Mexico's Potential to Take Advantage of the World Post-Pandemic and War Situation
Mexico is in a better position than other countries in the continent to take advantage of the situation of a world that has changed not only because of the pandemic and the war but has been transforming rapidly in this century.
Mexico has competitive advantages over other countries to face the economic problems derived from the pandemic and Russia's invasion of Ukraine, said Dr. Robert Grosse, Director for Latin America of Thunderbird School of Global Management, during the conference "Challenges and opportunities for companies in a post-pandemic and war world" that he gave during the presentation of the Doctorate in Business Administration and the Master in Business Administration (MBA), the latter with a double degree with Thunderbird School of Global Management, attached to Arizona State University.
Mexico is in a better position than other countries in the continent to take advantage of the situation of a world that has changed not only because of the pandemic and the war but has been transforming rapidly in this century, said the professor of the new programs of the UAG and business consultant based in Arizona.
Mexico's great advantages are the Free Trade Agreement it has with the United States and Canada; the border of more than 3,000 kilometers with the United States; the fact that it is not in recession; and the fact that it enjoys a good global image to set up businesses.
Faced with the current post-pandemic and war situation, it should be on the side of natural products and agricultural production, be a seller of international brands, an intermediary of manufactured products, and a supplier of intermediate services.
Seven specific points to seize the moment
- Replace the Chinese maquila. Shanghai is closed and this has created a supply problem in the production chains, so a good number of companies, especially technology companies, could come to assemble in Mexico. He gave the example of Apple, which does not manufacture but coordinates supply suppliers from five countries. Here in Mexico, the assembly should be expanded.
- Produce the grains that Ukraine has stopped producing. Jalisco has impressive agricultural production.
- Offer intermediate services, such as accounting, logistics, etcetera.
- Attract European investment to supply the consumption of certain products that are in short supply in the United States.
- To take advantage of remittances, which have reached an impressive level since last year exceeding 51.6 billion dollars.
- Set the medium-term goal of attracting technology.
- Seek allies, preferably from the United States.
- Train human resources of excellence.
Dr. Grosse explained that business paradigms have changed in the 21st century towards sustainable development, but the health contingency due to the Covid-19 pandemic and Russia's surprise invasion of Ukraine modified and, in some cases, accelerated the changes. This requires greater flexibility for companies to adapt to a new way of doing business.
He also spoke of some macroeconomic factors brought about by the post-pandemic and war era: we are suffering from high inflation, especially in the United States, because during the confinement money was issued to support people and businesses, the money supply was expanded and huge amounts were spent; rates were very low, but this situation has now been corrected and although there is a risk of recession, it will not be very long, probably by the end of the year normality will have returned. Unemployment in the United States was as high as 15 percent, today it is down and it is not a challenge, although recruitment is a challenge because there is a need for skilled labor.
The negative impacts of the war, of course after the loss of human lives and the destruction of cities, are the lack of agricultural and gas supplies. What Russia is doing is unacceptable, but what is worse is that Russian intentions to escalate the problem to other Western European nations and even to the United States are unknown.
On the other hand, this hastens the global diversification of suppliers and the use of clean energy. There is a vision for the future. For example, India and Vietnam are taking advantage of the opportunities created in the value chains that have been broken.
Dr. Robert Grosse ended his presentation with some optimistic forecasts, such as the end of the pandemic, although he admitted that there are still outbreaks that should not be neglected; the recovery of the North American economy shortly, and the possibilities that Mexico has in this environment.
Robert Grosse holds a Ph.D. in International Economics from the University of North Carolina and studied Business Administration at Princeton University. He was director of the School of Business at the American University of Sharjah, United Arab Emirates, and was director of George Mason's Global Business Center.