Mexico Shifts Focus From Drug War to Economy

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QUERÉTARO, Mexico -- They came looking for Andrés Cobos Marín, 22, with promises of financial security, a leg up over his peers, the chance to make the world his oyster.

But these were not the sort of recruiters who have made Mexico infamous, scouting hired guns and drug couriers for the criminal underworld. Quite the contrary, they were out hunting for talented young engineers with a knack for designing turbines and the like for this city's growing aerospace industry.

"The companies are looking for us; we don't have to go looking for them," said Mr. Cobos, who starts work in January at a Spanish company even before he graduates next year.

It is the flip side of the Mexico that the world is familiar with -- not the one in which drug barons hang bodies from bridges, evade the law in elaborate hideaways and funnel billions of dollars in narcotics across the border and around the world.

In this other Mexico, emergent but taking hold in several pockets of the country like this one, high-skilled jobs are plentiful, industrial plants churn out increasingly sophisticated products and families take on shades of middle-class life, with flat-screen televisions, new cars and homes a cut or more above those of their parents.

This more prosperous, parallel universe is what Mexico's president-elect, Enrique Peña Nieto, plans to highlight when he meets with President Obama on Tuesday, part of his vow to shift relations with the United States toward improving the economy and loosening up trade.

His advisers are careful to say that they will continue to work closely with the United States on fighting drugs and organized crime, and Mr. Peña Nieto has promised Mexicans that he will reduce drug violence.

But Mr. Peña Nieto, who takes office this weekend, has made it clear that Mexico's poor image abroad has slowed the country's economic growth. His team plans a strong push to "modernize" trade deals, speed up or add new crossings at the border for commerce, court foreign investment to take advantage of vast, newly discovered shale gas fields near the United States border, and generate more quality jobs like the ones here in Querétaro.

"In the next years, the great challenge is to succeed in making these kinds of examples multiply very quickly," he said this month.

Mexico fell into a deep recession in 2009 when American demand for Mexican-manufactured imports collapsed. But the recovery under President Felipe Calderón has been notable, with growth expected to reach almost 4 percent this year -- roughly twice as fast as in the United States.

While Brazil is often thought of as Latin America's economic marvel, Mexico's economy outpaced Brazil's last year and is expected to do so again this year. Business that had fled this country in favor of China has started to return, as the wage gap narrows and transportation and other costs rise. Auto manufacturing, for instance, is surging, with several new plants.

The Obama administration is not expected to let up on its security concerns, but economic changes have already altered the relationship between the two nations in some concrete ways. Better opportunities for Mexicans at home -- not just the flagging economy in the United States and stricter enforcement at the border -- contributed to a significant slowdown in illegal immigration north in recent years.

A senior Obama administration official said Mr. Peña Nieto's team from the start of talks after the July election made it clear that it would emphasize economic progress, and analysts suggested that the president-elect was wise to do so.

"The way to change the narrative is not to say, 'Security is not as bad as it seems,' " said Christopher Wilson, a scholar at the Mexico Institute in Washington. "The way to change the narrative is to talk about other things that are going well and the economy is a good story now."

Still, Mexico is far from realizing the middle-class society envisioned nearly two decades ago when it signed the North American Free Trade Agreement with the United States and Canada.

A recent World Bank report on the expanding middle class in Latin America noted that although an additional 17 percent of the Mexican population had entered the middle class since 2000, class mobility is still low. Almost 30 percent of Mexican workers toil in the informal economy, without any benefits or protection, for employers who pay no taxes.

Mr. Peña Nieto insists that he wants to push forward with a number of long-stalled economic measures -- several blocked in recent years by his own party, the Institutional Revolutionary Party -- that experts say choke off Mexico's productivity. He has promised to rewrite the tax laws, open up the state-owned oil sector to private investment and rein in Mexico's powerful monopolies.

His party, moreover, agreed to sweeping changes to the labor code this month that analysts say could pave the way for formalizing thousands of jobs.

"With structural reforms we can do much more; the growth rate could go up by several percentage points," said Gabriela Hernández, the president and chief executive of General Electric Mexico, which is building a new campus in Querétaro that will eventually house 1,800 engineers in glass-paned buildings.

In this city of about a million people, where highways lined with steakhouses and multiscreen movie theaters streak toward new hillside housing developments, there is a confidence that Querétaro's good run is just beginning.

It has certain advantages, being off primary drug smuggling routes from Central and South America but on a main highway from Mexico City to the Texas border. People fleeing crime and congestion in Mexico City have flocked here, giving the state -- also named Querétaro -- a pool of well-educated workers.

In the past decade, the state has emerged as one of the safest places in Mexico and an industrial powerhouse for appliances, auto parts and now aerospace, attracting more than $1 billion in investment as multinationals like Bombardier Inc. build new factories.

"We have identified what our vocation is," said Marcelo López, who has spent a decade working to attract companies to Querétaro as the state's undersecretary for economic development. "Our strength is industry."

Those industrial jobs have pushed Querétaro's growth and raised salaries to among the highest in Mexico.

With labor and transport costs rising for production in Asia, "a lot of manufacturers are saying how can we do this differently," said Pierre Beaudoin, the chief executive of Bombardier. "You have got states today recognizing this in Mexico."

When Bombardier decided to develop its new Learjet 85 corporate aircraft, it spread manufacturing across Canada, the United States and Mexico, shipping parts from all three countries for final assembly in Wichita, Kan. Several Mexican states competed for this country's piece, but Querétaro's proposal, which included a plan to attract other aerospace suppliers to a new industrial park as well as a training school, won. Now the company is speeding up new investments here.

Its Learjet plant is deceptively quiet, as young engineers in jeans run tests on a new fuselage built of lightweight composite fiber. At another plant, the rattle of bolting and welding runs along the line of tail pieces, as workers install electrical and hydraulic systems before the pieces are shipped off for final assembly in Toronto.

So far, Mr. Peña Nieto has not offered specifics on how successes here can be replicated across Mexico; border cities with robust manufacturing still became some of the most violent places in Mexico because the police and judicial institutions were too weak to stop criminal groups.

Mr. Peña Nieto, analysts said, will need to focus on both.

"The picture the United States has of Mexico is old, and it's skewed toward the violence," said Robert Pastor, director of the Center for North American Studies at American University in Washington. "If Peña Nieto can change the strategy on the cartels and reduce the violence, it will grow even faster."

Ginger Thompson contributed reporting from New York.


This article originally appeared in The New York Times.


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