Seeing how Mexico's wealth and means of producing wealth is scarce, it is a major problem when one of their major economic means is corrupt. This is exactly the problem with Mexico's oil company Pemex, which are the world's 5th largest oil company and the U.S. second larges supplier. Even now, Pemex loses more than $1 billion a year to fraud, theft, tax evasion schemes and clandestine Fuel sales by its workers and distributors, According to two Senior Pemex directors.
The solution to these problems, according to the conventional theory, is to get these types of economies to reach a "takeoff" to self-sustaining growth only under conditions of rapid capital accumulation. In Mexico's case the solution would be foreign direct investment. This is when foreign governments and corporations actually enter the developing economy and create production facilities. Some of the advantages are more jobs for indigenous workers and more advanced technologies are brought as well as taught to the developing country. NAFTA (North American Free Trade Agreement) is one of the ways in which Mexico has benefited from this. From 1994 through 2001, U.S. manufacturing companies invested an average of $2.2 billion a year in factories in Mexico. Some feel that NAFTA has deepened and institutionalized Mexico's drive to modernize and liberalize its economy and political system.
The Radical theory states that the cause is international exploitation by exactly these developed "friends," and the cure is a fundamental change of international relations between the poor and rich. For example, the NAFTA agreement was suppose to help the economy of Mexico, and some say it has as I stated earlier. But NAFTA has also been criticized as an exploitation of Mexican workers. U.S. companies have crossed the border down south and built factories in Mexico. The idea was to boost the economy in Mexico. Even though trade between NAFTA countries has grown from $297 billion in 1993 to $676 billion in 2000, real wages in Mexico have dropped (Carlson, L).
