My name is Jialu Yang and the name of the article I picked is named “Mexico has a productivity problem” by Eric Martin from Bloomberg. The article was published on November 17th in 2019. ()
The article is focused on talking about the current slow-moving productivity within Mexico and trying to explain the reasons behind it. For a small company in Mexico to open up a new plant or office, the taxes and red tape they have to pay goes up to as much as 50 per cent, which is a huge burden to a lot of small to even medium sized companies. This serves as one of the main reasons why people in Mexico have been reluctant in investing more and explains the slow productivity growth within the country. The article mentioned two types of business infrastructures in Mexico, one of them is the high technology productions such as aerospace and electronic sectors, while the other one is small to medium sized companies, which takes up the majority of the business within Mexico. The imbalance between the two major business suggest that more people are going to be affected by the unfair burden on tax and red tape, who turns out to be people who struggle the most. Some employees are forced to be driven out of the workforce and become unemployed. They turned out to be the people who would not be able to find another self-sufficient job based on their skills, so this also drives up the unemployment rate within the country.
I agree with the article’s main point. Like we discussed in class, there are various reasons and difficulties that could slow down development, and lack of investment is one of them. The difficult business environment and tax burden within the country of Mexico, which leads to the lack of investors and investment incentive. A business without the necessary investment money also lead to the inability to do research and development for products, which in turn drag down on the product’s competence in the global market. With insufficient pay and lack of strong basic infrastructure, employees also have a low incentive to increase their labor productivity. This article is related to Chapter 22 about how investment impact international trade (pg. 467-471) and Chapter 8 (pg. 165-167) about how unemployment rate affect company growths.
1. Hi Minghao,
I agree with your point and also the article's point that allowing a big international company into a developing country may bring in much risk for its existing business structure. Though, from my opinion, it may also bring in some positive influence compared to the risk it brings in. It is true that Amazon will be able to offer lower-price and higher-quality products, and a lot of people may be attracted by that. Another aspect I would like to point out is local people's preference within India. Will people find whatever they are looking for on Amazon or are something only available from the local vendors? And if people have their own shopping preference, having Amazon there may not be as much as a risk to the local vendors because they would have their loyal customers. I think this topic is related to what we learned in class about international trade and global strategy, as it is important for a company to develop a thorough plan before they enter a new market. And I would love to stay tuned on this topic to see what happens in the future. Thanks for sharing!
2. Hi Teddy,
Thanks for sharing this article! This is a really interesting article to read and I am surprised to learn that everyone in five people from Africa is starting their own business. That is quite incredible. I agree with your point and the article's point and I also think the Scale Up program is an awesome idea. I worked at a start-up company before and it was surely tough especially at the beginning to turn all your ideas into real actions. And with lack of experience, support or resources, it surely is easy for something to fall behind at the very beginning. For a start-up, it is important to lay a strong foundation for future growth. By having the program, it will be able to provide support and connect resources, which will create a win-win situation. After reading this article, I definitely think I would look more into where I can find resources or create connections where people are able to help each other out in my own future endeavors.