Solution to Mexico’s Economic Problems
Erik Gutierrez Chattahoochee Technical College
Principles of Economics
Dr. Emmanuel Chebe
April 20, 2013

Mexico has recently begun to improve its economy and make it a better country for foreign investment. It has surely improved the living conditions of its residents and it has also strengthened the economy. However, globalization did not reach the entire country and there are still many states that are lacking the globalization process. Mexico’s biggest problem is poverty. There are more than 60 million Mexicans living below the poverty line (Economist). Mexico can tackle this problem by giving incentives to business to go out to rural states, create a better education system, and by defeating the drug cartels. Mexico is a country that has been improving its friendly business environment. Providing a friendly environment for foreign businesses to come to Mexico’s land would increase the revenue for the country. Having foreign businesses operating in Mexico will also provide jobs for the Mexican residents. In many of Mexico’s rural areas and southern states there is a lack of businesses and job opportunities. Most of the states are not modernized. They have dirt roads and lack good schools and education. There are not many jobs out there to do for the people living within those states. The government should provide a tax break to businesses willing to go to southern states and to rural areas. Doing this will give the businesses an incentive to go there, therefor providing jobs to the Mexican citizens living in the rural areas. This will bring money in for the residents which will improve their economic situation. The money earned from the jobs would increase the villager’s wealth. The businesses will also have a strong incentive because they could manufacture at a lower wage than anywhere else. Mexico could also help eliminate some poverty by increasing their spending in the education sector. In the PISA test, which was an international test, Mexico placed 48th out of 65 countries. Mexico’s education sector is horrible compared to the United States. Mexico could improve their education in many ways. One of them would be to increase spending for the education. Mexico spent 4.8% of their GDP on education (FindTheData). Compare this to the United States which spent 5.4% on education .Many of the instructors who are hired to teach in rural areas find themselves teaching 35 children in a self-contained multi-age classroom format. Increasing spending in education would provide more schools and better equipped teachers with more resources. Increasing spending on education would provide more opportunities for kids living poverty conditions to obtain an education and better themselves. This would provide a strong incentive for kids to get a college education. The government should also provide grants to students who excel during their high school career. And when they obtain a college education they will be able to obtain a higher wage. This would not only benefit them, but the society as a whole would benefit. The Mexican government has already taken steps to helping its education by passing an education reform. This reform seeks to change a system in which teaching positions could be sold or inherited. Another goal is to raise the level of Mexican students who complete middle school and high school (Castillo). Having more students completing their education will help them escape the poverty ladder by obtaining higher wage jobs.

Mexico has devoted an immense amount of resources to fight the drug cartels. Unfortunately, there has not been a big improvement made with the drug cartels. The solution to the drug problem is not to kill every leader, because as soon as you kill one, there is someone under him ready to take his position. Supply and demand play a crucial role in this case. There is a huge demand in the United States for drugs. Mexico is simply meeting the