Mexican Economy Economics in the Essay

It seemed that it could bring political upheaval which became a worry to the United States. Hence, the existing lesser issues between these two countries had to receive increased attention. These were like drug, migration, trade, investment, and environmental concerns (Richard Sicotte, 2009).

Despite the two nations failing to come to an agreement on the best strategy that could be used in solving The Mexico's balooning foreign debt, the government of the United Sates went on to work with the Mexicans and proving support efforts that can buoy the economy of Mexico and try to reschedule the debt. One of the step taken by the United States was when it was announced that the several debt relief agreements in August 1982. Based on the terms of agreement, a purchased ahead of schedule U.S.$600 million in Mexican crude oil was done by United State as a strategic oil reserve. Treasury of the United State as well offered U.S. 1 billion in guarantees purposed for the Mexican new commercial bank loans.

An accord was reached with Mexico later by a group of 530 foreign creditors under the umbrella of a bank advisory group. The agreement that was scheduled was to allow Mexico to pay its foreign debt for a span of fourteen years with an interest rate that was to be lower as compared to original contracted. Chairman of the United States Federal Reserve Board (Paul A. Volker, together with his fellows advocated for a reduction of the interest rates, as a recognition that Mexico has instituted hard austerity measures and there are in need of some fiscal relief for the purposes of restoring economic growth

Some of the concerns instead strained the relationship of Mexican-United State, (A. H. Sevier, 2008).Drug trafficking featuring top of the list; For instance, cocaine consumption in 1970s and early 1980s went up steadily in the United States, making it to be a major law enforcement as well as public health problem. Though Mexico has never been a major producer of cocaine, it served as a conduit for transshipment of cocaine hydrochloride from South America to the United States. Sparse population; difficult terrain in most of the rural areas; existing infrastructure; as well as relative ease of bribing the local and federal officials facilitated drug traffickers to prefer and use Mexico as a conduit

Conclusion

Other than other factors the United States concern for the Mexican stability has facilitated the continued search for a solution by the two countries on the crushing debt burden of the Mexico. After the United States government coming to be certain that Mexico can never relieve itself the burden of debt by only stretching out payments as well as investing the more borrowed funds, and that part of the debt will never be repaid, a move was taken by the department of treasury after they offered and issued zero-coupon bonds that was to give opportunity to Mexico to buy back its debt at a discount.

References

A.H. Sevier,(2008). Treaty of Guadalupe-Hidalgo. Retrieved March 7, 2012 from http://www.sonofthesouth.net/mexican-war/treaty-guadalupe-hidalgo.htm

Earthy Family, (2013). The History of Mexico. Retrieved March 7, 2012 from http://www.earthyfamily.com/mexico-history.htm

Richard Sicotte, (2009). The Mexican-U.S. War: A Turning Point in Mexican Development?

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