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Presidents Barack Obama of the United States and Enrique Pena-Nieto of Mexico in Mexico City. (Photo: Mexican President's Office)
Monday, May 6, 2013

Obama, Mexico and the World

President Obama was very clear to the Mexican entrepreneurs that they need to support their government in the reform exercise.


It could safely be affirmed that after Franklin Delano Roosevelt no US president has faced more economic and geopolitical cum security challenges than Barack Obama.  

Indeed, Obama’s mandate has coincided with a tectonic change in the way products and services are manufactured and delivered. This has led to unequal growth which means enhancement of unemployment while people either learn or boost different skills so as to match labor demand. It also means tight employment conditions in economic activities that lead the absorption of innovation coexisting with high unemployment in economic activities tied to traditional manufacturing or services.  

This condition fosters inequality and its ancillary political tensions. FDR faced a similar challenge. Part of the untold story of the Great Depression is the incredible inroads made by technological innovation into agricultural production in the early 20th century which increased output by 25 percent, thereby reducing the need for manpower. This shift in productive means explains the limited impact that had and have had stimuli programs in the 20th and 21st centuries which are designed to fill street potholes but not to make people cybernetic proficient. In the geopolitical realm, Obama’s presidency has seen the full-fledged emergence of China as a world power; the economic collapse of Europe; the violent birth of democracy in the Arab World and the beginning of a major shift in energy production and demand. Such unforetold and nonreplicable mutations in the world political DNA is accountable for the lack of visibly precise and clear focus in US Foreign Policy.  To be sure, most of these changes touched upon national security and strategic alliances that had to be made while facing them and without too much publicity.  

But while for the common observer  this conflict ridden panorama has yet to settle, for the US President they represent clear air turbulences in  what otherwise can be seen as a safe flight towards a new development era both for the US as well as the world. And to fully seize the new development opportunities the US President has devised a ground breaking foreign policy which effectively addresses the US development needs and that could be dubbed: the shared value approach to development. This approach assumes that in the cyber driven economy development is an exercise in networking even if you represent the most powerful network in the world. Thus development is an exercise in inclusion. Inclusion means that you absorb and open the doors to your mainstream culture to immigrants so that they work hard and prevent the US economy from facing the terminal disease affecting Europe: an adverse population pyramid. From the political point of view it means sealing a pact with the next generations.

Mexican youngsters were thus duly convened by President Obama to start a much needed, but frequently obliterated, dialogue. From the economic viewpoint Mexico is key to future US development and for the US to resume vibrant growth, industrial redeployment with Mexico is necessary. This would allow the US to concentrate in services while manufacturing is mainly undertaken by Mexico whose labor costs are more competitive than those in China.

Mexico also is the second-biggest economy in the hemisphere after the US and Brazil. It is almost as large as the combined economies of Argentina; Colombia; Chile and Peru. 

But Mexico has still another advantage: it has concluded free trade agreements not only with the US and Canada but with all Pacific Shore countries in Latin America. This gives the US and Mexico an incredible leverage when negotiating with Asian nations.

President Obama was thus very clear to the Mexican entrepreneurs that they need to support their government in the reform exercise; promote innovation and give a hand in reducing the so called “Mexican Cost” of doing business. But President Obama was also clear in letting everyone in Mexico know that the torch of leadership had passed to a new generation on both shores of the Rio Grande and that this generation had a more inclusive and pluralistic vision of development.  

Beatrice Rangel, one of Latin America’s Top 100 Businesswomen, is a director of AMLA Consulting. She wrote this column for Latinvex.

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