By Raoul Lowery Contreras
The United States and Mexico will be two of the five largest economies in the world by 2050, just 32 years from now. Yes, Mexico. That is projected by experts. But what of today?
As Business Insider succinctly explains: “Mexico is the 11th-largest economy in the world with free access to the largest economy in the world… not to mention, vast amounts of American investment pouring in…Mexico is seen as a land of drug dealers. But this perception is like viewing the United States as if it were Chicago in the 1920s and 1930s and the typical American as Al Capone.”
While most Americans think of Mexico as a Third World country, those of us who live on the border, those who see Mexicans every day, those who do business in Mexico, know that it is not a Third World country.
For example, a San Diegan can park his car at a border parking lot, pay $30 to an American-Mexican joint venture, and walk through its building 50 or so yards into the Tijuana International Airport, pass through Mexican immigration and board a Mexican domestic flight (for half the price of one from Los Angeles) and be in Guadalajara in four hours. This is a popular trip as San Diego is an American tech and biotech center and Guadalajara is the capital of Mexico’s hi-tech industry.
The two cities are about the same size. Guadalajara is Mexico’s 2nd largest population center, San Diego is the 8th largest city in the U.S. The climates are similar, higher education institutions are numerous and of high quality in both cities, and there is a shared ambiance. Moreover, not far from Guadalajara is Tequila, world famous for its intoxicating drink; the San Diego equivalent is craft beer, famous throughout the beer drinking universe.
San Diego is known for its large Naval and Marine presence, its history as an aircraft manufacturing center, two great public universities — UC San Diego and San Diego State University, each graduating over 10,000 yearly — and more recently as home to hundreds upon hundreds of hi-tech startups. Remember Qualcomm when it was just a startup?
Guadalajara is similar in having quality public and private universities producing thousands of science, technology, engineering and mathematics graduates annually. The respected Tecnologico de Monterey Guadalajara campus alone produces 8,500 graduates annually. Like San Diego, Guadalajara invites outside investment like few places in the world. In the past four years, an estimated $120 million has been invested in over 300 hi-tech startups.
Mexico, surprisingly, ranks well in the world with engineering graduates, producing about half as many U.S. engineering graduates with only one third the population.
The Guadalajara hi-tech complex, the Guadalajara Ciudad Creativa Digital, is headquartered in a former shopping mall. It was founded by a public-private partnership led by the Jalisco state government. The state leased the massive 100,000-square-foot space and built it up into individually wired, turnkey work spaces and charged hi-tech startups minimal rent.
In they came, one and two-person operations, small cohorts of educated men and women, young and old, who knew what ones and zeroes do when properly put together and an industry was born. That effort continues with firms that employ dozens and even hundreds of people churning out over $21 billion worth of tech products that are exported all over the world — and to the United States in particular.
Itexico is one of those start-ups that is maturing in Guadalajara with offices in Austin, Chicago and Silicon Valley. It was founded by Guillermo Ortega, a Mexican engineer, with Anurag Kumar, an Indian immigrant to America. It has grown from half-a-dozen to 170 employees and it projects a thousand in five years.
Need a mobile app, original software, software maintenance? Need geographic or time zone convenience, or fluent American English-speaking help? Ortega and Kumar explained to this writer in better English than I speak why their American and Mexican facilities are better to deal with than firms in Europe or Asia. There’s also price.
Mexican industry grew exponentially when giant American manufacturers flooded into Mexico in the 1980s and 1990s to take advantage of wages, geography and transportation to the world’s largest market. Then China entered the scene, and Mexico found itself with empty manufacturing facilities left behind when plants moved to China for lower wages.
The brightest Mexican minds gathered and commissioned the Massachusetts Institute of Technology and consulting firm Accenture to conduct a study of how to fill the employment gap left behind by Chinese-bound companies.
The public-private partnership to help hi-tech startups was suggested. The state government organized it. The present leader is retired Hewlett-Packard executive Julio Acevedo Garcia, who revels in the non-paid job. He works at it full-time.
Itexico founders and partners Ortega and Kumar told me about their first days in business and how they grew and continue to grow. Their pitch made sense to customers, and referrals provide the bulk of their business. Guadalajara exports $21 billion today; in five years, will it be $100 billion?
Mexico is on track to be the 5th largest economy in the world in 2050. Will it be led by hi-tech in Guadalajara? There’s a good chance.
Raoul Lowery Contreras is a political consultant and the author of “The Armenian Lobby & American Foreign Policy” and “The Mexican Border: Immigration, War and a Trillion Dollars in Trade.” His work has appeared in the New American News Service of the New York Times Syndicate.
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