México and the US

Source: The Economist

In early February 1848, following a short and one-sided war, México agreed to cede more than half its territory to the United States. An area covering most of present-day Arizona, California, Nevada, New Mexico and Utah, plus parts of several other states, was handed over to the US. 

The rebellious state of Tejas, which had declared its independence from México in 1836, was recognised as American soil too. 

But a century and a half later, communities have proved more durable than borders. The counties with the highest concentration of Mexicans (as defined by ethnicity, rather than citizenship) overlap closely with the area that belonged to México before the great US land-grab of 1848. Some are recent arrivals; others trace their roots to long before the map was redrawn. They didn’t jump the border—it jumped them.

APEC Indonesia 2013

APEC Family Photo of Leaders

APEC continues to go from strength to strength, with an ever-expanding agenda, and an impressive share of the world economy held by its 21 members: this year, APEC accounts for 55pc of global GDP, 44pc of trade and 40pc of the world's people which shows just how dynamic and prosperous the region is becoming.

APEC's aim was never to be a negotiating forum. Its guiding principle is “concerted unilateralism”, that is, it has no power to force its members to do anything; it merely seeks to inspire good policy by example and co-ordination. This is where APEC's real accomplishment lies within a region not accustomed to working and coordinating together in a similar way to the the EU regional supranationalism integration. Instead APEC has developed many technical committees doing useful work in areas such as trade facilitation. It helps foster habits of consultation and co-operation. And, furthermore, its Leaders’ meetings provide an opportunity for useful and sometimes informal bilateral talks.

Since the Doha round of world-trade talks more or less came to a stand still with almost no hope of moving forward in the foreseeable future, APEC’s ambitions have spread into other areas. This year its motto is “resilient Asia-Pacific: Engine of Global Growth”, and its three main themes are the Bogor goals; improving “connectivity” (infrastructure, harmonising procedures and making it easier for people to travel); and “sustainable growth with equity”.

APEC's core interest has always been trade liberalisation. Twelve of its members (including two of the three biggest economies, the US and Japan, but not China) are pursuing the Trans-Pacific Partnership (TPP), an ambitious “21st-century” free-trade pact, covering areas such as labour, government procurement, state-owned enterprises, intellectual property and e-commerce, as well as traditional merchandise trade.

Meanwhile, eight TPP members (but not the US), along with four other APEC members (including China) as well as India and three other non-APEC countries are talking about yet another regional trade group, the Regional Comprehensive Economic Partnership.

The Latin American member economies, Chile, Perú and México are also pursuing the "Alianza del Pacífico" in the hope that a stronger regional alliance will give them more bargaining power in their trade relations with China. 

All, this adds up to a very dynamic Asia Pacific region. Hence a possible further grand aim for APEC over the next decade may be to try to co-ordinate these parallel processes, in the hope of bringing them all together in a grand Free Trade Area of the Asia-Pacific eventually. This is a role that APEC is well prepared for given its twenty or more years of existence across the Asia Pacific region and its technical expertise on trade liberalisation.

Geography and Demography are Destiny

Geographical view of the Américas

Geography is the backdrop of human history. The position of a country on a map is the first element that truely defines it, so much more than its government is able to. Geographical distortions can be as revealing of the long-range intentions of governments, for example, the melting of the Arctic, allows a glimpse of the possible future shipping routes between Asia and Europe and the geo-trade options that this could bring about.

Demography is destiny

The US is in the midst of a new demographic, cultural and political moment. Interestingly the extension of the US border southwards in the early 19th Century to incorporate newly won land from México into the US is now facing a seismic demographic change in the 21st century - in coming decades hispanos from the wider Américas will become more than a quarter of the US electorate. 

Hispanos currently represent 17pc of the US population, and hispanic population growth is set to turn the US into a country where fewer than half the population will be non-Hispanic whites within 20 years. This shift will create a new demographic reality in the US. This point was heavily illustrated in the messages of Obama's recent presidential inauguration speech. A Cuban-American became the first hispano to recite the official inaugural poem. Rev Luis León delivered an inaugural benediction with phrases spoken in Spanish. And Justice Sonia Sotomayor, the first hispanic on the Supreme Court, administered the oath of office to Vice President Joe Biden.

Geography and Economic Growth

The notion that Mexico offers only cheap labour no longer rings true in the 21st Century. México produces around 115,000 engineering students every year, almost three times as many as the US on an annual basis. Hence machine specialists are usually easier to find in Tijuana than in many big US cities. As are, accountants experienced in production economics and other highly skilled workers.

Today, in the 21st century, Tijuana is becoming to San Diego what Shenzhen is to Hong Kong. Travel between San Diego and Tijuana is around 20 minutes, with no passport required. Although a passport is needed to come back, but there are fast-track lanes for business people. Many employees commute across the border each day, good doctors are cheaper and easier to find in Tijuana, as are private schools. In some ways, the border feels more like the  borders between the members of the EU than a divide between two countries.

And it’s not just Tijuana. To the east, in Juárez, Dell computers are built by Foxconn, the company that manufactures more than 40pc of the world’s electronics (including Apple’s iPhone and iPad). To the south, in Querétaro, a factory builds the transmissions that General Motors installs in its Corvettes. The design of General Electric’s GEnx turbine jet engine and the production of interior elements of Boeing’s 787 Dreamliner also happen in México. In fact, manufactured goods are the country’s chief export, with private investment in this sector among the highest in the world.

Once again geography is destiny too, the shorter and more nimble a supply chain is, the better. Hence México is benefiting from its proximity to the US to feed the demand for just-in-time manufacturing. And the demographics of producing the right mix of highly-skilled workers have combined with it to create growth and prosperity in the 21st Century. 

The Pacific Century is getting underway

Map of the Asia Pacific Region

The US and the Pacific

Rarely has Rarotonga, the main city of the Cook Islands, seen so many important world leaders at its annual summit of the Pacific Islands Forum as at this year's event with the US Secretary of State in attendance. But this is indicative of the wider US' policy of the re-balancing of the US' strategic posture away from Europe and the Atlantic towards the Pacific. 

The competition for influence in the Pacific Islands recalls the days when they were more significant, both economically and strategically in the 19th Century when boats sailed readily from European countries in search of trading opportunities. In contrast, the 20th Century was very much an Atlantic Century dominated by the US and Europe.

Russia's Pacific Side

Russia has just inaugurated the longest cable bridge in the world, measuring 3,100 metres between Russky Island and Vladivostok. The bridge is quite spectacular, it is as tall as the Eiffel Tower and was built for the APEC Heads of State meeting. As such, the bridge is a symbol of Russia's plans to develop its Pacific side and strengthen its ties with its Pacific side, which in the words of Putin is "the most important geopolitical task" for the 21st century. 

Russia's new Vladivostok Bridge on its Pacific Coast

Europe is set to become the biggest loser

So far the impact of the shift in power from Europe to the Asia Pacific has been greatly underestimated by Europe. Interestingly, Asia has developed so fast that its population has not adjusted to their growth in prosperity by taking its foot off the throttle the way people have in Europe — opting for more leisure and higher levels of public spending. In Asia, people continue to work as hard as they did when they were much poorer.

For example, the average UK citizen works 1625 hours a year — a 35-hour week with four weeks’ holiday plus bank holidays. This compares with 2307 hours in Singapore and 2287 in Hong Kong. In economic terms, this means the Singaporean is working the equivalent of four months a year more than Europeans do. 

Add to that the top rate of income tax in Singapore is 20pc and in Hong Kong 15pc, and the net effect is that per capita GDP in Singapore is 30pc higher than in the UK, and in Hong Kong it is 50pc higher. The gap is widening as people in Asia show little sign of slackening off. Furthermore, life expectancy rates are also on the rise. 

Therefore, changes in Europe to compete with this blast of competition from Asia Pacific will have to be more fundamental and far-reaching than anything European politicians have yet dared suggest. The West has allowed its cost base to become bloated. Unless this is tackled, the future looks bleak, with many other countries going the way of Greece through stagnation to economic near-collapse with all the accompanying political implications that will test democracy.

Conclusion

The Geo-Trade Blog predicts that the next decade is going to see closer regional cooperation around the world – in América Latina, and in Asia too and maybe even in Africa. Basically if your neighbour’s house is on fire, then your house is on fire too, it makes sense to work together to prevent fires in the first place although the Geo-Trade Blog expects this to be a long and tortuous process.

Furthermore, the last few years have seen economics and politics pulling in opposite directions. The economics calls for more labour mobility; the politics argues for closed borders, particularly in Europe and the US. The economics calls for investment in the productive potential of the economy for 21st Century but  the politics is dominated by older voters in Europe and the US for whom the prime issue is the debt that society owes them for a lifetime of work. These two positions look very challenging to reconcile.


 

The Rise of Las Américas in the 21st Century

Panamá City Skyline in the 21st Century

The Decade of América Latina

The market orientated reforms of the 1980s and the 1990s combined with several years of commodity-driven prosperity have been transforming América Latina into a region of wealth and prosperity over the last decade. The commodity boom together with more progressive social policies has started to create more dynamic and less unequal societies across the region.

Thanks to the commodity boom and rising revenues, governments have presided over a time of rising incomes for the new emerging middle classes in many countries in América Latina. However the increase in wealth has been occurring against a background of an ideological battle between reformers (mostly liberals and social democrat politicians) and those such as Mr Chávez (Venezuela) and potentially President Christina Kirchner (Argentina) and others of the ALBA grouping who would rather return to the authoritarian and populist past. At present the reformers appear to be winning the debate. This is illustrated below in the Economist's Latinobarómetro published in October 2011. Even so there has been a slight fall in optimism over the last year. This chart clearly shows Panamá with the most ongoing optimistic outlook. 

Latinobarómetro Source: The Economist Oct. 2011

 

What of the northern neighbours – the US

The US, América Latina's northern neighbour on the same continent has so far failed to appreciate the rising importance of América Latina with its expanding market for the north's exports, its huge investment opportunities, its enormous reserves of energy and minerals and its continuing supply of needed labour. However at the same time and despite their recent growth and globalisation, the economies of América Latina still depend on the US for capital, know-how, technology and remittances.

If geography is destiny and the US and América Latina need one another so much, the obvious question is why are the two not pursuing a more joint approach to consolidate their relations in a meaningful way? The answer to this question turns on key policy differences on three main areas. Firstly, immigration, many in América Latina find the idea of building a wall between the México and the US particularly offensive. Secondly, the war on drugs, the North's war on drug trafficking serves mainly to spread corruption, increase criminal violence and generally undermine the rule of law. Finally, the embargo on Cuba imposed by the US is seen as counter-productive and likely to have prolonged the repressive rule of the Castro brothers rather than ending it. However none of these policy issues is easily resolved due to domestic US politics and less so in an election year. Immigration has been a particularly toxic issue in the Republican primaries. To make progress in the war on drugs, the US needs to curb demand for illegal narcotics at home, but US politicians are loathe broach the the idea of decriminalisation. And the Cuba policy is held hostage by the swing state of Florida and its residents of Cuban origen.

Panamá, the Singapore of the Americas

Panamá is the success story of the first decade of the 21st century. Business of all kinds continues to grow, in a land coveted in the late 17th century by the pirate Henry Morgan and occupied since the beginning of the 20th century by the US President Roosevelt, to build the Panamá canal and link the Pacific with the Atlantic on the narrow isthmus. During many decades, the country has served as a hiding place for multiple legal and illegal dealings, from drugs to weapons and political conspiracies and money laundering.

Nevertheless the Panamá of the 21^st century has many feathers to its bow: a chanel, an international banking center, the world's first merchant fleet, a free trade area which is one of the main bases for the collection and re-export of inland freight, an interoceanic railway, seven private ports and dozens of casinos and property developments (as the above picture shows). Panama in 2011 was placed at the head of economic growth in Las Américas, an increase of 10.6pc of GDP, against 9.2pc in 2010, according to the Statistics and Census Institute (INEC) of Panamá which likely explains the optimism in the Latinobarómetro above too. 

But the Elephant in the room is still... la droga

US President Nixon declared the war on drugs 40 years ago, interestingly the front that he opened in 1971 has survived all his successors up until now.

The Presidents of Brazil, Colombia and Mexico were the first to speak out on the failure of the war on drugs, Fernando Henrique Cardoso, Cesar Gaviria and Ernesto Zedillo respectively. Recently, the current president of Guatemala, Otto Perez, and the former President of Colombia, Juan Manuel Santos, have also spoken out to demand the opening of a debate on the decriminalization of drugs using the legitimacy granted to countries suffering the most tragic consequences of victims of the war on drugs. Honduras topped the global homicide rate, with 82.1 homicides per 100,000 population, followed by El Salvador. México has also been immersed in the drug war for the last six years, with almost 50,000 people dead and the homicide rate has increased by 65% since 2005 according to UN data.
 

The legitimacy of key leaders of América Latina speaking out, coupled with the figures of the dead has forced the US president, Barack Obama, to finally address the issue. In the US in April 2012 Obama said "We recognize our responsibility in this matter and I think it is entirely legitimate to engage in a discussion about whether the laws now in force are laws that perhaps are causing more harm than good in some areas." When Obama spoke, everyone understood: it is time to talk about drugs. The issue that is a constant drag on América Latina has finally reached the international agenda, a further sign of the América Latina's rise. 

 

New York's Manhattan Grid - a blueprint for the US' biggest city

Aerial view in 21st century of the Manhattan Grid started in 1811

Before it could rise into the sky, Manhattan had to first create the streets, avenues and blocks that would later support the 20th century skyscrapers. In the early 19th century, New York's population was continuing to increase having tripled to 96,373 since 1790 mostly due to the growing port. It was then predicted that 400,000 people would live in the city by 1860. The City planners were entrusted with planning the city in 1811. They proposed a grid for the future city stretching northward from roughly Houston Street to 155th Street in the faraway heights of Harlem as the layout in the photo (above) and map (below) show.

Manhattan Grid Plan

 

The Grid Plan

The grid plan is a type of city plan in which streets run at right angles to each other to form a grid. The Greeks and Romans used City Grids as did the Chinese from 1500 BC onwards. The Chinese Tang 唐 Dynasty laid out their capital city in a grid plan.

The Roman model was also used in Spanish settlements during the exploration of the Americas. In 1573, Felipe II compiled the Laws of the Indies to guide the construction and administration of cities in the Americas. The Laws specified a square or rectangular central plaza with eight principal streets running from the plaza's corners. The grid plan became popular with the start of the Renaissance in Northern Europe. In 1606, the newly founded city of Mannheim in Germany was the first Renaissance city laid out in the grid plan as the map below shows. 

Mannheim Grid Plan

 

Why use grids?

An inherent advantage of the geometry of a proper grid is its tendency to provide regular building space in well-spaced sequences. This maximises the use of the land of a block without affecting street frequency - any frequency of streets produces the same packing effect. Furthermore geometry also minimises disputes over lot boundaries and maximises the number of lots that can front a given street.

Another important aspect of street grids is that traffic flows of either pedestrians, cars, or both, only cross at right angles. This is an important safety feature, since no one entering the intersection needs to look over their shoulder to see oncoming traffic. Hence the grid is a geometric response to our human physiology. It is highly likely that the original purpose of grid layouts comes from the Athenian Agora where the laying out of market stalls into regularised rows at right angles solved the problem of frequent wagon collisions that occurred when the markets were laid out randomly in a field with traffic approaches at odd angles.

New York's Manhattan Grid

The Manhattan grid plan was a far-reaching, visionary and daring plan to urbanize the geographical limits of the Island of Manhattan.The plan called for a regular grid of streets and property lines without regard to the topography of the island itself. This included numbered avenues running north and south roughly parallel to the shore of the Hudson River. The avenues would begin with First Avenue on the east side and run through Twelfth Avenue in the west. There would also be 155 orthogonal cross streets. 

Interestingly, Manhattan’s grid is not perfectly regular. No two blocks are ever precisely the same because the grid indulges variety, building to building, street to street. Some avenues are wider. Broadway cuts diagonally across the north-south streets, and those cuts have made room for public spaces (Union Square, Madison Square, Herald Square, Times Square, Columbus Circle, Verdi Square). 

New York’s grid has proved flexible enough to adapt when the city’s orientation has shifted north-south, and flexible enough to accommodate the creation of Central Park which interestingly was not a part of the original grid plan. It was not until 1853 that the idea for a large area of green space for leisure activities was envisioned.
 

One of the advantages of the Manhattan city grid is that it makes a complex place instantly navigable. Manhattan invites long walks, because walkers can judge distances easily and always know where they are. In contrast other cities such as London which are formed from historic agglomerations of villages, often include vast stretches of nowhere land as they sprawl in ways that discourage easy comprehension and walking. 

 

Finally, perhaps one of the greatest benefits of the Manhattan grid is that it gives order through physical form to a city filled with a diversity of ideas, concepts and people from so many different places. It is not likely that this is exactly what the original city planners had in mind back when they proposed that the Manhattan Grid should "promote the health of the City" back in 1811.  

The New Geo-Trade Order - the Chinosphere, the Hispanosphere and the Anglosphere

Culture Map from the World Values Survey

In a recent paper published by a London think-tank, the Legatum Institute, its author the Geographer, Joel Kotkin, looks at the world through the prism of culture. The ties of history and habit and of shared experiences and common customs can explain a lot about who does business with whom. For example research shows that two countries that share a common language trade 42pc more with each other. Two countries that once shared imperial ties trade a massive 188pc more. Imperial ties affect trade patterns more than membership of a common currency which boosted trade by only 114pc. 

The Chinosphere

China's growing might is reinforced by its links with the overseas Chinese. Around 70m ethnic Chinese live outside mainland China. Some are descended from those that moved abroad during China's imperial expansion from the 12th to 15th centuries, settling in what is now Indonesia, Vietnam, Malaysia and Myanmar. More recently many have migrated to the US and to other developed countries. 

Overseas Chinese are the biggest innovators in mainland China, around 68pc of the foreign direct investment that China received in 2009 came from places where ethnic Chinese are the biggest group such as Hong Kong, Singapore and Taiwan. Moreover China's government has funded hundreds of Confucius institutes to teach the Chinese language and nurture China's soft power abroad. In business, cultural ties matter because they lower transaction costs. And cultural affinity can super charge communication and foster instant trust the glue of successful business. In this way kinship still counts to foster relationships. Chinese-Americans naturally do business with Shanghai and Singapore.

The Hispanosphere and the Anglosphere

In a similar vein research shows, for the hispanosphere and the anglosphere, the two great European cultural blocks, that the flows of people and information are a massive 93pc higher when compared with traffic flows with the rest of the world. Moreover it is calculated that Spain's ties with its old ultramar provinces in América Latina are even closer than Britain's with its ex-colonies in the US, Ireland, Canada, Australia and New Zealand.

Interestingly, the World Values Survey divides the world into big cultural zones as the chart above shows on the basis of common values. The Anglosphere is currently the world's biggest economic block, it accounts for more than 25pc of the world's GDP. It produces more scientific papers than any other country. In addition, English is the closest the world has to a lingua franca. It has dominated international business and diplomacy in the 20th century and into the 21st century. 

Language Diversity in the 21st century

The Chart below shows the US, China, Mexico and Russia have over 100 languages each, but score relatively low on the diversity index, because English, Chinese, Spanish and Russian have grown to the point where they threaten to destroy the many tiny native languages. By contrast, linguistic rivalry and relative poverty have kept a single language from dominating countries like India and Nigeria, which score high on the diversity index. Both poverty and geography combine to make Congo and Papua New Guinea the most linguistically diverse countries in the world.

Chart of Language Diversity in 21st Century Source: The Economist

Markets and the Power Shift to the Emerging Economies

The weight of economic activity is shifting from the US & Europe to Asia & Iberoamérica

Energy squeeze – higher prices

The longer-term energy story is complex. The developed world is now barely increasing its use of energy and energy demand is projected to remain stable for the forseeable future, at least for the next couple of decades. Energy use in the emerging world, by contrast, continues to grow relentlessly every year.

The emerging world now uses more energy than the old developed world. This is what you would expect to happen, for as the weight of economic activity shifts from the US and Europe to Asia and Iberoamérica, so too will demand for energy. But it means the price paid by the developed world will be increasingly determined by the emerging world. The so called “West” (the US and Europe) has never been in this position since industrialisation. There is a weak parallel with the rise of Opec in the 1970s when the oil producers cut supply and quadrupled the price. At that time, the US and Europe found other sources of oil and reduced their dependence on Opec. But this time the squeeze comes from the demand side, not the supply, and there is not much the US and Europe can do about it.

And what next for the commodities markets 

The Chart below provides an overview contrasting developed countries with emerging economies' share of GDP and their world share of some of the most important commodity markets and other indicators:

Source: The Economist Daily Charts

Many analysts believe that the long-running boom in commodity prices (for some of the world's most important raw materials) has been driven up by financial speculation as much as physical need. Hence the commodities market may be heading for a massive crash on the scale of sub-prime. The commodity boom has not reached the excess so evident in the subprime era but it is pretty big nevertheless. Recently, some analysts have speculated that the gigantic merger between the mining company Xstrata and the commodity trading house Glencore is a signal of the prospect of a looming crash in the commodities markets. Just before the subprime crash, many massive subprime acquisitions came at the end of a massive boom in the securities markets and those doing the deals appeared to have sensed that the party was coming to an end and that they had to do something spectacular to be able to reap the super profits to be had in the final stages of the blowout. The Geo-Trade Blog believes it is possible that this deal may be the signal that the commodity markets are today where debt markets were on the eve of the credit crunch.

Printing Money and Bubbles in Markets

In the immediate aftermath of the subprime crash, printing money or quantitative easing (QE) as it is also known helped a wide variety of financial institutions to avoid facing up to their losses, covertly recapitalising US and European banks that were, to all intents and purposes, insolvent. Over the last few years protests from countries including Thailand, Australia, South Africa and China have been heard complaining that the US' unprecedented monetary expansion was responsible for causing dangerous bubbles in commodity markets going way beyond US equities. The US government also knows, although it denies it, that the more money it prints, the more speculative pressures push up global food prices. 

While the causes behind the Arab Spring unrest in 2011 are complex, it must be noted that it was surging food price that provided the spark. Hence the large emerging economies view "quantitative easing" as a developed country policy aberration, dressed up as a "legitimate technical solution" that they do not agree with at all. Brazil's finance minister has described it as "throwing dollars out of a helicopter and the Russian PM has described it as "economic hooliganism". The emerging economies clearly perceive the current trials and tribulations of the developed countries very differently to the conventional wisdom that underpins the policy decisions and assumptions that justify QE in the developed world. Emerging Economies are aghast that the US is now shouldering declared federal liabilities of $9,100bn - making it by a long way the world's largest debtor. Furthermore US Government debt is set to reach 42pc of GDP by 2015 according to official estimates. And more and more interest is being shown in the fact that the US' total sovereign liabilities including off-balance sheet items such as Medicare and Mediaid amount to $75,000bn - no less than five times annual GDP.

 

Here comes Iberoamérica - a new regional power in 21st Century

Leaders arriving at the CELAC Summit in Caracas, Iberoamérica

The 33 Heads of State of the Iberoamerican countries met in Caracas at the beginning of December 2011, when they left they had created a new International Forum for Integration for Iberoamérica called  Comunidad de Estados Latinoamericanos y Caribeños (Celac). This organisation excludes the US and Canada and its main objective is to build its own financial architecture that will protect it from the financial crisis that has hit the US and Europe. The new CELAC bloc accounts for a population of around 550 million people with high GDP (PIB, Producto Interior Bruto) growth rates as the diagram below shows:

The idea to found a new Comunidad de Estados Latinoamericanos y Caribeños has come about over the last three years. Just when the markets were beginning to crumble in December 2008, the then, President of Brasil, Luíz Inácio Lula da Silva, called the Presidents of the 33 countries to the first Summit, Cumbre de América Latina y en el Caribe (Calc) to discuss strategies to safeguard the region against the financial crisis. Later in February 2010, the Calc met again in Cancún, México and it was there that they agreed that they needed a permanent forum for discussions, hence the birth of Comunidad de Estados Latinoamericanos y Caribeños (Celac) at the end of 2011 in Caracas. 

As well as discussing the financial crisis, the Presidents of Estados Latinoamericanos y Caribeños also discussed other business related to the cohesion and stability of the region. President Evo Morales asked for support for Bolivia to reach an agreement for sea access for his land-locked country. The President of Colombia, Juan Manuel Santos, advocated for a common policy to rid the region of narco-trafficking. 

Español, common language of the 21st century

The potential of español as a world language is increasingly based on its great diversity. The hybridisation of español in so many countries is becoming a major advantage in a globalised world. At the beginning of the 21st century, many believe there is a renewed "Siglo de Oro" in the Spanish language, partly because there has never been so many people writing in Spanish and writing in such an interesting way. The existing prejudices between Iberoamérica and Spain are being broken down and eliminated and a new common linguistic territory is being created in español. Evidence of this is the founding in 2011 of Amazon.es, selling books, DVDs and other products to the increasing market of Spanish speakers worldwide. Amazon (and its Kindle e-reader) already has plans to enter Chile, Argentina and Brazil too.

Interestingly, speakers of español are not limited to América Latina and Spain, instead within the EU (excluding Spain) there are 30 million Spanish speakers. Currently in the US, there are 40 million Spanish speakers and in Brasil, 5.5 million Spanish speakers. The US is further predicted to be the world's largest Spanish speaking nation by 2080 according to recent studies.

The recently celebrated XXV Feria Internacional del Libro de Guadalajara, México in 2011 celebrated its 25th anniversary  with a list of 25 secretos literarios de América Latina. In the video below, the writer, José Saramago, explains in his own words the importance of the cultural and commercial exchanges already taking place within the Iberoamérica region in the 21st Century.

México – a new regional power in the Américas

México in the 21st Century

The stereotypical image of México, particularly the steady flow of security-related stories in the international media, is not flattering. However the numbers tell a different story.

México is roughly the size of Western Europe. It is the world's 14th largest economy, producing 2.2pc of global GDP and the world's 10th largest producer of oil. Goldman Sachs and The Economist predict that México has the potential to become the 7th largest economy within the next 40 years. It has a young and urbanised population. Around 50pc of the population are under 25 and around 77pc live in urban areas.

México is a trading nation with more Free Trade Agreements than any other country (13 agreements with 44 countries including the US and the EU). Around 80pc of Mexican exports have a US destination. Nearly 1million people and $1bn in trade travel between the US and México border everyday – making it the world's busiest border.

It shares similar values to Europe and the US: political openness, free trade and a willingness to debate and act on key 21^st century challenges. México is a member of the G20 and was previously a co-ordinator of the G5 major emerging economies.

Position in the world in 21^st century

However México does not yet project a clear strategy for its long-term development. It remains uncertain about its role and position in the world – now and in the future. It has yet to work out whether it is serious about challenging Brazilian regional leadership, and about becoming a global power too.

It appears that within México there are still conflicting views on how much it should aspire to play a wider regional role. It has a strong history of non-interventionism in the region. But México could do so much more in light of its economic weight. It could position itself as a convening power and deal-maker in the Americas. It could also be much more demanding of other neighbouring countries in the region if it wanted to.

Relations with the US have never been better

The importance that the US attaches to its bilateral relationship with México was illustrated in President Calderón's first State Visit to Washington in May 2010. President Calderón was granted generous access to President Obama, a one-on-one meeting, a press conference and he was granted only the second State Dinner to be celebrated under the Obama Administration at the White House. As a result both President Calderón and President Obama have built a genuinely strong and productive relationship.

During the State Visit, President Calderón became the first Mexican President to lay a wreath at Arlington National Cemetery's Tomb of the Unknown Soldier. Previously Mexican presidents had declined this request, not wanting to dwell on US military incursions into México, but President Calderón's visit to Arlington represented the 21^st relationship between México and the US, in which Calderón used the opportunity to recognise the role of Mexican Americans in the US military.

The State Visit showed that México-US relations were on a good footing with the US characterising the relationship as: “The United States is proud to be México's friend, partner and neighbour...we will succeed or fail as one...”

Mexican innovations for the north

The US economy has been undergoing a massive economic structural shift over recent decades with those at the bottom feeling the pinch of stagnating wages and even more so after the 2007 financial crisis. Mexican companies, seeing an opportunity, a growing demographic of increasingly poorer people in the US, have begun to export their own emerging economy innovations. For example, MedicallHome, a Mexican company that provides medical advice over the phone for $5 a month, as well as access to its network of 6,000 doctors has expanded north of the border with great sucess. Similarly, a subsidary of Carlos Slim's América Móvil, has also been selling pre-paid mobile phones popular in México. More than 3 million phones have already been sold in the US.

So what role should México play

México appears to be punching below its weight in the region in the 21st century. Even though it has only half the population of Brazil, geographically it is the US' closest neighbour and in many ways its most like-minded “ally” in the Americas, where more countries are increasingly becoming hostile to free trade and political openness. If México is serious about becoming a major emerging regional player, it needs to begin to act like one in the eyes of the other players on the world stage.

To do this, México needs to gain momentum across bilateral and multilateral issues to win it influence with the other big players like the EU and China. If this were to happen, México would be in a position to become a strong regional player with the ability to shape the outcomes on some of the big questions of the 21st century. The key challenge is, will México and its leaders step up to the fray?