Effect of Mexicos Automotive Industry on North American Economies Essay

Effect of Mexicos Automotive Industry on North American Economies - Essay Example The paper tells that Mexico has emerged as one of the leading recipients of manufacturing investments including in the automotive industry. In fact, according to Bureau of Economics and Business Affairs, Mexico has gained a foothold in the world and has jumped to be the eighth world producer of automobiles in the world. Among the two dominant North American economies, Canada and the United States, the latter has been the leading source of foreign direct investment in Mexico.   As a matter of fact, up to fifty percent of FDI in the first 9 months of the year 2012 were from United States investors. according to Keenan, Canada has continually fallen behind both Mexico and the United States in the auto industry over the years. Reduced investment in Canada’s auto industry has seen the investment being redirected towards the Mexican economy. In effect ballooning the Mexican economy and hurting the Canadian economy.   Major Investors in the Canadian economy are from the United St ates, and hence when they transfer their investments to another economy they shatter one and hurt the other, the effect, the Canadian economy is reeling from. Two reasons can be attributable to such an effect, first, unlike Mexican labour market, the Canadian market just like the United States labour market is very expensive and therefore employers undergo more operational costs. Secondly, Keenan, remarks that the Canadian dollar has hurt the economy, affecting its competitive position. The Mexican peso has provided not only the United States investors with favorable opportunities to make more profits, but also the Asian and European auto giants.