PESTEL analysis of Mexico

This detailed PESTEL analysis of Mexico aims to explore some of the

political, economic, social, technological, environmental, and legal factors
affecting Mexico today. Mexico is officially known as the United Mexican
States and its capital is Mexico City. It is one of the most naturally
beautiful countries in the world.

Political factors affecting Mexico

Mexico is a presidential democracy with the President being both the

Head of State and Head of Government. The President is also the
Supreme Commander of the Mexican Armed Forces who is elected for a
six-year term by popular vote. Anyone who has held the post before is not
allowed to serve again (Santander, 2019).

Mexico is the second largest country in Latin America by population.

Mexico City, the capital of the country, is one of the biggest cities in the
world. The country has good trading relations with the USA and Canada
as evidenced by NAFTA Agreement. However, the announcement from
the American administration of building a wall in the US-Mexican border
has strained the country’s relations with the USA. Likewise, many analysts
observe that Mexico has growing concerns over Brazil’s assertion of
leadership in the region.

Mexico is a regional power and has a significant global presence. It is also

on its way to be a global power by 2050. It maintains diplomatic relations
with most of the countries in the world. It is also a founding member of
the United Nations and participates as an active member in a very good
number of international forums. Its historical position in international
conflicts is neutral, and therefore relatively safe from the consequences of
the international conflicts.

However, corruption is a massive problem in Mexico. The judiciary, police,

politicians, and many governmental and non-governmental institutions
have been accused of bribery and corruption. Many politicians have also
been accused of misusing the government programs to assist poor
people to gain political advantages. In fact, corruption poses a significant
risk for both local and international companies operating in the country.

Economic factors affecting Mexico

Mexico is a member of the G20 and is the 15 th biggest economy in the

world. Its GDP in 2018 was 1,223.36 billion US dollars and 1,158.23 billion
US dollars in 2017. The GDP has been growing at an average annual rate
of 4.25 % for quite some time (Knoema, 2019).  It represents 1.97% of the
world economy.

Cars, vehicle parts, delivery trucks, computers, and crude petroleum are
the top exports of Mexico. Most of the exports of the country go to the
USA, Canada, China, Germany, and Japan. The top imports are vehicle
parts, refined petroleum, cars, computers, and petroleum gas which
Mexico imports mostly from the USA, China, Germany, Japan, and South
Korea (OEC, 2019)

Mexico is a key part of the MINT group (Mexico, Indonesia, Nigeria, and
Turkey). MINT countries are considered to be the next emerging
economic giants after BRICS (Brazil, Russia, India, China, and South Africa).
Mexico is very open to foreign direct investment (FDI) and its FDI inflow
was 31.6 billion US dollars in 2018.

The corporation tax in Mexico is 30% as of October 2019 while the

individual income tax rate varies greatly and ranges from 1.92% to 35%. A
Value-Added Tax is applied to the sale of most of the retail goods and
services. The VAT rate is 16% in most parts of the country, while 11% in
border areas.

Social factors affecting Mexico

Mexico is a country where affluence, poverty, natural beauty, and urban

blight go side by side. As of December 2018, it has a total population of
approximately 125.3 million. However, it is worth noting that different
sources have come up with different figures concerning the country’s total
population.

The life expectancy for men is 75 years and 80 years for women in Mexico.
Spanish is the major language, while Christianity is the major religion in
the country (BBC, 2018). Mexico is one of the most affordable countries in
Latin America. Compared to many other cities in the continent, the rent
and food prices in Mexico City are indeed lower.

However, there are some social challenges facing Mexico today. For
instance, economic affluence is a dream for most Mexicans and the gap
between poverty and richness is very wide. According to a number of
sources, 53% of the country’s population is considered poor. Corruption is
widespread, and thousands of people have been killed in violence in the
past decade. Due to poverty and other social problems, many Mexicans
risk their lives to go across the border to the USA to search for better life.

Putting social challenges aside, many socio-cultural aspects of Mexico

have drawn worldwide attention and respect. For instance, family is seen
the most-important element of the Mexican society. Mexican cuisine has
created fans worldwide, notably in great cities such as Barcelona, London,
Melbourne, Chicago, Los Angeles, and New York. Likewise, the Mexican
football team has fans around the world as it is one of the best in the
world.

Technological factors affecting Mexico

Technological environment is the next element to discuss in the PESTEL

analysis of Mexico. As the as the second largest country in Latin America,
Mexico has been a key target market of big tech giants such as Amazon,
Facebook, Uber, Google, and many others. In fact, Brazil’s IT and
communications sector is expected to represent 10.7 percent of the
country’s GDP by 2022.

Guadalajara, the second-largest city in the country, has recently turned

itself into a global centre for research and development, programming,
and design (Lunchway Media, 2019). A bill passed by the Mexico Congress
in March 2018 shows that country is eager to remove barriers and
uncertainties about cryptocurrencies and crowdfunding technologies. It
also shows that Mexico is ready to revolutionize its economy with
technology.

Environmental factors affecting  Mexico

Mexico is one of the most beautiful countries in the world. Its stunning
beaches, desserts, landscapes, ancient historical landmarks, and weather
make it one of the most visited countries in the world. It is also one of the
top five countries in the world in terms of biodiversity. Copper Canyon,
Sumidero Canyon, Mesoamerican Barrier Reef, Monarch Butterfly
Reserves, Whale Sharks, Cenotes and underground rivers, the Sea of
Cortez, and Pico de Orizaba are some of the top attractions that catch the
attention of millions of tourists every year.

However, Mexico faces some serious environmental challenges. For

instance, air pollution was so challenging and reached levels potentially
dangerous to human health in May 2019 that Mexico City declared an
environmental emergency and urged residents to stay indoors (BBC,
2019). Likewise, water pollution, toxic waste, and loss of essential water
resources along Mexican-US border are some other environmental
challenges facing Mexico today.

Legal factors affecting  Mexico

Legal environment is the last element to discuss in the PESTEL analysis of

Mexico. A detailed discussion on the Mexico’s legal environment is
beyond the scope of this article; hence this minimal discussion. Mexican
judiciary is free and independent. People, whether nationals or foreigners,
are entitled to impartial justice. However, the image of this institution has
been put in question because of corruption.

Employment rights are protected by the Mexican labour laws. Employers

must provide their workers with a written contract. Workers are entitled to
annual holidays and maternity leave. Discrimination against any worker on
the basis of gender, age, disability, race, nationality, religion, social and
marital status, and sexual preferences is prohibited in Mexico (Invemsa,
2019).