The duties levied on the companies had also been relaxed between these countries. This program was called as ‘The Border Industrialization Program’. With the implementation of NAFTA called as North American Free Trade Agreement, Mexico manufacturing has tripled.

Earlier, Mexico attracted manufacturers who perform only simple assembling. But, later with the development in this industry many big shots with complex products started flowing in to Mexico. China attracted many inexpensive commodity manufacturing in world level. At this time, US were looking for a similar place like china which could produce low cost products. Mexico manufacturing proved as the exact solution for a situation like this. Many foreign firms started setting up their operations and manufacturing in Mexico.

Methods of implementation :
Mexico manufacturing companies used five common methods:

• Contract or sub-contract manufacturing – This method is a form of outsourcing where Mexico manufacturers manufacture products for another company. This method will be used for companies who like to drive down the production cost involved in setting up infrastructure.
• Joint venture – Two or more firms invest for a single manufacturing.
• Full-owned – As its name suggests, the whole capital and profit belongs to a single company.
• Shelter – In this method, a firm can operate manufacturing and assembly in Mexico without even having knowledge of the subsidiary.
• Outsourcing – This is almost same as contract or sub-contract, except that this method outsources people rather than products.

Advantages :
The price of the land marked as one of unique Mexico manufacturing companies’ advantage for its development. Unlike other developing countries, the land cost remain cheap in Mexico which attracted many manufacturing in Mexico. Many firms which require large engineering content preferred Mexico than to other countries. Its proximity to US also helped the manufacturing companies for coordinating activities. Products got manufactured soon as the raw materials were readily available nearby and the products got delivered in time because the markets were nearby.

By the end of the 19th century, the capitalist economies were out of breath from the cyclically recurring crises. This was observed by Karl Marx, who was vowing that the capitalist system would collapse after the next crisis caused by the overproduction of goods. And everything told us that the prognosis of Marx was about to come true, because overproduction had become a chronic problem of the capitalist economies – more goods were produced than there were customers. Drastic measures were needed, and the solution was found – the pyramid of consumption was turned. If previously the man first produced and then consumed, now he first consumed and then produced. By the way it was achieved, four forms of socialism can be distinguished.
State Socialism, or the European model of socialism. In this model the distribution of public goods is a state affair. The reasoning is simple: the state removes the excessive efficiency of the companies through taxes and distributes it among the citizens.
Taxes have always existed, but in the 20th century they were collected, not only in favor of the ruling class (the bureaucracy) and public needs, but also to maintain the solvency of all its citizens, which naturally led to an increase in the tax burden. Actually, the money that the state gives to a citizen through various forms of social services and guarantees, are returned to the economy, when he buys goods and services for which he previously would not have had money, respectively, enterprises can easily expand the production of these goods.
But this concern about the proliferation of citizens turned to parasitic attitude. A striking example of this is Germany, where people prefer to grow old living on unemployment benefits, rather than look for a job, the payment of which may be below the public benefit. Thus, the businessman is between the hammer and anvil – high business taxes strike on the one hand and on the other wage workers do not allow to reduce costs by requiring payment not lower than the state standards. And the introduction of minimum wages became generally a lethal drug from poverty.
Of course businessmen have been shifting production to countries where there are no such problems for business. It reached catastrophic dimensions when China chose a path of capitalist development. China, with its relatively educated and hardworking people and very cheap working hands, has become the funnel, which has sucked in the entire world economy.

The second, which is very close to the first, is the Nordic model of socialism. We may call it public socialism, because the primary role in the redistribution of public domain in these countries does not belong to the state, but to local self-governed institutions – municipalities. Moreover, although the level of the social expenditure is even higher than in the rest of Europe, the degree of the governmentalization of the economy is significantly lower. Here such an unprofitable large-scale nationalization of industries didn’t take place, as in other European countries, where this was a way of trying to avoid social disruptions caused by massive dismissals from bankrupt enterprises. And though this model worked even better than the pan-European one, the outcome was the same – bankruptcy.
A special case is Japan. This model can be called “corporate socialism”. In Japan, the brunt of caring for workers is not on the state, but on the corporations in which they work. Corporations, for example, provide their employees with housing. The outcomes of such an economic system are not very good either- corporations have become totally unwieldy. Japan is already in the second decade of stagnation, despite all the efforts of the Government of Japan to revive the economy, be it the zero discount rate, or the maintenance of the low-rate of the yen. Japan is not competitive with the new Asian tigers of economy, which have no such an onerous social system for business.
And finally, the fourth model of socialism – the United States. By way of redistribution of wealth, we can define it as credit socialism. The main feature of this model is, of course, is the developed mortgage system, which is supported by the State. In this model, housing plays a role of locomotive of the economy as a whole, as the increased production in this industry gives a multiplied effect – the construction provides with contracting other industries.
This model of socialism owes its emergence to the Great Depression. Its first institution was the Federal institute for bank housing loans, which was established in 1932, and whose activities are exempt from federal and local income taxes. The bank is something middle between a credit union and the central bank for 12 private regional mortgage banks (by the way, at this moment 8 of these 12 banks are in fact on the verge of bankruptcy). But, of course, the most famous American mortgage institute is the Federal National Mortgage Association, better known as Fannie Mae, established in 1938 by Franklin Roosevelt. In 1968, from Fannie Mae was allocated from the Government National Mortgage Association Ginnie Mae, which deals with social housing, and the Fannie Mae was privatized, but it is still an organization that is sponsored by the U.S. government. In 1970, the U.S. government created the federal mortgage corporation Freddie Mac, which, in essence, is the same as Fannie Mae, but according to the original idea of the States it had to create competition and thereby lower the costs of the mortgage loan. In 1999, Bill Clinton squeezes through the facilitation of the provision of mortgage loan, and the final outcome of it is known to all of us.
The system worked as follows, a mortgage association buys mortgages from banks with the money received by the associations from issuing their own securities, which were bought by both national and foreign investors, including the government. The popularity of these securities was due to the fact that in any case the U.S. government itself would, as it happens, take the responsibility for the payment of these securities. It is a kind of worldwide financial vacuum cleaner for pumping money from the global economy and loading it into the United States. While for the sake of fairness it should be noted that, for example, the easy money of Arab sheikhs has simply nowhere else to go. That is the money earned by them in the export of oil in the United States, are brought back to America.
But the United States is not the only country that went on that path. From the U.S. experience of the “market” stimulation have benefited economies from so many countries around the world. A very impressive example, when the student has surpassed the teacher is Spain, where the mortgage is provided for a term of up to 50 years. By stimulating housing Spain has demonstrated over the past decade a staggering growth, but with the start of the global depression this bubble burst, too.
Thus, at the moment we have, a crisis of all the old capitalist economies, this crisis is not of a conjecture type, as it is often stated by government officials in public statements, claiming that the crisis will stop by itself within one or two years, for which it is only sufficient to boost up consumer demand and provide additional liquidity to banks, but it has touched the very system, affecting the way of formation of consumer demand in developed countries. But the assertion that the main victim of the crisis is the U.S. is not true – the numbers say otherwise.
Many may reasonably argue that not all comes down to cash, that in the modern economy the human capital is crucial. But according to this indicator the world leader is Taiwan. According to the latest testing of students in the framework of the program PISA, which was attended by 57 countries, including all 30 OECD countries, i.e. all countries have the official status of developed countries, Taiwan ranked first in the world by the level of mathematical knowledge, on the second position is Finland, on the third comes Hong Kong, Korea on the fourth, and on the fifth the Netherlands. And, for example, the United States was the 35th, and Russia the 34th. In the rating of the level of scientific knowledge students from Taiwan ranked fourth, the first was Finland, the second Hong Kong, Canada the third and the fifth Estonia. United States in this ranking is in the 29 position, and Russia, respectively in 35. Thus, the level of knowledge, both in the U.S. and Russia, is lower than the average among the countries that participated in the study. By the way, Kyrgyzstan in both ratings took the last 57th position. Unfortunately, nothing can be said about the level of knowledge of Kazakh students, because they were not tested, but considering the above mentioned figures, I am afraid that they would not be very good for Kazakhstan.
Knowledge is, of course, good, but without investment, it will not bear fruit. And then one should pay attention to what occupies the minds of the world powers. At a time when the United States and European countries spend the already holey budgets of their countries to support the banks and broken motor car companies, the Arab and Chinese sovereign funds have started buying up the world and especially the European economy. By the leaders of Western countries, such activity of the eastern investors is welcomed investors, because thanks to it is temporarily stopped the fall in stock indices, and the crisis seems to have ceased to grow rapidly. But the crisis did not go anywhere, as consumer debts to the banks, and bank debts towards each other continue to grow as a snowball.
By giving money to the banks, the governments, first of all, do not allow the financial system to become healthier, and secondly, they strengthen their own debt, and, thirdly, exacerbate the situation with the debts of financial sector. State leaders have forgotten the simple truth, that you cannot save the private sector at the cost of the bankruptcy of the state. And if Europe has already made its choice, the Europeans will be working in enterprises owned by Asians, the United States still has a chance to survive as a great power, but all measures taken up to this time by the U.S. government, force to have doubts as to this question. But I am confident that America has a plan for economic revival, only it is too radical to start bringing it into life now, the crisis has not yet gone so deep as to hold open the bankruptcy of the old economy, and to begin building a new one.

The volume of retail sales in the United States grew by 0.5% in May 2009 compared with that of April and amounted to 339.99 billion dollars. Such data was released on Thursday, June 11, by the US Department of Commerce. Analysts had expected that this figure would increase by 0.6%.

In annual terms, retail sales in the United States decreased by 9.6% in May 2009.

According to revised data, the volume of retail sales decreased by 0.2% in April of this year.

The trade balance was positive in the amount of $ 31.3 billion, which is $ 38.8 billion less than that in January-April 2008. In the trade with foreign countries the balance was equal to $ 24.7 billion (down 34 billion dollars), and with the CIS countries – 6.6 billion dollars (a decrease of 4.8 billion dollars). Export of the Russian Federation in January-April 2009 amounted to $ 77.8 billion as against that of January-April 2008 – a decrease by 47.7%, including export to foreign countries – $ 65.5 billion (down by 48, 1%), and the CIS countries – $ 12.3 billion (down by 45.4%).

“Reduction of the value of Russia’s exports in January-April 2009 was due to a fall in average prices of exported goods and because of the physical volumes of export supplies”, – said FCS. The basis of Russia’s exports in January-April 2009 to foreign countries amounted to fuel and energy goods, the share of which in the commodity composition of exports to these countries amounted to 67.4% (in January-April 2008 – 72.8%).

Imports of Russia in January-April 2009 amounted to $ 46.5 billion, which decreased by 40.9% compared with that of January-April 2008, including from foreign countries – to $ 40.8 billion (down by 39.5%), and from CIS countries – 5.7 billion dollars (a decrease of 48.9%). “Reducing the cost of Russia’s imports in January-April 2009 is due to a decline in average prices of imported goods, and the collapse of their volume”, – said FCS. In commodity composition of imports from foreign countries the share of machinery and equipment accounted for 45.5% in January-April 2009 (in January-April 2008 – 55.5%).

The main trade partners of Russia in January-April 2009 among the foreign countries were: China, trade with which amounted to 10.7 billion dollars, Germany – 10 billion dollars, Netherlands – 9.5 billion dollars, Italy – 8.5 billion dollars, Turkey – 5.7 billion dollars, United States – 4.9 billion dollars, Japan – 4.5 billion dollars, France – 4.5 billion dollars, Finland – 4.1 billion dollars, Poland – 4 billion dollars.

Meanwhile, the positive trade balance of Russia on the methodology of the balance of payments in April 2009 decreased by 1.7% over March 2009 and reached 6 billion 688 million dollars, said the report published today by the Bank of Russia. In general, for January-April of this year the surplus was 26.442 billion dollars, which is 2.4 times lower than that of the same period of last year.

At the same time, as compared to April 2008, the trade surplus decreased 2.2 times (from 14 billion 835 million dollars).

Exports of goods from Russia in April 2009 compared with that of March 2009 increased by 0.5% and amounted to 21 billion 279 million dollars. Imports to Russia in April 2009 increased by 1.55% – up to 14 billion 591 million dollars. Export from the Russian Federation decreased by 47.1%, import – by 42.6% Compared with those of April 2008.

Thus, foreign trade turnover on the methodology of the balance of payments in April 2009 amounted to 35 billion 870 dollars, which is 0.9% higher than that in March 2009.

Russian GDP may decline to 6-7% and inflation may become below 10% while maintaining the trend of stabilization in the economy in 2009, predicts Oleg Vyugin, the president of the board of directors of MDM-Bank, ex-head of Federal Financial Markets Service. “If Russia’s economy is going towards stabilization, we can get a reduction of GDP at the level of 6-7% the following years, taking into account the effect of the fourth quarter of 2008. Inflation under such scenario may be less than 10%”, – said Vyugin.

The new work of the RF Ministry of Economic Development forecasts a fall in GDP in Russia by 6-8% this year, a number of officials and experts do not rule out a deeper downturn in the economy. The official forecast for inflation this year is 13%. “I would describe the present situation in the Russian economy as stabilizing. I think later (in the short term) we will flounder somewhere at the current level, which is now reached”, – said Vyugin.

In his view, the projections for the longer term can be built no earlier than autumn of this year. “This is due to the fact that consumers’ and producers’ views on the trends of development of economy and the strategy of their behavior results from the signals that they receive from the economy during a few months. I think that by the fall of this year final opinion on the further development of the Russian Federation can be formed on the model of the letter L, not W, as some think now, “- said Vyugin.

“The economic recession, which is expected in the current year, for the most part, is a consequence of massive disruption in the global economy and the consequent drastic reduction in our exports,” – quotes a leading paper from the speech of Minister of Economics and Technology of Germany Karl-Theodor zu Gutenberg at the meeting of the Cabinet of Ministers.

According to him, the two existing government programs to improve conditions allow Germany in a national scale “to survive better” compared with other countries. In this regard, zu Gutenberg sees no benefit in taking the third market program, as called for by some politicians and experts.

“Anyone who believes that we must “add” a third program will get just the opposite effect: undermining the confidence of investors, consumers and taxpayers. Waiting and frustration – this is the last thing our country needs “, – stressed the Minister.

He said that the further stabilization of the banking and financial sector was the main problem in the process of solving the issue of returning the German economy on a course of stable growth.

“So I think that the primary purpose of developing a rapid and effective solution is the isolation of “toxic securities” on bank balance sheets” – said the head of the Ministry of Economy of Germany.

He also expects further decline of exports this year, but also predicts, that the global economy recovery will stabilize in this sector in 2010.

Almost the same predictions, according to experts in the ministry, can be attributed to the construction investment. “The government market program has a direct supporting influence on it,” – it is said in the press release.

Less encouraging forecast is given in the paper for the field of employment: “In the current year, unemployment will increase by an average of 450 thousand and will reach the level of 3.7 million people, and next year it will increase approximately by 900 thousand and will be 4.6 million people.”

The Minister called personal consumption an important stabilizing factor, which in this period will be exposed to only a very slight decline due to short-term program of government (in particular, reduction of tax on incomes of citizens, reduction of the size of mandatory contributions to health insurance, payment of benefits to children and increase of pensions).

Wide economic benchmarks of the spring forecast, as noted in a press release, will be the basis for the planned evaluation of tax revenues, as well as for meetings in the Council of financial planning, in regard with federal budget, land, communities, and contributions to social insurance.

The Minister of Finance of the United States arrived in China. Economies of the two countries are so tightly linked to each other that any wrong movement can lead to the collapse. Head of Finance of the U.S. came to persuade Chinese colleagues not to do sudden movements.

“A successful transition to a more balanced world economy will require significant advances in the world. But the most important changes must occur in China and the United States. The welfare of the rest of the world will depend on our success. And the effectiveness of U.S. policy in part will depend on China,” – said Gaytner.

But the questions of the effectiveness of this policy make China nervous. All the recent years, the country has bought U.S. treasury bonds – sort of IOU of America. They have always been considered very reliable: after all American economy is backing them. As a result, almost 70% of China’s reserves are located in dollar-denominated assets; their reliability is under big questions now.

And if China suddenly decides to start getting rid of dollar reserves, it is clear that it will be followed by a collapse, which will affect both the United States and China. Because of that the tone of statements is similar to that of ultimatum. “It is in the interest of China that the U.S. economy once again begins to show growth. We will rise or fall together. We are in the same boat, and it is good that we paddle in one direction,” – U.S. Secretary of State declares Hillary Clinton.

But the concern of China in recent years is only growing. The United States are trying to solve all the problems solely by printing new dollars and releasing more and more debt bonds. The last example is the bankruptcy of General Motors. At first glance everything seems to be done by the rules of the market economy: debt restructuring, sale of assets, if it was not for one significant “but” – this is again done with the money of the government. And it is not taken from taxpayers, but is simply done by re-printing and producing U.S. IOU.

A special board in New York shows the astronomical amounts of debt – the United States owes globally more than 11 trillion dollars – to 94 thousand dollars per household. To rescue its economy the United States is going to issue debt receipts for another 3 trillion dollars this year. However, the more they are produced, the more doubts are heard about their reliability. So suddenly oil prices got higher once again – almost of pre-crisis rates; and stock markets are also rising.

This means that it is very difficult to build long-term projections, including budget and schedule of entire countries. Over the past 3 months almost all of the world indices have increased – the Russian stock exchange has risen by 80%, German – by 40%, and the Chinese – by 25%. But one can not exactly say whether that means improvements in the real economy or not.

This was stated by EU Trade Commissioner Catherine Ashton following a meeting with Russian Minister of Economic Development Elvira Nabiullina on the sidelines of the St. Petersburg Economic Forum.

Nabiullina also commented with enthusiasm on the prospects of joining the WTO.

“Indeed, there is a feeling that we are coming to an agreement with the EU. We hope that we will complete major negotiations by the end of the year. We have built a schedule that must be completed by that date” – brings the words of the Minister agency RIA Novosti. She stipulated that an unresolved issue remains in the negotiations with the EU; that is the issue of export duty on Russian forests, which is not beneficial for such European countries as Finland.

Deputy of Nabiullina Maxim Medvedkov, who has headed the Russian delegation in negotiations on the WTO for a long time, pointed out that several months will pass between the completion of negotiations and the actual entry of Russia into the WTO. “We have actually agreed with the EU on the understanding that negotiations would be completed before the end of the year. But between the completion of negotiations and acceptance at least six months will pass” – said Deputy Minister.

Catherine Ashton and the U.S. representative for trade negotiations Ron Kirk are the highest ranked foreign guests of the Forum, where many Russian leaders will have speeches, including President Dmitry Medvedev.

Russia has been negotiating with the WTO member countries more than 10 years. The organization includes 153 countries; all of them must give their consent to the entry of Russia in this organization.

Russia remains the world’s largest economy outside the WTO.

Previously the obstacles for Moscow to become a member of WTO were its strained relations with neighboring countries, such as the introduction of the ban on the importation of wines from Georgia in 2006.

As BNP Paribas Bank President Philippe Delpal told the Russian service of BBC, the main theme of the forum should be the investment climate in Russia. “I would like to know how we should restructure our strategy to conduct business in Russia. How we, foreign investors, can invest more in the country, and how we can create a safer place for investments in Russia”,- explained Delpal.

Organizers have invited over 2 thousand participants to the forum, including representatives of the political elite and leaders of major corporations such as Exxon Mobile, Gazprom, TNK-BP, and ONEKSIM. But shortly before the forum it has been revealed that not all of the invited people will attend the program. “The crisis is not the best time to overspend” felt heads of international corporations, and stayed home.

But even those who come are unlikely to listen to the recommendations of the forum on the crisis. The program, offered by the organizers, at first glance, is large: there is a session to discuss the causes of the crisis, its impact on different sectors of business, even the history of previous crises, and there are also planned roundtables for the companies in banking sector, oil, transport, and even film.

The forum members give particular attention to the subject of reserve currency. Opinions about the fact that dollar, as such, needs to have an alternative appear increasingly in recent times. A few weeks ago, representatives of China and Brazil discussed the possibility of using national currencies instead of dollar in trade transactions.

In general, however, from the 13th Economic Forum in St. Petersburg experts and analysts are not waiting for anything good. Members who attend the forum will most probably leave without a prescription from anti-crisis, and without hope for the new rules of doing business in Russia. And even the planned concert of the group Duran Duran on Palace Square is threatened to be spoiled by rainy weather.

Leaders from 16 major economies have been invited to a “preparatory session” on April 27-28 in Washington to “help generate the political leadership necessary” to achieve an international pact to cut greenhouse gas emissions later this year, it said in a statement.

It said the meeting would spur dialogue among developed and developing countries about the issue, “and advance the exploration of concrete initiatives and joint ventures that increase the supply of clean energy while cutting greenhouse gas emissions.”

The major economies include: Australia, Brazil, Britain, Canada, China, the European Union, France, Germany, India, Indonesia, Italy, Japan, Korea, Mexico, Russia, South Africa and the United States.

Denmark, which is hosting a U.N. meeting at the end of this year to forge a pact that would take over from the Kyoto Protocol, and the United Nations were also invited.

The group’s preparatory sessions would culminate with a major meeting on the subject in Italy in July.