The Real Economy in the Long Run

Introduction

The factors determining the country’s productivityHow the country’s policies influence its productivity growthHow the country’s financial system is related to key macroeconomic variablesHow Sprint can reduce the risk they would face in relocatingThe current and projected unemployment over the next five years Conclusion

Sprint is a large company that is known for its wireless services. Sprint has been in business since 1899, but it has not always been called Sprint; it has changed its name and its services provided many times throughout the years. Sprint managed to evolve and remain relevant for many years. To continue doing so, it must focus on growth. This presentation will discuss just that by exploring the following:

Factors Determining Mexico’s Productivity

Policies That Influence Productivity Growth

Policies That Influence Productivity Growth (Cont.)

InequalityCorruptionTax Collection imposed on firmsTrade deal with North America remains unclearMexico would benefit from carrying out reforms for stronger and more inclusive growth

Mexico’s Financial System and Key Macroeconomic Variables

2.4 trillion economy: 11 largest in the worldUnemployment rate:3.6% (2017)Growth annually: 2% (2017)Inflation rate: 5.9% (2017)

Economic input (GDP by sector):Agriculture: 3.9%Industry: 31.6%Services: 64% (2017 est.)Economic output (GDP by end user):Household consumption: 68%Government consumption: 12.5%Investment in fixed capital: 22.1%Investment in inventories: -1.3%Exports of goods and services: 37.4%Imports of goods and services: 38.7% (2017 est.)

Mexico’s Financial System and Key Macroeconomic Variables (cont.)

Import:$417.3 billion (2017 est.)

Export:$406.5 billion (2017 est.)

How Sprint can Reduce Risks Associated with Relocating:

Hire national locals, they should be aware of the labor laws. Although Mexico is the United States’ close neighbor, the labor laws differ from ours. Example:Mexico only requires one day of rest as opposed to America’s two-day weekend (Zelek, 1992). After one month, employees are considered permanent and cannot be fired unless there is a breach of contract (Zelek, 1992). Ensure all stakeholders are educated on what taxes and regulations will be imposed on the company. Ensure all stakeholders are fully informed regarding the current policies and the future direction of the country’s goals.

How Sprint can Reduce Risks Associated with Relocating (cont.):

Strong security measures should be taken to ensure the safety of employees, products, and physical assets. Security risks should be considered due to the following:Growing unrestPolitical corruptionOrganized violence Training should be provided to all employees to ensure they are familiar with the customs and courtesies of Mexico.

The Current and Projected Unemployment Over the Next Five Years

Mexico’s Unemployment Rate Additional Facts

Minimum wage- current 80.04 pesos is equivalent to $4.28. Minimum wage will be increasing in Mexico this year to 88 pesos per day with is equivalent to $4.71.Sprint will be able to hire more employees since the minimum wage is lower in MexicoSprint expected unemployment rate should decrease by expanding to Mexico.

Conclusion

Mexico has become a powerhouse for businesses to relocate and sprint can benefit hugely by taking advantage of the economic outputs that come with doing business in Mexico and is a good place for a US business to relocate. In the US it is very expensive to have a business, but in Mexico the business can take advantage of cheaper labor and business cost to help grow sprint into a powerhouse.

References

Manikiw, N. G. (2015). Principles of Macroeconomics. Stamford: Cengage Learning.Retrieved from http://newsroom.sprint.com/about-us/?INTNAV=Footer:About Retrieved from https://en.wikipedia.org/wiki/Mexico#/media/File:Flag_of_Mexico.svgRetrieved from http://worldpopulationreview.com/countries/mexico-population/ Retrieved from https://www.wilsoncenter.org/sites/default/files/evolving_demographic_human_capital_trends.pdfRetrieved from https://www.britannica.com/place/Mexico-City Central Intelligence Agency(n.d.). Retrieved from https://www.cia.gov/library/publications/the-world-factbook/geos/mx.htmlhttps://knoema.com/dhdmnpc/mexico-unemployment-forecast-2015-2020-and-up-to-2060-data-and-charts