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The Comparison of Economics Situation in Mexico and in Latvia
1.1 Economy in Mexico
Official name: United Mexican States. The economy of Mexico is the 12th largest in the world, with a gross domestic product that surpassed a trillion dollars in 2004, measured in purchasing power parity.
Mexico has a free market and export – oriented economy and is firmly established as an upper middle – income country. In spite of Mexico’s unprecedented macroeconomic stability, which has reduced inflation and interest rates to record lows and has increased per capita income, enormous gaps remain between the urban and the rural population, the northern and southern states, and the rich and the poor. Some of the government's challenges include the upgrade of infrastructure, the modernization of the tax system and labor laws, and the reduction of income inequality. The economy contains a mixture of modern and outmoded industry and agriculture, both of which are increasingly dominated by the private sector. As an export-oriented economy, more than 90% of Mexican trade is under free trade agreements with more than 40 countries, including the European Union, Japan, Israel, and much of Central and South America. In 2006, trade with Mexico's two northern partners accounted for almost 90% of its exports and 55% of its imports. Mexico's Gross Domestic Product (GDP) in purchasing power parity (PPP) was estimated at US $1.134 trillion in 2006, and 741.5 billion in nominal exchange rates. As such, its standard of living, as measured in GDP in PPP per capita was US $10,600. The World Bank reported in 2007 that the country's Gross National Income in market exchange rates was the second highest in Latin America, after Brazil at US $820.319 billion, which lead to the highest income per capita in the region at $7,870.
2.1 Economy in Latvia
Official name: Republic of Latvia. Latvia is an important industrial center, and this sector employs about 40% of the workforce. Latvia is a member of the European Union.
Its industries are extremely diversified and include the manufacture of motor vehicles, street and railroad cars, synthetic fibers, agricultural machinery, pharmaceuticals, electrical equipment, electronics, and textiles. Food and dairy processing, distilling, and shipbuilding are also significant, and tourism has developed as a source of foreign income.
Trade is primarily with Russia and other former Soviet republics, as well as Germany, Sweden, and Great Britain. Latvia has been engaged in transforming the state-run economy, inherited from its years as a Soviet republic, into a market economy; reforms include the abolishing of price controls and the initiation of privatization. The country has encouraged foreign investment. Dairying and stock raising remain integral to the agricultural sector, which employs more than 15% of the labor force. Grain, sugar beets, potatoes, and vegetables are also important. The nation has valuable timber resources.
Reforms implemented in Latvia and integration in the EU has left a positive impact on economic development of the country. Latvia has shown the highest economic growth rates in the EU. Since 2001 the average annual growth of gross domestic product in Latvia was 8.1%, in 2005 GDP increased even faster by 10.2%. Rapid economic growth of Latvia continues in 2006 as well. GDP in the first 3 quarters of this year has increased by 11.9% in comparison with the respective period of 2005.  The high growth rates are achieved due to stable dynamics of domestic demand and increase in exports.
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