Economy

Until the mid-1940's, Mexico's economy was based almost entirely on agriculture and mining. Industrialization has occurred since then. Oil, which Mexico has produced since the late 19th century, has been especially important to Mexico's economic development. Major new deposits were discovered in the 1970's. In the early 1980's oil accounted for nearly 80 per cent of all Mexican export earnings. During the late 1970's the government borrowed heavily from abroad to invest in economic development. In the early 1980's the price of oil on the world market fell dramatically, causing many problems for Mexico, including inability to repay debts, extremely high rates of inflation, and rising unemployment.

During the late 1980's and early 1990's Mexico underwent major economic changes. The government began to privatize many state-owned industries. By 1992 nearly 75 per cent of Mexico's state-owned concerns had been bought by private investors. The government also relaxed many restrictions on foreign investment, attracting more money from abroad. With increased investment, the manufacturing sector grew substantially during this period, and the country's dependence on oil lessened.

During the early 1990's, inflation and unemployment subsided and the economy expanded. Despite these gains, the standard of living throughout much of Mexico is markedly low. Prosperity for the most part is limited to a relatively small segment of the population; poverty is widespread.

Mining is very important in Mexico as the country is one of the biggest producers of silver; about one-seventh of the annual production in the world is mined in Mexico. The silver mines are located in the central regions of Mexico. Other than silver, Mexico is also a major producer of petroleum. The oil wells are mostly found in Campeche, Tabasco, and Veracruz, along the coast and in the Gulf of Mexico. The government regulates the petroleum industry. Natural gas is also produced in the country. Valuable minerals like antimony, bismuth, fluorite, and manganese are found in abundance. The steel industry of the country is supported by the large iron deposits. Electric power in Mexico comes from coal, natural gas, petroleum, hydroelectric plants, and nuclear energy. Mexico is a leading exporter of petroleum and petroleum products.

Tourism is a big source of foreign income for Mexico. Millions of tourists, most of whom are Americans, visit Mexico every year. Mexico City, the old Spanish colonial cities of central Mexico, and the ruins of Maya Indian cities on the Yucatán Peninsula are the popular tourist spots. Mexican resorts include Acapulco, Ensenada, Manzanillo, Mazatlan, Puerto Vallarta, and Zihuatanejo on the Pacific coast, and Cancun and Cozumel Island on the Caribbean coast.

Mexico is connected by airlines, highways, and railways. Buses link Mexico’s urban regions. International airports are situated in Cancún, Guadalajara, Merida, and Monterrey, but Mexico City is the most important center of international air travel. The railway network is owned by the government. Veracruz on the Gulf of Mexico, and Guaymas, Manzanillo, and Mazatlán on the Pacific Ocean are the major ports.