Mexico meets all the criteria of an emerging market economy. The country's gross domestic product, or GDP, per capita beats most of its peers in the developing world but falls short of the threshold required for classification as a developed country. The story with its Human Development Index, or HDI, is similar: on the cusp of developed but still insufficient. Compared to developed countries, such as the United States, Canada and Australia, Mexico contains much broader swaths of abject poverty and regions where common luxuries the developed world takes for granted, such as clean running water and access to quality medical care, are scarce. Even so, the country is making commendable progress in bringing a higher quality of life to its most neglected regions.
- Mexico is a major trading partner of the United States, but the country tracks more closely to a developing or emerging economy rather than a developed one.
- The country has had rocky GDP growth over the past years, and its per capita GDP remains well below the $12,000 a year required by developed nations.
- The country also remains just under the threshold for developed economies based on the Human Development Index (HDI).
Perhaps most characteristic of an emerging market economy is Mexico's strong economic growth rate. Though its year-over-year GDP increases waned during the global recession and its tepid recovery, Mexico's growth was strong through 2014, but waned in the years since, with a 2019 GDP of US$1.3 trillion.
Emerging Market Economies Vs. Developed Economies
Developed economies, as a rule, meet several criteria. A developed country's gross national income per capita (GNI), at minimum, is $12,535. The world's leading economies have per capita GNI much higher at $30,000 and above. For developed countries, HDI, an index based on a country's health care, education and other quality of life metrics, must come in at 0.8 or higher.
In addition to the quantitative criteria above, several qualitative factors define developed countries. Access to clean water, healthy food and medical care needs to be widespread. Every country, even the most developed, has residents who are poor and unhealthy. What they do not feature, however, are broad areas of abject poverty and deplorable living conditions.
Mexico as an Emerging Market Economy
Mexico's per capita GDP falls short of the $12,000 required to qualify as a developed country but not by much. GDP per capita was recorded at $9,946 U.S. dollars in 2019.
The country's most recent HDI calculation, as of 2019, is 0.779. This is just under the 0.80 mark required of developed countries—and Mexico ranks 74th out of 189 countries and far outscores the average developing nation.
Mexico's strongest emerging market economy characteristic is not the current state but the pace of its development. Yes, the country still has substantial poverty, but it is also receding rather than steadily growing. This trend has reversed in the past year along with the global impact of the COVID-19 pandemic.
The Bottom Line
The economy of Mexico may not be fully developed as of 2021, but with new trade deals with the U.S. and Canada it may yet be getting there. As a result, the country is still a good example of an emerging market economy. While Mexico has become a strong manufacturing economy with many U.S. businesses integrating business across the border, there remain impediments. Among others, the international drug trade continues to be a major contributor to violence and corruption across the country.