Is Mexico an Emerging Market Economy?

Mexico meets all the criteria of an emerging market economy. The country’s gross domestic product (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 (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 that 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’s GDP

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 $1.3 trillion in U.S. dollars.

Emerging Market Economies vs. Developed Economies

As a rule, developed economies meet several criteria. A developed country’s gross national income (GNI) per capita, at minimum, is $12,535 in U.S. dollars. The world’s leading economies have per-capita GNI much higher: $30,000 and above in U.S. dollars. For developed countries, HDI—an index based on a country’s healthcare, 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 US$12,000 required to qualify as a developed country, but not by much. GDP per capita was recorded at $9,946 in 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 that has been receding rather than steadily growing. This trend has reversed in the past year with the global impact of the COVID-19 pandemic.

The Bottom Line

The Mexican economy may not be fully developed as of 2021, but with new trade deals with the United States 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, impediments remain. Among others, the international drug trade continues to be a major contributor to violence and corruption across the country.