Comparison of the Economies of Mexico and Canada

Brief Introduction

The world economy seems almost too large to fathom, let alone analyze. This births the process of the comparison of two countries. It is possible to compare the history, government, and/or geography of Canada and Mexico. The economies can also be compared for analysis, as well as social class and potential wealth gaps that are visible. Social characteristics and changes also help in the analysis of a country’s economy and projected growth.

Social Characteristics

Canada

There is currently much social inequality in Canada, as of 2010, and this includes large differences in wealth, educational opportunity, and social class that include gender and family issues. Of Canadians, Gerber, and Macionis, of Sociology, write: “In reality, however, we tend to interact with those who are close to us in the class system, insulating us from the true dimensions of social inequality. Although money is an important component of inequality, socioeconomic status encompasses, as well, power, occupational prestige, and schooling” (2010). The social issues of Canada go beyond simply class or money, they fuse together to make a problem that runs across the classes, affecting the education of the poor and dispersion of power. As of 2012, the population is 34.88 million people and the country’s GDP as of the year is $1.821 trillion. There has been a GDP growth of 1.7 percent as calculated in 2012. Life expectancy for Canadians is 81 years as of 2011 (The World Bank [Canada], 2014). Canada has seen both improvement and decrease in growth, but they are a country that continues to run on sustainability.

Mexico

Mexico, socially, is generally split between the highest and lowest social classes. There is a massive wealth gap and importance of social status, although educational levels are widely spread across these classes and throughout the country. There was a liberalization of its economy in the 1990s and this left to the emergence of a class of well-educated elite, and these people have a severe contrast to the rural poor of Mexico. The poor “still reel under poverty and related socio-economic hardships” (Center for International Studies, n.d.). As well, as a society, Mexico emphasizes hierarchy; citizens respect authority and look to their leaders for decision making and guidance. Higher rank always means, in Mexico, that such a person or group should be treated with respect (Center for International Studies, n.d.). The population of Mexico as of 2012 is 120.8 million, with a GDP of $1.178 trillion. As of 2012, there has been a GDP growth of 2.8 percent. The national poverty headcount, as of 2012, is 52.3 percent of the population. The life expectancy is 77 years old as of 2011 (The World Bank [Mexico], 2014). There hasn’t been much growth lately for Mexico’s economy, and it reflects in the poverty rate and average life expectancy.

World Economy

There has been a growth seen in the global economy and fluidity of global trade as of late. The growth of developing countries has been lately supported by high-income countries’ growth. “Growth prospects remain vulnerable to headwinds from rising global interest rates and potential volatility in capital flows” (Global Economy, 2014). The United States Federal Reserve Bank has been withdrawing a massive stimulus for the country.

In an article from the World Bank Group, the global GDP has seen a growth spurt of 2.4 percent in 2013 to 3.2 in 2014. Predictions about the global GDP include projections that say that it will stabilize at 3.4 to 3.5 percent in both 2015 and 2016 respectively. This, of course, accounts for the massive growth of the higher-income countries:

Growth in developing countries will pick up from 4.8 percent in 2013 to a slower than previously expected 5.3 percent this year, 5.5 percent in 2015 and 5.7 percent in 2016. While the pace is about 2.2 percentage points lower than during the boom period of 2003-07, the slower growth is not a cause for concern (Global Economy, 2014). The differences are not due to the ease of growth potential in these developing countries. They are mostly a reflection of a cooling down of the “unsustainable turbo-charged pre-crisis growth” of the higher-income countries. This projected growth, though slow, is much better than the growth of the 1980s and 1990s (Global Economy, 2014). Of course, these are only speculations. The analysis will currently be between the economies of Mexico and Canada, two seemingly very different countries.

Mexico

Mexico has the second-largest economy in all of Latin America, as of 2014. They are connected with the World Bank Group and this engagement has helped them structure a model that provides the country with development solutions and an important package of convening, knowledge, and financial services (The World Bank, 2014). There are a lot of U.S. products that are exported from Mexico, and this could be a large indicator and affect the country’s economy. However, the gap between the well-educated liberation and the growing amount of people in poverty is also a powerful indicator of the growth of the Mexican economy.

Mexico’s inflation rate, as of January 2014, was 4.48 percent. This was recorded by the Instituto Nacional de Estadística y Geografía (INEGI). Between 1974 until 2014, the average inflation rate has been a little over 27 percent. The highest rate was recorded as 179.73 in 1988, and the lowest was recorded in 2005 as 2.91 percent. “The CPI index has a base of 100 as of December of 2010. The national index tracks 46 large, medium and small cities” (Mexico Inflation Rate, 2014). Inflations are most effective for non-food goods in Mexico. The Mexican has the potential for growth but there is an imbalance of funds.

Canada

Canada has always had stern ideals about stability, economic inclusion, and sustainable prosperity, as seen their partnership with the World Bank Group. They use this back to maintain sustainable development (Canada, 2014). There has also been class disparity and a gap between those in authority and those below them. This is something that Canada currently has in common with Mexico and its economy.

Canada’s current inflation rate, as of January 2014, is 1.5 percent. In December of 2013, the inflation rate was at 1.2 percent. This is estimated as the fault of shelter costs throughout the country. As a first comparison, prices and inflation rates are much better in Canada than in Mexico. Electricity prices in Canada increased to 4.7 percent from January 2013 to January 2014. This also affects the price of shelter, rent, and housing in the country. The price of rent 1.6 percent, home and mortgage insurance went up by 5.4 percent in the same period of time.

The mortgage interest cost index decreased 0.6 percent on a year-over-year basis in January, the smallest decline since May 2012. On a monthly basis, the index posted its third consecutive increase, rising 0.2 percent. From December to January, prices rose 0.3 percent after falling 0.2 percent in the previous period. The annual core inflation rate rose to 1.4 percent from 1.3 percent the previous month (Trading Economies, 2014).

The inflation rate affects the economy because it affects prices and how much people can make and how much they pay for things. The price of shelter can always be detrimental, although the inflation rate has not quite sunk so low.

Analysis

The analysis of the economies of Canada and Mexico is an interesting one. The Canadian economy is more developed than that of Mexico, and such affects the life expectancy of a country’s people. The resources of the economy also justify the level of prosperity or poverty of the two countries. Similarities between the Mexican and Canadian economies are in social class and wealth differences among the populations of both countries.

The life expectancy is four years longer in Canada than in Mexico. There are billions more people in Mexico, with a GDP of only a small percentage higher than that of Canada. The poverty rate in Mexico is much higher than in Canada, and this could very well be because of the unfair and large wealth gap in the country between the well-educated rich and rural poor. As mentioned, there was liberation in the 1990s, and those with more money were able to become educated and move up. However, this left many people without such an opportunity at the bottom, in poverty. In Mexico, there are more people than money, and that is the reason for their wide wealth gap. In Canada, this is also true, but the GDP is much better; the economy is a lot more even in this more developed country. As well, over half of the population of Mexico is poverty-stricken and this is another large reason for the wealth gap in the country. Socially, it is accepted to follow authority figures, and this does not help the rural poor in the least. In Canada, there is a growing wealth gap, but none like that in Mexico.

Conclusion

The comparison of the economies of Mexico and Canada has its similarities and differences. Both Mexico and Canada have a wealth gap, but Canada is doing much better in terms of fairness between the amount of money and the number of people in the population. The analysis of Mexico and Canada, based on their economies and social situations in the world, is a tight analysis because one is developing while the other is as developed as the United States.

References

Center for International Studies. (N.d.). Mexico. Angelo State University. Retrieved from http://www.angelo.edu/dept/cis/country_profiles/mexico.php.

Gerber, L.M. & Macioinis, J. J. (2010). Social Class in Canada. Sociology: Sixth Canadian Edition. Retrieved from http://wps.pearsoned.ca/ca_ph_macionis_sociology_6/73/18923/4844438.cw/index.html.

The World Bank. (2014). Mexico. Retrieved from http://www.worldbank.org/en/country/mexico.

The World Bank. (2014). Canada. Retrieved from http://www.worldbank.org/en/country/canada.

The World Bank. (2014). Global Economy at Turning Point, Says World Bank. News. Retrieved from http://www.worldbank.org/en/news/press-release/2014/01/14/global-economy-turning-point-world-bank.

Trading Economics. (2014). Canada Inflation Rate. Retrieved from http://www.tradingeconomics.com/.

Trading Economies. (2014). Mexico Inflation Rate. Retrieved from http://www.tradingeconomics.com/mexico/inflation-cpi.