 |
|
|
 Business News | January 2007 
For Calderon, Reversing Mexico's 'Brain Drain' Is Key to Success
 Louis Nevaer - New America Media
| | To stop professionals from leaving Mexico, the country's new president must break up monopolies. |
As Felipe Calderon, Mexico's new president, sets his agenda for 2007, he will have to succeed where his predecessor Vicente Fox failed: creating greater opportunities for Mexicans by breaking the rapacious monopolies that flourished during NAFTA's first decade, and stopping the brain drain that is a result of it.
To be sure, Mexico has made a remarkable transformation during the past quarter century, evolving from a country with a closed economy and political system, to a viable democracy, with a stable currency and consistent, if lackluster, economic growth and capital formation that ranks it as one of the world's top 15 economies.
In 1994, Mexico began its economic integration with the United States and Canada with the North American Free-Trade Agreement, or NAFTA. In 2000, Vicente Fox was elected president, and ended the monopoly on power that the Institutional Revolutionary Party, or PRI, enjoyed. In 2006, Mexicans living abroad, primarily in the United States and Canada, sent an astonishing $20 billion to their home country. These remittances became the largest source of foreign revenues, fueling the nation's trade surplus -- with so many dollars coming in, the peso remains a strong and stable currency.
In its assessment of which emerging nations would dominate the global economy, Goldman Sachs declared that by mid-century, "only Mexico and perhaps Korea have the potential to rival the BRICs [Brazil, Russia, India and China]. Mexico's favorable demographics and scope to catch up place it among the BRICs in terms of economic size by 2050."
Under Fox, Mexico's educational system improved greatly, and NAFTA money provided educational opportunities for Mexican students abroad. But the paradox is that as Mexicans become better educated, or more study abroad, many are courted by foreign companies. Australia, for example, is so desperate for certain professionals, such as accountants and nurses, that they will "sponsor" Mexican professionals for one- year, paying their expenses in the hopes that during that time they will decide to remain in Australia.
Canadian universities sent recruiters to the top private Mexican colleges in a campaign to lure full-tuition paying students to Canada's top schools. Japan, which depends on Mexico for fully a third of all its organic produce, sponsors fairs to lure Mexican agricultural professionals; Ireland sponsors job fairs for Mexican professionals, where proficiency in English is seen as the only obstacle to landing a job.
"The 'brain drain' continues," Judith Zubieta Garcia, of the Autonomous National University of Mexico, said last week, when a report documenting the problem was issued. Scores of thousands of Mexican professionals and graduate degree holders emigrated in 2005 and 2006, according to the report. The four principle beneficiary nations identified were the United States, Canada, France and Germany. The report further warned that this continuing "emigration of intellectual capital" threatens Mexico's prospects for economic development.
The exodus of Mexican professionals accelerated during the last two years of Vicente Fox's administration, when employment opportunities for professionals stagnated. (The last time Mexico experienced a similar brain drain was in 1982-1986, when, after the devaluation of the peso under Jose Lopez Portillo, the economy went into a free-fall and many middle class Mexican families moved to the United States, Canada and Spain.)
This is a result of the failure of the government to foster greater competition in the marketplace.
"Public and private monopolies dominate the country," Jorge G. Castañeda, a former foreign minister and a professor of politics and Latin American studies at New York University, complained in December 2006, when Calderon took office. "The oil (Pemex) and electric power (Federal Electricity Commission) firms owned by the state are untainted by competition; the private virtual monopolies in telecommunications (Telmex), television networks (Televisa), cement (Cemex), bread and tortilla manufacturing (Bimbo and Maseca, respectively) and banking (Banamex/Citigroup and Bancomer/Banco de Bilbao) face only tepid competition at home, thanks to their cozy relationship with the state. Prices, supply, service and quality suffer as a consequence, and today these monopolies are stronger than ever."
These state-owned or state-protected monopolies may have been necessary in the mid-1990s, when Mexican companies faced strong competition from U.S. competitors entering Mexico after NAFTA was implemented, but many Mexican companies are now strong enough that they are not only defending their market share at home, but aggressively expanding into the United States. From baking to electronics, cement to automotives, Mexican firms are viable competitors. (This may at first not be obvious to U.S. consumers, since Mexican companies often use "American"-sounding names when they enter the U.S. market. Bimbo bakes bread under the brands "Wonder Bread," "Oroweat" and "Thomas' English Muffins"; Mexico's leading consumer electronics brand retailer in the U.S. is "CompUSA"; Cemex has acquired scores of U.S. cement producers without changing their names, simply to be discreet.)
As a result, "Corporate Mexico" is characterized by large conglomerates where protected and privileged businessmen block innovation, undermine competition and keep salaries for professionals low.
"Calderon needs to prove that market-led reforms and democracy can work for the vast majority of Mexicans, because on the streets, Andres Manuel Lopez Obrador and his combative social movement will be shouting that they don't," Denise Dresser, a political analyst, argued. "Calderon needs to show that he is committed to leading Mexico down the path that successful countries such as Chile, Ireland, South Korea and Spain tread today - countries that made dual decisions to grow and share, compete and educate, create wealth and distribute it better."
It can be done. Other emerging nations also faced brain drains - India and South Africa come to mind. Many Indian professionals, fluent in English, chose to remain in the United States or the United Kingdom after they completed their graduate studies, as did many South Africans. However, both India and South Africa have made significant strides in luring their professionals back; India is now a regional economic powerhouse, and South Africa has emerged as Africa's most dynamic economy.
Ending the privileges enjoyed by the masters of Corporate Mexico is a daunting task. The sense of entitlement conferred on the state-sanctioned monopolies are the last vestiges of the ancient regime imposed by the PRI.
It is not enough that Mexicans abroad sent money back, Calderon must understand: Mexico must be able to make use of its intellectual capital as well.
Louis E. V. Nevaer, is author of the forthcoming book, "HR and the New Hispanic Workforce." |
| |
|
Vallarta Weddings
Tell a Friend
Site Map
Print this Page
Email Us