Good article in this weeks Financial Times about Mexico, the US election and how important Mexico is becoming to the US. "...it (Mexico) is as economically integrated with the US as any two members of the eurozone are to each other."The current slow down in China and rise in energy costs is having a big impact in solidifying Mexico-US economic integration.
Here is Uncle Sam’s Latin American reality. First, Mexico is rapidly becoming as important to the US economy as China. There has been much excitement in recent months about the possibility of “reshoring” manufacturing jobs from China to America. If you broaden the destination to North America, the trend is already under way. Mexico is now vying with China as the manufacturing hub of choice for US and other multinational companies – it is as economically integrated with the US as any two members of the eurozone are to each other.
Much of this is driven by the rise in the cost of oil, which makes transport costs increasingly pricey for US companies to make goods for domestic consumption as far away as east Asia. And most of the rest is driven by Chinese wage inflation. In 2000, the average Chinese worker was paid 35 cents an hour versus $1.72 in Mexico, according to HSBC. Now the Mexican gets paid $2.11 an hour and the Chinese $1.63. Pretty soon Mexico will have the lower labour costs.
Link to article in FT: http://on.ft.com/WwA3rM
