Is Mexico a Third World Country?

Is Mexico a Third World Country

The term “Third World” came up during the Cold War era. Countries that aligned with NATO (North Atlantic Treaty Organization) were called “First World”, and those that aligned with the Warsaw Pact were called “Second World”. The remaining countries, which were about 0.75 of the world’s population, were labelled “Third World”. It’s clear to see that the notion of First, Second, and Third World didn’t have anything to do with a country’s economic status, but rather an alliance. Today, “Third World” is an outdated term, but people usually use it to refer to countries with economic instability, poverty, starvation and other problems.

Is Mexico a third world country? Yes, from the Cold War model, Mexico was among the Third World countries, because it didn’t align with either NATO or the Warsaw Pact. It’s also considered a Third World from today’s definition because it’s still dealing with poverty, inequality, and lack of basic education. However, nowadays, the term “developing country” is used instead of the Third World.

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While Mexico is considered a developing nation, it has an institutionalized government, legal system, public education, infrastructural networks, and public healthcare. Additionally, the country has one of the highest GDPs in the globe and the UN reports that it has an upper-middle-income economy.

  • So, why is Mexico called a third world country?
  • And, does it have hope of ever becoming a first world country?

In this post, I discuss such matters in further detail. Continue reading for more information.

Why Is Mexico Called a Third World Country (Developing Nation)?

Although Mexico has a decent Human Development Index score, it’s still plagued with certain problems that make it poorer than the United States. The following are some of the reasons why Mexico is considered a developing (third world) country.

  • Administrative Corruption
    The Government of Mexico is often construed as being institutionally apt toward callous dishonesty and reluctant to seriously deal with drug cartels. Many times, the country is dangerous for travellers who lose their way in the wrong zone, because they might fall prey to narco-terrorists and other criminals.

Undeniably, the corruption in the Mexican government is prevalent and expensive. The country’s Institute for Competitiveness estimated that corruption costs Mexico 2%-10% of its GDP, decreases foreign financing by 5% and gets rid of 480,000 job opportunities annually.

The situation relinquishes the impact of any attempt at genuine meritocracies, which substantially depletes the country’s skilled workforce.

A huge portion of entrepreneurs reports that corruption is part of the expense of operating a business in Mexico, Even when cases of corruption reach the judiciary system, less than 20% get a guilty verdict, in comparison to nearly 90% in the U.S.

  • Inequality
    Income inequality is not a new phenomenon in Mexico. Only a relatively small number of citizens limited majorly to large cities, have the ability to enjoy high development levels. The top 1% of the country’s high earners own 21% of the national income. But, minimum wages stay so low that a substantial portion of the populace is impoverished.

Mexican business tycoon, Carlos Slim, has been regularly cited in the past as one of the richest people in the world. He has immense wealth that is equivalent to about 5%-6.3% of Mexico’s GDP, which exceeds the total income of the country’s poorest 20%.

Wealthy people attend private schools, get access to world-class healthcare, possess many estate residences across Mexico and abroad, and are served by private staff. On the other hand, poor Mexicans are left to deal with underfunded public schools, overcrowded conditions, and less favourable health programs.

The end result is a full absence of upward movement and a country that under-utilizes native intelligence, work ethic and ambitions. At the same time, the privileged persons stay barricaded behind their high walls and secured by bodyguards.

  • Poverty
    Around 33% of Mexico’s population is moderately impoverished, while another 9% is extremely poor. That implies over 40% of the populace lives in destitution. As a consequence, at least 30 million Mexicans live in poorly built houses made from cardboard or reeds. The high poverty rate is attributed to poor infrastructure, incompetent institutions and bureaucracy, widespread corruption, inadequate education, and labour market inefficiency.
  • Worrisome Education
    Mexico’s tertiary enrolment rate trails far behind that of some major Latin American nations, such as Brazil, Colombia and Argentina. The fairly low participation is caused by capacity shortages and discrepancies between the country’s more developed and less industrialized southern parts. Mexico’s more prosperous parts are in the north and central areas, while the less developed regions are in the south. It is within the underfunded rural parts in the south that educational participation and achievement rates are severely low.

In an effort to increase education participation levels, in 2012, Mexico’s government made it compulsory for all children to attend upper-secondary school. However, insufficient funding and administrative hindrances have thus far blocked implementation of this aim, especially in disparaged rural areas.

  • Crime
    Criminal activities are one of Mexico’s most critical concerns. Drug trafficking rings in the nation play a huge role in the movement of marijuana, heroin and cocaine between the USA and Latin America. Drug trafficking has ignited corruption and violent crime in the country, which has negatively impacted its image. The highest crime levels are in Mexico’s urban centres and its border with the United States.

Does Mexico Have Hope Of Ever Becoming A First World Country?

Yes, like many other developing countries, Mexico has the potential to move from a third world to a first-world nation. The country’s GDP is among the highest in the globe, right next to the United Kingdom and Italy based on PPP (purchasing power parity).

Of course, Mexico is not as industrialized as Britain. Similar to most countries making a transition from underdevelopment to better development, Mexico is mired by regional inequality. However, that does not change the reality of the country’s relative strength.

It is true that organized crime prevails in Mexico and many of its citizens want to move to the USA. But, at the same time, a roughly equal amount is leaving the USA and going to Mexico, because of attractive economic opportunities.

Mexico is home to the hugest auto plant on the Western hemisphere, and Bombardier constructs major aircraft parts in this country. Sure, Mexico is dealing with numerous issues, but so is the United Kingdom and Italy. Currently, Italy also faces considerable regional inequality.

The common perception among many is that Mexico is a Third World nation with an overall breakdown of laws and citizens fleeing north. That viewpoint also appears true among numerous Mexicans who have generally internalized the defiance others hold against them.

Mexicans are aware that their economy has grown substantially in recent years and is forecasted to grow more in the coming years. However, strangely enough, they have a tendency to discount their country’s competitive growth rate in a sluggish worldwide economy. Mexico is one of the leading global economies, but most people fail to acknowledge it as such and instead dismiss its relevance.

It’s worth noting that Mexico is one of the largest exporters in the globe. Its trade with Canada and the USA has tripled following the North American Free Trade Agreement signing in 1994. At least 90% of the nation’s trade is covered by twelve free trade agreements. Reports show that Mexico has trade agreements with roughly 46 nations, which is higher than any other country. These agreements are a huge reason for the nation’s numerous accomplishments.

Mexico is the biggest manufacturer and exporter among Latin America countries, and primarily exports manufactured goods, cotton, fruits, vegetables, silver and coffee. Moreover, it is the eighth largest global producers of oil, at nearly three million barrels daily. That is less compared to Canada, Iran and Iraq, but higher in comparison to Brazil, Kuwait, Nigeria and other prominent exporters.

Mexico’s imports include machinery for agriculture and metalwork, aircraft parts, automobile components and steel mill goods.

The economy and culture have changed considerably over the years. Now, Mexico is a primary manufacturing hub for electronics, which include a majority of the flat-screen televisions sold in the USA. Additionally, it manufactures medical tools and aerospace components.

Trade agreements with other nations give its manufacturers duty-free reach to a huge portion of the globe. That advantage attracts external factories. Foreign trade, which is made up of exports and imports makes up over 70% of the nation’s gross domestic product. That is higher compared to Brazil, and China. Mexican firms have entered into the United States’ market and share a familiar language with other Latin America countries.

The insistence on commerce makes companies in Mexico globally competitive. For instance, Gruma is the largest tortilla maker in the globe, and Bimbo is the hugest bread maker after it acquired USA baker Sara Lee.

Part of Mexico’s economic change incorporates the entry of a new president, AMLO (Andres Manuel Lopex Obrador). After he was elected in 2018, AMLO made a promise to terminate corruption, decrease violence and tackle the problem of poverty. In addition, he promised to assess agreements for oil exploration granted to international companies. The country’s oil industry requires foreign competence and funding.

The previous president of Mexico, Enrique Pena Nieto granted 100 contracts to partially privatize the country’s oil sector. He also put effort into strengthening the automobile sector by making it simpler for foreign firms to set up auto plants. Additionally, Nieto’s Pact for Mexico convinced Congress to approve 85 major reforms. His plan successfully tore down monopolies, amended education and overhauled tax laws.

About the author: Marta Kovachek is the author of this article. She graduated from the University of Chicago with a master’s degree in Economics. Marta enjoys writing about the current economic situation and loves helping our readers to find their next "destination". From places to live to complex social and economic topics, we always enjoy Marta's work. Please contact us in case of any questions.