Economy Politics Country 2026-04-14T10:21:18+00:00

Mexico's Economic Vulnerability

The article analyzes Mexico's economic situation, highlighting its vulnerability due to import dependence and the destruction of international trade links. The author discusses the consequences of rising oil prices, business closures, and the impact of government subsidies on the economy.


Mexico's Economic Vulnerability

It was once assumed that interaction between nations fostered economic development, but today these ties are destroyed. As Mexico is a country with an open economy that trades with other nations, but at the same time it is deficient in many and important products, such as gasoline and petrochemicals, corn and various foods, as well as inputs for the industry, etc., it is very sensitive to changes abroad. For example, the increase in the price of oil by almost 50% in international markets already has a strong impact on the costs of airlines worldwide, which has led to the suspension of operations of an airline in Mexico in recent days, harming those who had already purchased their tickets. To face these changes, it is common for different governments to decide to support or subsidize consumers or companies, so that they are less harmed by variations in prices or in the availability of products in different markets. For the same reason, it is fundamental to start from the assumption that governments do not have their own income, but obtain it from those who pay taxes or from greater indebtedness, which is the same as saying that it will be paid by the future taxpayers, that is, us in the coming years or our children and grandchildren, which will reduce future growth. Some think that in the short term we will return to the previous situation of high economic growth and the reestablishment of international productive chains, so the impact of higher subsidies and price controls will have little impact and its cost will be reduced. However, this does not seem likely and the situation will not return to the previous one, because many of the bases on which the growth of the past decades was sustained have been destroyed. The international political and economic environment has changed drastically in recent months and it is not very clear what will happen in the future. Mexico must prepare for a more difficult environment in the coming years, so it must make decisions that promote the solid growth of the economy. This explains in large part the large number of tortillerĂ­as and bakeries that have ceased to exist throughout the country, also impacting employment. However, those who lose the most are the producers of raw materials who cannot absorb the lower prices of their products, such as corn, wheat and others, since their costs continue to rise, such as fertilizers, wages, electricity, etc. This explains that our country imports more than 50% of the corn and gasoline that is consumed here. For the above, it is important that when decisions are made to control the prices of various products and services, it is essential to understand who will pay the costs of these measures. This benefits the consumers of these foods, but it is not so clear who loses. There are various ways to face this imbalance, such as raising the prices of other products they sell; for example, supermarkets that sell tortillas or breads with a price controlled below their cost have losses that they can absorb by raising the prices of other products. Furthermore, the destruction of institutions within our country will further worsen the environment for companies and consumers. For example, after World War II, dozens of global institutions were created that aimed to create an environment that fostered international trade and the market model. In this case their alternative is to close their establishment or look for other products to sell. First, there are those who acquire other goods and pay a slightly higher price for them; others who lose are those who only produce these food products and whose losses cannot be absorbed by other items they offer to their customers. However, subsidizing or providing them 'for free' has costs, which are not always visible. Thus, forcing companies to grant their products below their costs means that they will have lower profits or even losses in their operations.

Latest news

See all news