166.4 What will be the fate of Mexico, a nation dependent upon a declining hegemon?

Wednesday, August 1, 2012: 3:36 PM
Faculty of Economics, TBA
Oral Presentation
Kathleen SCHWARTZMAN , Sociology, University of Arizona, Tucson, AZ

            What is the fate of nations that are satellites of declining hegemons?  What does the future hold for Mexico--an economy closely tied to the United States?  Between 1947 and 1967, the United States enjoyed global hegemony. That position was supported by its   superiority in production. Mexico has always had close economic ties to the United States. NAFTA, implemented in 1994, left it very open to trade and capital flows. As the United States began its hegemonic slide in the 1970s, it embarked on numerous paths to ameliorate its profit crises. One was offshoring, and by the 21st century, China was a desired destination for trade and direct foreign investment. The rise of China is seen in its growing market share of global exports. China has also garnered the investment confidence of market raters e.g. A.T.Kearney FDI Confidence Index and received a higher volume of foreign capital flows. This dual feature of U.S. hegemonic decline—loss of dominance and turning to an emerging market for offshoring—have negative consequences for Mexico. Numerous researchers have pointed out the detrimental effects, especially in fields of high tech and manufacturing assembly. One would expect however, that Mexico, because of geography and NAFTA, would have a comparative advantage in the agricultural sectors. I investigate the case of garlic. China has become the largest producer and the largest exporter of garlic. And even this little bulb has displaced Mexico’s own garlic trade with the United States. The thing about globalization is that if you blink, you miss it (South Africa Finance Minister 2003).