Colorful houses in a suburb of Mexico City

Mexico An emerging economy of great contrasts

With the US to the north and the South American continent to the south, Mexico occupies an important geostrategic position. This emerging country is the 15th largest economy in the world and has an important role to play in meeting global and regional challenges.

Within the international community, Mexico acts as an intermediary between industrialised and developing countries. The country plays an active role in international organisations such as the United Nations and the Organization of American States (OAS).

The World Bank classifies Mexico as an upper-middle-income country. However, the country is characterised by vast social disparities. More than 40 per cent of the people live in poverty. Crime, governance that lacks transparency, a shortage of skilled workers, human rights abuses and corruption are impediments to development.

Development cooperation

As a G20 member, Mexico is engaged in efforts to foster close international consultation on financial, technical and environmental cooperation. The country is one of the global development partners with which the Federal Ministry for Economic Cooperation and Development (BMZ) seeks to engage in a close strategic partnership.

The focus of Mexican-German cooperation is on protecting and conserving global public goods. The emphasis is on supplying sustainable energy in line with the country's needs, and on the protection and sustainable use of natural resources. Germany does not support any activities that Mexico, thanks to its strong economy, is able to fund using its own resources.

In recent years Mexico has itself taken on a donor role in the field of development policy within Latin America. Germany is supporting this new role. Through triangular cooperation arrangements, Mexico and Germany are able to pass on their combined experience to other countries in the region. In addition, the two countries have set up a Joint Mexican-German Fund to finance governance projects, with each side contributing an equal share of the funding.

At present, Mexico’s democracy is still characterised by significant shortcomings in terms of the rule of law and legal certainty. The government under López Obrador is using a new strategy to fight corruption and address past abuses of human rights.

Mexico is a typical emerging economy: on the one hand, the country is an important regional and global player that has achieved considerable economic success and that is actively involved in shaping international politics. On the other hand, it is still facing the social and environmental challenges typically associated with a developing country.

Mexico’s economy is highly dependent on foreign trade, especially on the export of industrial goods such as vehicles and vehicle parts, machinery and electrical appliances. About 80 per cent of Mexican exports are destined for the United States.

One of Mexico’s biggest problems is increasing environmental degradation. Urbanisation, the use of large areas of land for crop and livestock farming, and extensive logging are threatening the country’s huge biodiversity.

German development cooperation with Mexico

Mexico is what is known as a global development partner for German development cooperation. Since 2015, regular government talks have been taking place between Mexico and Germany in the form of a Binational Commission that is chaired by the two countries' foreign ministers. In addition, there are specialised commissions that report to the Binational Commission. On the German side, the Federal Ministry for Economic Cooperation and Development (BMZ) and the Federal Ministry for the Environment, Nature Conservation, Nuclear Safety and Consumer Protection (BMUV) together have lead responsibility for the specialised commission on cooperation for sustainable development, environment and climate.

At the government negotiations in September 2019, Germany committed fresh funding of 68.5 million euros to Mexico (Financial cooperation: 48 million euros, Technical Cooperation: 20.5 million euros).

Development cooperation focuses on the following priority areas:

Sustainable and needs-based energy supply
Environmental policy, protection and sustainable use of natural resources

Out of the new commitments, 59 million euros is allocated to the area of environmental protection and 9.5 million euros goes to projects outside of the agreed priority areas, in particular to projects in the areas of vocational training and good governance.

Germany and Mexico have also agreed to expand their triangular cooperation with other Latin American countries and to implement projects jointly with third countries.

Although Mexico's geographic and climatic conditions are conducive to renewable energy use, it still generates most of its energy from fossil fuels – the country is one of the top ten oil producers worldwide. Mexico has huge potential for solar and wind power in particular that is not yet being used.

An important field of work under Mexican-German environmental cooperation is biodiversity conservation; Mexico, with its rich diversity of animals and plants, is what is known as a mega-diverse country.

Triangular cooperation: Sharing experience

Germany and Mexico have agreed to share the experience they have gained from their own joint cooperation with other Latin American countries; it will be shared with them through triangular cooperation and by implementing joint programmes with third countries. The two countries have been working together in this way since 2006, pooling their financial resources and their knowledge in order to solve problems in the region – for the benefit of all concerned. Germany and Mexico are currently engaged in twelve different triangular cooperation measures with various partner countries.

Germany is, for example, supporting measures to foster an exchange of experience between Mexico and Cuba on the use of solar energy. Another cooperation project is assisting Ecuador in developing instruments for municipalities for urban development and urban land use planning. The purpose of these activities is to increase cities' resilience to climate change.