The “game” to which Mr. Friedman refers is statistical legerdemain. This is a game that Mexico plays adroitly, especially since 1991 when the government added “border transactions,” which referred to maquiladora assembly operations, to the national accounts. The move was to inflate Mexico’s status as a trading partner with the U.S. in order to promote NAFTA.
Take out intra-firm transactions in which Chrysler-Mexico sells to Chrysler-China, and daily trade will shrink to the value of commerce in oil and food products, services (including oilfield services), plus the remnants of a tourism industry battered by violence. Meanwhile, Carlos Slim skims off the top of the Mexican economy monopolistic rent whose value has been estimated by Mexican economists at 3 percent of Mexico’s GDP.
As for the “massive cheap natural gas finds,” the reference is to the 400+ TCF of shale gas, which will doubtless still be there a generation from now, as Pemex has no plans to develop shale fields. The new government, meanwhile, is almost certain to limit its reforms to making Pemex more efficient by any means except that of market competition.
Celebrations about Mexico’s advances in its economy and governance are premature.
Read Friedman’s op-ed article published in The New York Times by clicking here.
