Does Anybody Have an Idea of the Implications of Foreign Investments? Guillermo Ramon Adames y Suari - PVNN
March 30, 2012

from Detroit Industry by Diego Rivera (1933)

Well apparently not, but I find it the most dangerous economic policy. Yes, for example in Mexico we have been “good kids and we have done our homework correctly and on time”… and foreign companies keep in investing in Mexico and collecting their gains. It is true that foreign investment generates capital but not for Mexico. Altogether, it pays their taxes. Also, for the time being it somehow solves Mexico’s non job generation problem but it certainly is a time bomb. In the past, some 10 million Mexicans entered the US more illegally than legally. But that is bound to change. The US does not care of Mexico’s job crisis or population growth’s problems.

What is actually Mexico “not doing?” Let us compare strategies’: At the end of WWII Germany and Japan among other economies that were severely struck by the war, rebuilt and created their own industries and allied industry components. Everybody entered the game. Many industries were simply new. This strategy implied enormous economical efforts both by the industries and the corresponding governments. They invested in R&D and created their own products and still continue to do so. Now what is then foreign investment for them in Mexico? These companies arrive here because “we do our homework well and on time and we are cheaper than at home” and have us working for them. A second approach would be the creation of new technologies, of new enterprises. But then starting a new company in Mexico is a huge red tape and considerable bribing: unless your name is Carlos Slim. Take a look at South Korea. They built up the largest ship building docks when Britain and France and the US and others had already huge ship building facilities. A considerable investment in high tech coupled with a lot of work gave results in today’s world. Likewise with their electronics components: international companies such as Samsung and LG. The lack of Mexican dynamism together with tremendous corruption is placing us further and further back in the creation of enterprises.

The question here is what is going to happen later on.

Job shortage will be the next worldwide issue and that will be valid absolutely for all countries and for everybody. So, for example American companies installed in Mexico will be forced to employ their fellowmen Americans in Mexico. Whether Mexico likes it or not. And what can Mexico do? There is not much marge of maneuver, Mexicans will have to accept enterprises’ policies or close up a great number of obviously lower level jobs for Mexicans. They own their business here in Mexico and will have the power to decide who is best for them and where. The same situation will be true with German or Japanese enterprises. Mexican high tech executives will be fired or offered lower level salaries for the same job… or go elsewhere without a job. In the future, a worldwide short of jobs “a” job will be treasured: any job. We will see as years go by that people will be offered lower and lower salaries against “a certain job security”… or no job at all. Age will not help our top executives either. As time goes on, we will become “servants” of big international corporations. You don’t like it? Go find a job elsewhere if you can.

What of foreign technicians? In my field, statistics, an Indian Ph. D. costs about one third of a Mexican statistician with a Ph.D. degree. It costs about one eighth of an American statistician with a Ph.D. and speak excellent English: today’s operational language. Again, we seem to miss the point. We are training kids for jobs that will not be there at the end of their training. And even if we train them, they will be below standards. But nobody seems to question the educational results or futures.

Mexico has an industry, yes, but it is not Mexican, it is mostly foreign with all that it implies. What will happen with Mexico as other economies in newer countries “are also good kids and do their homework well and on time”? International corporations will go and invest in those emerging countries and close our facilities. The commercial advantage of Mexico is our neighbor… as long as Mexico does not turn into left wing policies. But costs are likely to also change that. Take a look of what is happening today in China and the Eastern block. Small states like El Salvador will become a strategical component of a much larger industry complex. With job offers, other countries in Central America will become “good kids, do their homework well and on time” as we used to do, but now THEY will be cheaper!!!

What is then left for Mexico? In touristic jargon we will “sell beaches” but beaches have been already (despite the fact that by law they cannot be sold) physically sold to big touristic corporations (first world’s hotels) and have established themselves and “sell beaches” to their co-nationals with an “American” or “European” name and service. And money still keeps running away from Mexico. I would have loved to be more optimistic about Mexico’s future but apparently a whole set of policies have been taken over by the population growth and Mexican governments are more interested in taking over, than in the future of our country that will be taken over by its own past: Mexico will self destroy… by Mexicans. And who are we going to blame? Because we always blame somebody, the Americans, the Spaniards… but we are never at fault.

Guillermo Ramon Adames y Suari is a former electoral officer of the United Nations Organization. Contact him by email, check out his blog, or visit him on Facebook.

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