We have a problem: we have too much data. That makes it difficult to focus on the things that matter most. Mexico ceased to be one of the 15 largest economies in the world at some point in 2021. This data deserves attention and has gone almost unnoticed. We were the 12th economy in the first decade of this century. We went to box 13 and 14 in the second decade and now we are at number 16.
What did we do to deserve this? What’s next … will we regain positions or continue to decline? There are no easy answers, nor are they free from ideology. Data first. The total value of goods and services produced by the Mexican economy in 2021 is equivalent to $ 1.04 trillion, according to World Bank data, this figure is lower than what we had in 2015, so the Mexican GDP was $ 1.17 trillion.
In the last five years, Indonesia has overtaken us, a country that resembles ours in two things: oil resources and a tourist vocation. Nothing more. Its economy was worth $ 860 billion in 2015. Now it is worth $ 1.09 trillion. They go up… we go down? The data from the last five years are useful to us but can be confusing. There is the covid and, in the case of Mexico, the 4T. To understand, it may be helpful to go further.
In 1980, the Mexican economy produced 205,000 million dollars. Indonesia’s economy was just over a third of that of Mexico, worth $ 72.48 billion. To gain perspective, we can include South Korea, which is now the 10th largest economy in the world. It produces goods and services worth $ 1.56 trillion. In 1980, its GDP was $ 65 billion. If you want to add salt to the wound, bear in mind that its economy produced 9,000 million dollars in 1970. At that time, Mexico produced 35,520 million dollars annually.
We compare ourselves to South Korea because it is a success story. They do not have natural resources but they successfully implemented an industrial policy, which combined imagination and discipline. They were able to develop science and technology, to the point that they have patents in industries such as electronics, automotive and are one of the largest developers and producers of semiconductors.
In the four decades, China and India also surpassed us. The economy of each of these countries was smaller than Mexico’s in 1980. India is now larger than France and is 2.5 times the size of the Mexican economy. China is 14 times bigger than Mexico. We are left with the consolation that we are still bigger if we consider GDP per capita. In the case of China, this will not last much longer. With the Dragon, the quantitative is becoming qualitative. In the next decade, it will become the largest economy in the world. At the end of the 1930s, if nothing exceptional happens, each Chinese will have a GDP per capita similar to that of a middle-income European country.
Don’t look up, it’s called a Netflix movie that tells us a fable about the fall of a meteorite that will destroy the world. When it comes to GDP, don’t look up to those who don’t want to learn or get depressed. We can look down and draw lessons from two nearby countries. Argentina’s economy was larger than Mexico’s in 1980. Now it is equivalent to less than 40% of the Mexican economy, worth less than 400,000 million dollars. Venezuela had a GDP of $ 393.2 billion in 2010. Now it is below $ 47 billion.
Why do countries fail? There is no easy explanation. It takes more than one book and hundreds of conversations to understand it. That’s the name of a great book, written by Daron Acemoglu and James Robinson. They point to the interaction of political and economic factors to explain “the crime.” The question has a B side, why are countries progressing?