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Mexico: A Danger or an Opportunity?

Posted by: Seth Kaplan    Tags:      Posted date:  February 10, 2012  |  Comment

Fragile states are hard to classify: are they a danger to be avoided or an opportunity to be sought?

This conundrum is especially sharp in the bigger countries that may have large markets worth tapping, great tourist sites worth visiting, or a large number of people worth helping.

Mexico is not really a fragile state, but the rise in drug-related violence and its continuing problems with weak institutions give it some of the same characteristics.

See, for instance, two articles from the newspaper today.

First, the Washington Post reports on new U.S. government warnings on travel to Mexico:

The State Department advised Americans this week to defer “non-essential travel” to vast stretches of Mexico, warning that 14 of the country’s 31 states are so dangerous that visitors should avoid them if at all possible. For four other states, it counseled caution or extreme caution. . . .

Yet, the Wall Street Journal reports that the country is booming:

If Mexico’s drug violence is so relentless and gruesome, then why are Marriott, Hilton, InterContinental and other hotel chains piling into the market?

Largely because tourists and business travelers keep piling in too. Shootouts notwithstanding, Mexico is benefiting from a tide that is raising many boats around the world. The globe’s new nouveau riche are going to Mexico to vacation, taking vodka to Veracruz and kung pao to Cancun. And international companies continue to build factories in the country, albeit sometimes more slowly than before.

How can this be?

Well, the visitors avoid the most troublesome locations. And most of the visitors come from other developing countries such as Brazil, China, and Russia that are more accustomed to dealing with difficult environments than travelers from a rich country such as the US. Investors are betting on the long term, that over time the country’s large domestic market and cheap labor force will more than make up for whatever short-term problems they must face.

As the WSJ concludes:

Many of those international companies operate behind security fences in the region bordering the U.S.—the thousands of maquiladoras that employ hundreds of thousands of Mexicans.

And like the hotel chains, they all contend daily with the array of problems vexing developing markets like Mexico. But they have nonetheless taken a stake in Mexico’s future because the country is a cheap place to make things, with easy access to the U.S. market.

Similar challenges and opportunities await those working in many emerging markets. Fragile states may be in worse shape than Mexico, but the opportunities in Nigeria, the Congo, Pakistan, and elsewhere outweigh the risks for many people.

Categories: Conflict and Security Economic Development Fragile States Latin America

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About the author
Seth Kaplan
Dr. Seth D. Kaplan is a Professorial Lecturer in the Paul H. Nitze School of Advanced International Studies (SAIS) at Johns Hopkins University, Senior Adviser for the Institute for Integrated Transitions (IFIT), and consultant to organizations such as the World Bank, United Nations, African Development Bank, and USAID. He is the author of two books on fragile states, Fixing Fragile States: A New Paradigm for Development (2008) and Betrayed: Promoting Inclusive Development in Fragile States (2013), the lead author of the Inclusive Transitions Framework for fragile states, and runs the website https://www.fragilestates.org/. He lived in China for seven years and speaks Mandarin Chinese.



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