The Role of Oil in the Mexico Economy essay sample

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Mexico is a unique country rich in natural resources which became both its blessing and its curse. The country was turned into colony because invaders wanted to get an unlimited access to the treasures of this state. It was mercilessly robbed for many centuries by foreign invaders of all types. When Mexico finally became independent rich natural resources gave burst to the development of its economy and turned it into one of the leaders in Latin America. Currently Mexico has a well developed oil industry that brings the country high profits. The oil industry in Mexico makes it the fifth largest oil producer in the world and the eleventh-largest exporter in terms of net exports. Mexico is the third largest oil producer in the Western Hemisphere after the United States and Canada. Mexico has eighteenth-largest oil reserves in the world and the fourth largest in the Western Hemisphere after Venezuela, Canada and the United States. In 1994 Mexico became the member of the North American Free Trade Agreement (NAFTA).

The oil sector is extremely important for the Mexican economy. Oil revenues generate more than 10% of export earnings in Mexico and high taxes on the income of the state oil monopoly Pemex provide about one-third of all tax revenues collected by the Mexican government (Playfoot, Andrews and Augustus 2015: 3). Oil industry has a huge influence on the economic development of Mexico and any changes in the amount of export or oil prices have a direct impact on the lives of its citizens.

Development of the Oil Industry in Mexico

Mexico is one of the most ancient countries of the world. It is one of the cradles of human civilization and the state where such important products as maize and beans were domesticated. It is also the state that had very rich deposits of gold and silver. These deposits attracted invaders and in 1519 the Spanish conquest of Mexico began. Mexico was the Spanish colony for more than 300 years and it was used as a cheap source of raw materials. Mexico became the major supplier of gold and silver to the metropolis. The powerful revolutionary upsurge in the country took place in the early 19th century. The War of Independence (1810-1821) and the subsequent period of instability ravaged the country and slowed down the development of economy. The republic was proclaimed in 1821 but it did not stop the political struggle between conservatives and liberals. This led to the instability of the government. Within seven years of 1841 – 1848 there were more than 20 presidents. One coup followed the other. This period of instability was used by the neighbors of the state and Mexico lost its territories and financial independence. At the end of the 19th century Porfirio Diaz used a profligate fiscal incentives to attract foreign investors, who started development of oil fields in Mexico and built the railways, highways, port facilities, telegraph lines and the system of power lines. …

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