll on the middle class because it is very hard to hold on to that socio-economic position. The informal economy pays no tax and runs under the radar. Many Mexicans who operate in this sector of the economy have no health benefits and no savings. If one of the family members gets sick, the family slips right back into poverty.

The silver lining to this problem is that the middle class is sending their children to school, allowing the parents to work. The children help support their parents and in turn, with their education, provide a good outlook for the future of Mexico. The New Mexico is still a lot better off than the Old Mexico, and the trend line is going up. 

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