Mexico, the U.S. and the Economic Crisis

There's an old saying that when the US economy gets a cold, the Mexican economy gets pneumonia. The deepening US financial crisis is already having a violent knock-on effect around the world, and Mexico will be among the hardest hit.
"Poor Mexico! So far from God, and so close to the United States!" - Porfirio Diaz
There's an old saying that when the U.S. economy gets a cold, the Mexican economy gets pneumonia. For example, between 2000 and 2001, when the Internet bubble burst and the U.S. economy slowed from 3.7 percent to 0.8 percent, Mexico's economy went from 6.6 percent growth to zero, with devastating effects on the lives of millions of people. So what happens when the U.S. economy itself gets pneumonia? The deepening U.S. financial crisis is already having a violent knock-on effect around the world, and Mexico will be among the hardest hit.
Mexican President Felipe Calderon – considered by millions of Mexicans as illegitimate due to the blatant electoral fraud that brought him to power – has said that Mexico is no longer economically dependent on the U.S. and will therefore not be adversely affected by the crisis. Confronted with rising social instability and falling oil revenues, Calderon needs to put on a brave face and find a way to justify his government's increasing use of repression to maintain itself in power. Social discontent in the country is reaching the boiling point and a further hit to the Mexican economy could unleash an even bigger wave of mobilizations by the masses, with revolutionary implications. Unfortunately for Calderon, the reality is a far cry from his optimistic assessment.
According to Alfredo Coutino, a senior economist for Latin America at Moody's Economy.com: "Mexico is the most exposed economy to the U.S. recession." And according to George Grayson, an expert on Mexico at the College of William & Mary in Virginia: "I think Calderon is sort of like a deer caught in the headlights of four onrushing tractor trailers." How could it be otherwise when 80 percent of Mexican exports go to the U.S., and U.S. consumers and companies are cutting back across the board? Already, the U.S. economic crisis is having a devastating effect on millions of Mexicans (and Central Americans) living at home and abroad.
For decades, U.S. corporations shuttered factories and "shipped jobs off to Mexico" in pursuit of higher profits due to the availability of cheaper labor and weaker labor and environmental protections. Now factories in Mexico are being shut down and the jobs are being "shipped off to Asia." According to the United Nations, from 1970 to 2007, Latin America's share of worldwide domestic product remained more or less unchanged at 5.7 percent, while Asia's share grew from 18 percent to 29 percent. Mexico's share of the world economy has now fallen from a 1980 high of 1.4 percent to just 1.2 percent. In other words, the region has stagnated for nearly 40 years, and even before the recent crisis, Mexico was on a downward spiral.