ECONOMIC ACTIVITIES IN MEXICO (BY SECTORS AND EXAMPLES OF COMPANIES) - CULTURE VOCABULARY - 2025

The economic activities of Mexico refer to the different tasks on which the economy of this nation is based. The Mexican economy is diversified, including oil production, high-tech industries, manufacturing, and mineral exploitation.

Mexico is the second largest economy in Latin America, behind Brazil, in addition to being located among the fifteen largest economies worldwide. 80% of its exports go to the United States, its main trading partner, on which it depends largely for this reason.

Cemex plant on the outskirts of Monterrey. Source: By Hector Martínez flickr.com, CC BY-SA 2.0

The growth of its Gross Domestic Product (GDP) was a modest 2.2% in 2018. This economic growth was spurred by domestic demand, higher investment and strong household consumption.

The Mexican economy has increasingly turned toward manufacturing and exports. It has a workforce of 54 million people and is expected to soon become a fully industrial country.

Opportunities and challenges

Mexico City

Mexico offers great economic potential. Its sustained macroeconomic stability is the main incentive to promote the development of the private sector with new investments.

Its privileged geographical position, its commercial agreements and the growing domestic market make Mexico an excellent destination for investment. Improvements in productivity growth, stronger institutions, and quality of service delivery could bring shared prosperity.

Among the key challenges still to be addressed are high dependency on the US economy, high crime rates, weakening infrastructure, income inequality, and decades of low investment in the oil sector.

Economic activities of the primary sector

Mexico's economic activities in the primary sector are varied due to the diversity of the country's natural resources and climates. These activities include the extraction of minerals and other non-renewable resources, agriculture, forestry and fishing.

This sector has a transcendental role for the Mexican economy, because it has helped to strengthen commercial ties with the United States, as well as to alleviate poverty and create jobs. In rural areas, more than half the population is involved in activities in this sector.

Fishing is a long-standing industry. Shrimp and other shellfish, sardines, tuna, and pompano are the most valuable commercial prey.

On the other hand, there is a small forestry industry. The main trees cut for lumber are mahogany, oak, and pine.

farming

It represents 3.3% of Mexico's GDP and employs 12.9% of the country's workforce. Although agriculture accounts for a small percentage of GDP, Mexico is among the world's largest producers of sugar cane, coffee, oranges, corn, lemons and avocados.

In addition, it has many other relevant agricultural products in the economy, such as sorghum, wheat, bananas and tomatoes. However, the credit shortage continues to hurt this sector.

Subsistence agriculture is dominant in central and southern Mexico, where most farmers grow maize and bean staples on small plots.

In contrast, in the north, large, modern irrigated farms especially produce fruits and vegetables, such as strawberries, melons, cucumbers, and tomatoes. Most of this is exported to the United States.

Also livestock, along with birds and eggs, are important activities in the food industry. Cattle are raised in the driest, non-irrigated areas.

Mining and oil

It has huge reserves of non-renewable resources. Its main extractions are oil, gold, silver, lead, copper, coal, coke, iron, manganese, etc. It has the largest proven silver reserves in the world.

Mexico is among the world's leading producers of various minerals, such as fluorite, mercury, and zinc. The most important company is Compañía Minera Asarco of Grupo México.

Natural resources are owned by the nation, so the energy sector is managed by the government with limited private investment.

In addition, the gas and oil reserves are one of the most precious possessions that the country has. It has the tenth largest oil reserves in the world.

Mexico is the twelfth largest producer of oil in the world. In fact, the largest company in Mexico according to the Fortune 500 is Petróleos Mexicanos (Pemex), a state oil and gas entity.

Pemex is the world's fifth largest oil producer and the second largest corporation in Latin America, according to Latin500. Oil production accounts for a third of government revenue, with sales of about $ 130 billion annually.

Industrial or secondary sector

Most of the success in the performance of the Mexican economy relative to other major economies in Latin America is due to its burgeoning manufacturing sector. This sector represents 31.2% of GDP and employs 25.9% of the workforce, according to the World Bank.

The industrial sector has managed to grow thanks to its great integration with the United States economy. Most of the industries are located in the cities of the north of the country, such as Juárez, Monterrey, Ensenada, etc.

The main industries in Mexico are petrochemicals (Alpek), cement and construction (Grupo Cemex), beverages (Grupo Femsa) and food (Grupo Bimbo and Grupo Maseca).

However, the segment that drives Mexico's industrial growth is high-end manufacturing, such as the plastics, automotive and aerospace industries.

The construction segment is quite dynamic, mainly due to important real estate investments, such as Kaluz Inmobiliaria.

Mexico is also the fifth largest beer producer in the world and its second largest exporter (Grupo Modelo and Cervecería Cuauhtémoc Moctezuma).

The main exports made are automobiles, vehicle parts, computers and oil.

Electronics and aerospace industry

Mexico has the sixth largest electronics industry in the world, whose growth has been quite evident in the last decade. Computers (Lanix, Meebox), televisions, electronic devices, mobile phones, LCD modules, communication equipment, etc. are designed and produced.

The aerospace industry has grown considerably, thanks to the development of a cluster in Querétaro and the presence of 200 companies, such as Goodrich, Bombardier, Honeywell and the Safran group, which together employ about 31,000 people.

Since 2003, this industry has increased by 17% each year, currently representing 30% of exports.

Automotive industry

In this secondary sector, the automotive industry stands out. Mexico is one of the ten largest automobile producers in the world, although the fear of US tariffs on vehicle imports looms over this industry.

This sector has experienced double-digit growth in exports every year since 2010 and is recognized throughout the world for its high quality standards.

The automotive industry plays an important role in the Mexican economy. This sector is strategic not only due to its contribution to GDP, but also because being very demanding with qualified labor, it generates a multiplier effect in the supply and sale of intermediate goods branches.

In this industry, not only vehicles are assembled, but complex technological components are also produced, participating in large research and development activities. Only in Puebla there are 70 conglomerates of Volkswagen parts.

Large auto companies such as Toyota, Volkswagen, Ford, Nissan, Fiat, Chrysler, and General Motors have increased their production in Mexico recently, or have announced their intentions to do so.

Service or tertiary sector

The service sector constitutes 60.9% of GDP and employs 61.2% of the workforce. High-tech sectors, such as information and software development, are experiencing a real boost fueled by low operating costs and the quality of the workforce, which facilitate the creation of call centers.

The most important activities in the tertiary or services sector in Mexico are tourism, commerce (Grupo Soriana), telecommunications (América Móvil, from Grupo Carso), real estate, educational and financial services, transportation and storage.

Financial services

Financial service is one of the main components of Mexico's service sector and has attracted the largest foreign investment. It is dominated by foreign companies or by the merger of local and foreign banks, with the exception of Banorte.

For example, Banamex is part of Citigroup, Bancomer is a unit of BBVA of Spain, SERFIN is part of Santander, Scotiabank of Canada owns Inverlat and Bital operates as part of HSBC. The banking system is liquid, profitable and well capitalized, but the sector suffers from high concentration.

Of the nearly 50 banks that are currently operating in the private sector, the two largest institutions, Banamex and Bancomer, own 39% of total bank assets, while the top five banks have 73%.

Mexico is the headquarters of many international financial services companies for Latin America, Citigroup being one of the most important, generating three times more revenue than all its branches in the rest of Latin America.

tourism

Cancun

Besides financial services, tourism is another important segment of the service industry. Mexico has a great scope for its tourism industry, with 31 sites on the UNESCO world cultural or natural heritage list.

The tourism sector is the fourth largest source of income in the country. Mexico is the main tourist destination in Latin America and the eighth most visited country in the world, with more than 20 million tourists per year.

Specifically, tourism and medical services have grown because service costs are lower than in other countries in the hemisphere.

References

1. Santander Trade (2019). Mexico: Economic and Political Outline. Taken from: santandertrade.com.
2. World Bank (2019). Mexico Overview. Taken from: worldbank.org.
3. Economic Activity (2020). Economic activities in Mexico. Taken from: economicactivity.org.
4. Prableen Bajpai (2019). Emerging Markets: Analyzing Mexico's GDP. Investopedia. Taken from: investopedia.com.
5. Scholastic (2020). Mexico: The Economy. Taken from: scholastic.com.
6. Kom (2020). Main economic activities of Mexico. Taken from: kom.com.mx.