NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, September 18, 2012

Mexico has a large, stable and growing economy, currently the 14th largest economy in the world and, according to Goldman Sachs, will be the fifth largest economy by 2050.

Mexico has such a solid macroeconomic context that — among the only four countries to have recovered all the lost ground after the stock markets crashed during the 2008 financial crisis — Mexico is the fastest-growing country according to the MSCI index, surpassing the U.S., Singapore and Sweden.

According to the Mexico Ministry of the Economy, 35 percent of Mexico’s Gross Domestic Product (GDP) and 73 percent of the country’s jobs are created by small and medium sized companies (SMEs), which are the fastest-growing segments of the economy. While only 21 percent of small and medium sized companies are subject to bank financing, most startups and SMEs have no access to credit.

In order to boost entrepreneurship and aid the development of startups, Mexican government institutions, particularly the Ministry of Economy and Nacional Financiera, Mexico’s development bank, decided to solve this limited access to credit by encouraging financing of these projects through venture capital.