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Quality of life in Mexico fell sharply in 2009 which caused the country was ranked 43 out of 104 nations evaluated, according to a list of the Legatum Institute of London that measured the wealth, prosperity and happiness of people in the world.
The agency in its 2009 Prosperity Index, said that Mexico fell to the list, because it received poor grades in several key areas. In Democratic institutions, compared with other countries, was ranked 61st, while education was at the site 60th; security, 72nd, and individual freedom in the post 73rd.
The highest scoring areas were innovation and entrepreneurship (29th), economic prosperity (34th) and social capital (45th).
Authorities Strategies
Since the middle of the eighties, Mexico began a process of macroeconomic stabilization to combat inflation and structural change to open its economy and reduce state involvement in productive activity.
This implied, among other measures: the privatization of state enterprises, deregulation of markets, elimination of monetary financing of fiscal deficit and the incorporation of the economy to international trade and investment flows.
At the time the previous structural transformations allowed greater mobility of production factors, less distortion in prices and of course efficiency gains, after a better allocation of resources.
However, in terms of social welfare results were limited. For example, between 1983 and 2003 the real annual growth rate of per capita income averaged 0.5%.
This does not mean that the focus of economic reforms have been wrong. On the contrary, international experience shows that developing countries with equal or lower development than Mexico when carrying out similar transformations eventually managed significant gains in social welfare.
For example, Singapore and Ireland with free operation-oriented reforms of markets and economic openness in similar periods, recorded real annual growth rates in GDP per capita of 4.1 and 4.8% respectively.
So why are there differences in income levels between countries? And particularly, what can be done to improve social welfare in Mexico? To answer these questions in this work is carried out an analysis of the determinants of economic progress.
It is argued that while among specialists there is a consensus that the expansion of production depends on the amount of productive factors (land, labor, capital, etc.) and productivity, second is the most important determinant of economic growth because, while the above factors are limited, human talent and creativity are not, and therefore the potential for gains in productivity and production are endless.
Thus, from a technical perspective the immediate response to the questions posed would be that differences in economic growth between countries correspond to differences in the determinants mentioned. Particularly, Mexico's low per capita income growth would result from the lack of human and physical capital and low productivity.
The above is correct, but a more substantive response must recognize that prosperity is a complex phenomenon and occurs only if conditions are appropriate for business expansion.
Conditions according to recent research are closely linked to the prevailing institutional framework in a society. The evidence reveals that there are incentives and conditions for the accumulation of productive factors and productivity only when there is a prevailing atmosphere of economic freedom and State is concerned to provide goods efficiently.
The fall in per capita income
In 2009, the Gross Domestic Product (GDP) per capita was $8,111 dollars, which meant a fall of 20.2% over 2008, the biggest decline since the 1995 crisis, said estimates based on figures from INEGI.
In 2008, GDP per capita was $10,163 dollars.
In 1995, the hypothetical measure of each person's income fell 33%, but the most severe decline occurred in 1983 with 38% annual, just after the peso devaluation in 1982.
According to INEGI, in 2009, GDP at current prices stood at $11.82 trillion pesos, an annual fall of 2.5%, not observed for any year at least since 1983. In the fourth quarter of last year, GDP per person was $8,929 dollars, an increase of 2.7% annually, the first in four consecutive periods. During this quarter GDP at current prices stood at $12.58 trillion pesos.
The result of GDP per capita was due to a deterioration of economic activity, as in 2008, on constant prices, fell 6.5%, but was influenced largely by a 21% depreciation of the peso in 2008-2009.
In 2009, the interbank wholesale exchange rate averaged $13.5224 pesos per dollar.
According to International Monetary Fund estimates, with this the country ranked in 60th place among 181 economies for this measure, taking in turn the fourth in the Latin American list.
As for the last year GDP per capita of our country fell 3 sites worldwide and 2 in the comparison of Latin America.
In 2008, Mexico ranked 57th worldwide and second in Latin America. Last year's crisis had a severe impact on personal income, as lower economic activity led to higher unemployment and punished wages.
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