Dead Calm
On the storms Mexico survived, the winds it wasted, and the one it cannot afford to miss
A dinner in Madrid this past Saturday. A close friend — someone I admire, someone who thinks carefully — said that we’ve forgotten what was good about Mexico. That somewhere in the noise of recent years, overwhelmed by what went wrong, we lost sight of what the country actually had going for it. That the fundamentals were real. That there was something worth recovering.
Around the table, everyone had something to say. Strong opinions, half-formed arguments. The conversation moved fast, the way it does when people care.
I listened. And I realized I didn’t have a clean answer. Not because I disagreed, but because I hadn’t ordered my own thinking well enough to say what I actually believed. Nostalgia felt wrong. MAGA came to mind. But I couldn’t quite name why, or what the better frame was.
So I did what I always do when a conversation outpaces me: I came home and started writing.
Because nostalgia, however sincere, is a compass that points backward. And Mexico cannot afford that direction right now.
The Economist recently described Claudia Sheinbaum’s government with a single, precise word: becalmed. A ship without wind. Not sinking. Not sailing. Just there, in the middle of the water, waiting.
Mexico’s economy grew 0.8% in 2025 — Sheinbaum’s first full year in office. The worst growth rate since the pandemic. The slowest of any large economy in Latin America. Investment fell 6.6%. Public investment alone collapsed by 28%, the steepest drop in over three decades. GDP per capita slipped back to what it was in 2017. Nine years. Gone.
The government, predictably, calls it a blip. First years are always hard. A turnaround is just around the corner. We’ve heard this before — from this government, and from the ones before it.
But the problem was never one year. The problem is the pattern.
I. The History of Drifting
Mexico has never been comfortable with sustained navigation.
For more than thirty years, the country has lived with the promise of its own moment. The demographics were right. The geography was extraordinary. The trade agreement with the world’s largest economy was signed, sealed, celebrated. Mexico was going to be the next great emerging market story.
It never quite became that story.
In the three decades since NAFTA, the economy has expanded by roughly 2% per year — consistently below peers like Brazil, Turkey, or Colombia. Not a catastrophe. Not a transformation. A drift. And what makes it particularly hard to accept is that Mexico was, for much of this period, an unusually obedient student. It followed the Washington Consensus playbook with more discipline than most: fiscal austerity, trade liberalization, inflation targeting, privatization. It did what was asked. And it still fell behind.
Today, Mexico has 130 million people and barely registers in the global economy. Its share of world GDP has not grown. Its productivity has stagnated. Its place in the international conversation — the role a country of its size and position should be playing — remains far smaller than it ought to be.
We have lived, as a country, between two dangerous states: calma chicha — the sailor’s term for the dead calm when the sea goes glassy and nothing moves — and sudden, violent storms that shred the sails before anyone had time to prepare. The peso crisis of 1994. The global crisis of 2008. COVID. Each time, the storm arrived and found Mexico without an adequate vessel.
And in the calm years between storms, what did we do?
We built an economy of extraction, not creation. Decades of macroeconomic instability generated something more corrosive than poverty: a short-term logic of wealth that rewarded whoever was craftier and better connected, not whoever created the most value. The rent-seeker — the coyote, the comisionista, the company charging abusive prices behind opaque structures — became a cultural archetype. Not condemned. Admired. The system didn’t just tolerate extraction. It institutionalized it.
PEMEX. CFE. Telecomunicaciones. Sector after sector captured not to generate productivity but to generate rents — for the state, for its allies, for whoever had the right connections at the right moment. Competition was the enemy. Efficiency was irrelevant. And the formal economy, instead of expanding, became something to avoid: a trap of compliance costs, regulatory exposure, and tax obligations that the well-connected could sidestep and the small entrepreneur simply couldn’t afford.
The result was not just slow growth. It was active destruction of productive capacity. Fifty-five percent of Mexican workers informal. Productivity roughly one-third of American levels. Not because Mexicans don’t work hard, but because the system around them was never designed to compound their effort. It was designed to extract it.
We didn’t just miss the opportunity. We built institutions that made missing it structurally inevitable.
And the winds came. More than once.
NAFTA was real wind — structural, favorable, historic. Mexico had geography, labor cost advantage, and a trade agreement with the world’s largest economy. What it did not build, in those years of tailwind, was the apparatus to convert that advantage into compounding growth: a reliable rule of law, competitive energy, a tax base broad enough to fund public goods, a formal labor market that rewarded productivity over connections. The wind filled the sails for a moment. But the vessel wasn’t built to hold the speed.
The oil boom of the 2000s was wind too. It generated revenues that were consumed rather than invested — transferred into subsidies, patronage, and current spending that evaporated with the price cycle. The maquiladora model brought employment but not capability. Assembly without technology transfer. Jobs without the institutional scaffolding that turns jobs into productivity gains.
Each time, Mexico caught a favorable current and failed to build from it. Not from bad luck. From a system deliberately designed — through rent capture, through informality as policy, through the slow strangulation of competition — to consume opportunity rather than compound it.
The wind came. The sails were never quite right. And now, another storm is building on the horizon.
Sheinbaum’s Plan México talks of pushing the country into the top ten largest economies by 2030. It aims for investment at 28% of GDP. It promises 1.5 million new manufacturing jobs. These are not small ambitions. But Mexico lost 133,000 formal manufacturing jobs in 2025. And the economy would need to outgrow its peers by four percentage points annually — every year until 2030 — to even approach that ranking.
The ambitions are not the problem. The diagnosis behind them is.
Plan México is an industrial response to an institutional problem. More investment, more jobs, more domestic content — all worthy goals. But none of them are achievable without first addressing what structurally blocks them: a rule of law that capital cannot trust, an energy policy that makes competitive industrial production nearly impossible, an informality trap that keeps more than half the workforce outside the productive economy. You cannot sail faster by setting bigger targets. You have to fix the hull.
The Economist calls it tinkering. That is precise. A government willing to reshape the constitution when its political agenda demands it, but unwilling to touch the structural reforms that the economy actually requires. The pattern is not new — it has defined Mexican governance across administrations, across parties, across ideologies. What is new is the cost of repeating it.
Because the world has changed around Mexico in ways that make the old drift increasingly expensive. The geopolitical winds are shifting. The opportunity is real. And the window, unlike previous ones, will not stay open indefinitely. The demographic dividend is already narrowing. The geopolitical realignment that is searching for reliable manufacturing partners will find them — in Mexico, or elsewhere. Capital does not wait for institutional consensus. It moves on.
II. The Storm That Is Coming
But the calm is ending. And what replaces it will be both storm and wind — sometimes simultaneously, sometimes in the same gust.
Donald Trump’s trade policy has already hit Mexico’s largest export sector. Tariffs on cars, steel, and aluminum drove vehicle export volumes down 2.7% in 2025. The USMCA is now under formal review: by July 1st, the parties must decide whether to extend the agreement for sixteen years or begin the process of unwinding it. That is not background noise. That is structural uncertainty with a hard deadline.
And yet — this is the part that gets lost in the alarm — overall exports grew 7.6% in 2025, producing Mexico’s first trade surplus since 2020. The storm hit the headline sectors. The broader trade position held. The vessel took on water in some compartments and stayed afloat in others.
This is the paradox Mexico has to navigate: the same geopolitical forces that generate turbulence also generate opportunity. The fragmentation of global supply chains, the accelerating shift of manufacturing away from China, the search for alternatives in the Western Hemisphere — these are not hypothetical tailwinds. They are structural winds already in motion. Mexico’s geography, its labor cost structure, its proximity to the United States market, its network of trade agreements — these are real assets in a world that is actively repricing proximity and reliability.
But here is where the numbers require honesty.
The FDI headline — record highs, consecutive years of growth — tells an incomplete story. In 2024, new investment represented barely 9% of total FDI. The rest was retained earnings: foreign companies already in Mexico, reinvesting their own profits. Capital that was already there, deepening its roots. Not new capital choosing Mexico for the first time. New FDI since 2022 has declined to a ten-year low. What Mexico is capturing, so far, is consolidation — not transformation. Companies that were already here are staying and expanding. Companies that were considering Mexico are still, mostly, considering it.
The nearshoring moment is real. The nearshoring capture is not — not yet, not at the scale the opportunity demands. Part of the reason is structural: a country still optimizing for cheapness is not naturally positioned to capture the kind of investment that sophisticated supply chain relocation actually requires.
And this is where the argument has to go somewhere uncomfortable.
Because the failure to capture that opportunity is not only a government failure. It is also a private sector failure. The same rent-seeking logic that shaped decades of Mexican business culture — compete for access, not for efficiency; protect your position rather than build your capability — is still operating. Mexican domestic investment collapsed 6.6% in 2025. Not because Mexican entrepreneurs ran out of ideas. Because the short-term horizon that extraction logic produces does not build factories, does not train workforces, does not anchor supply chains.
Foreign capital is signaling interest. Mexican capital is hiding. And the distance between those two facts is not just a policy gap. It is a cultural one — a residue of decades in which the intelligent move was to wait, extract, and avoid commitment.
The storm is coming regardless. The wind is already blowing. The question is not whether the conditions are favorable — in structural terms, they are more favorable than they have been in a generation. The question is whether there are enough people in Mexico — in business, in government, in the institutions that shape investment horizons — willing to build a vessel capable of using them.
That has never been a government question alone. It is a question about what the private sector decides to do with the moment it has been given.
III. The Question Mexico Has Never Answered
I have lived in Spain long enough to understand something that is easy to miss from the outside — and something I say with care, knowing how easily this kind of observation becomes condescension.
Spain’s transformation was not painless, not linear, and not led by a single visionary. It emerged from a moment of genuine crisis, and from a decision — fragile, contested, improbable — to build from shared ground rather than from ideological victory.
In October 1977, two years after Franco’s death, with inflation above 25% and democracy barely taking its first steps, Spain’s political parties did something that had no precedent in the country’s modern history. They sat down together — government and opposition, left and right, unions and employers — and signed the Pactos de la Moncloa. Not because they agreed on everything. They didn’t. Not because the crisis was resolved. It wasn’t. But because enough people understood that without a shared direction, there would be no direction at all.
The success of the Pacts was more political than economic. What they achieved was not an immediate fix — unemployment kept rising, many structural reforms were shelved. What they achieved was a common commitment: that competing visions of Spain’s future would be argued within a shared institutional framework, not against it. The left accepted the constraints of a market economy. The right accepted the legitimacy of the democratic transition. And from that agreement — imperfect, incomplete — Spain built the scaffolding that would eventually hold the weight of European integration, of modernization, of sustained growth.
Nine years later, Spain entered the European Community. That membership added an external anchor to the internal one: rules on competition, fiscal discipline, and institutional design that were not negotiated from strength but accepted as conditions. The discipline imposed from outside reinforced the discipline that had begun to generate from within.
Mexico had NAFTA. And NAFTA was, by design, a different kind of agreement — more transactional, less transformational. It opened markets. It did not demand institutional convergence. There was no external Brussels, no set of conditions that required Mexico to build the state capacity that trade integration actually needs to compound. Mexico got the formal rule change. It never built the informal institutional consensus that makes formal rules stick.
Douglas North spent his career explaining this gap. Formal institutions — laws, agreements, constitutions — can change in a day. Informal institutions — the norms, the habits, the expectations that shape how people actually behave — change in generations. Mexico signed NAFTA in 1994. It has been living with the informal institutional gap ever since.
And here is the question that Spain’s story forces into the open, the one Mexico has never cleanly answered: what is the anchor?
Not a bully. Not an ideological alignment with one geopolitical bloc over another. Not Trump’s pressure, which is real but erratic, and which generates compliance without conviction. What Spain found — first in the Moncloa Pacts, then in European integration — was something rarer: a shared understanding, across political differences, of what kind of country it wanted to be and what it was willing to build together to get there.
Mexico has never had that conversation at scale. It has had governments with missions. It has had opposition with counter-missions. It has had moments of technocratic reform and moments of ideological reversal. What it has not had is a durable coalition — across parties, across the private sector, across civil society — aligned around a common institutional horizon.
That is not a government problem. It is a national one. And it cannot be solved by waiting for the right president. It has to be built — slowly, imperfectly, from the bottom up and the top down simultaneously — by people who are willing to subordinate the short-term logic of political advantage to the long-term logic of compounding institutions.
Mexico’s anchor, if it is to exist, will not come from outside. It will have to be chosen from within.
IV. The Architecture Mexico Needs
The question, then, is what building that anchor actually requires. Not a list of reforms. An architecture — the deliberate design of systems that connect Mexico’s real assets to the opportunities that are already moving in its direction.
For three decades, the organizing question of Mexican economic policy has been: how do we make Mexico cheaper? Cheaper labor. Lower input costs. More competitive tariffs. And by that metric, the strategy has worked. Mexico is now, by some measures, a lower-cost manufacturing destination than China. Wages in the border region have been held down with enough consistency that multinational supply chains have integrated Mexican factories deeply into the most technically sophisticated industries — electronics, aerospace, automotive — at wage levels that would be unthinkable in any country that had actually compounded its prosperity.
That is not competitiveness. That is a race to the bottom that Mexico is winning.
I think often about Monterrey in the mid-twentieth century. The industrial families that built that city did not build factories alone. They built schools, hospitals, housing, universities. They understood — intuitively, before the economists had language for it — that a productive economy and a cohesive society are not separate projects. They are the same project. The worker who lives in a stable community, whose children have a realistic path forward, whose neighborhood is not controlled by organized crime — that worker is more productive, more loyal, more capable of operating the sophisticated machinery that modern manufacturing requires. Social fabric is not a welfare expenditure. It is industrial infrastructure.
Walk through the border cities today. The factories have reached extraordinary levels of technological integration. The communities around them tell a different story. That gap — between the technical sophistication inside the plant and the precarity outside its gates — is not an accident of geography. It is the logical outcome of an economic model that optimizes for cost and externalizes everything else.
Tom Chi, in Climate Capital, writes that if we value a world where most humans live in stable and prosperous societies, we will make different choices than if we simply value a world where all goods are as cheap as possible. Mexico has been making the second choice for decades. And the deterioration — the insecurity, the informality, the emigration of talent, the erosion of institutional trust — is not a separate problem from the economic one. It is the economic problem, made visible in human terms.
And here is where the climate transition enters — not as an environmental argument, but as an architectural one.
Mexico has extraordinary solar and wind resources. It sits adjacent to the largest economy in the world at precisely the moment that economy is trying to decarbonize its industrial base and reshore its supply chains simultaneously. The T-MEC review is creating pressure — real, structural pressure — on energy standards and carbon content in manufactured goods. European companies moving supply chains westward are not just looking for cheap labor. They are looking for clean energy, for low-carbon production, for partners who can help them meet their own decarbonization commitments. Mexico has the physical endowment to be exactly that partner.
But meeting that opportunity requires a completely different capital architecture than the one Mexico has built. It requires patient capital — instruments that can bridge the gap between a validated technology and a functioning industrial facility, that can absorb the first-of-a-kind risk that no purely commercial investor will take alone. It requires blended structures that align public risk tolerance with private return expectations. It requires an energy policy that treats solar and wind not as ideological symbols but as competitive inputs for the manufacturers that nearshoring demands.
What I have spent four years building in Europe — capital structures for industrial decarbonization, layered financing that allows hard technology to cross from proof of concept to commercial scale — is not a European solution to a European problem. It is a template for exactly the industrial transition that Mexico needs to make. The difference is that Europe has the regulatory architecture that creates demand for that capital. Mexico has the physical resources. What it lacks is the institutional design that connects the two.
This is the question that no electoral cycle has answered: not how do we make Mexico cheaper, but how do we make Mexico capable? Capable of producing at the technological frontier. Capable of retaining the talent that currently leaves. Capable of building communities around its industries, not just factories inside them. Capable of using the energy transition as an industrial upgrade rather than watching it happen somewhere else.
That capability is not a government deliverable. It is a collective architecture — built by entrepreneurs who stop optimizing for extraction and start building for compounding, by capital that extends its horizon beyond the next election, by a political class that finds, finally, the shared direction that the Moncloa generation found in Spain in 1977.
The wind is there. Mexico has the hull. What it has never built is the architecture to sail fast.
V. The Mexico That Is Still Possible
I am not writing this as nostalgia. And I hope, by now, it is clear why.
My friend at dinner was not wrong. Mexico had — and has — real foundations. Geography that no policy can undo. A demographic weight that still carries potential. A manufacturing base that, in its best moments, reaches genuine technological sophistication. A culture of resilience that has survived crises that would have broken less resourceful societies. These things are real.
But the conversation I couldn’t finish that night was not really about what Mexico had. It was about what Mexico keeps doing with what it has. And the answer to that — the honest one, the one I came home to write — is that Mexico has spent thirty years converting opportunity into drift, and wind into calm, not because it lacked resources but because it built systems optimized for extraction rather than creation. Systems that rewarded the rent-seeker over the builder. That protected the connected over the capable. That confused the stability of stagnation with the peace of genuine progress.
That is not a condemnation. It is a diagnosis. And diagnoses exist to be acted on.
Because here is what I also believe, with the same clarity: the Mexico that is still possible is not a smaller ambition than the Mexico my friend was remembering. It is a larger one.
It is a Mexico that looks at its border factories — technically sophisticated, globally integrated, genuinely impressive — and asks not just how to make them cheaper, but how to make the communities around them worth living in. That understands, as the industrialists of mid-century Monterrey understood, that a prosperous economy and a cohesive society are not competing priorities. They are the same project, approached from different angles.
It is a Mexico that reads the climate transition not as a burden imposed by wealthier countries but as the most significant industrial opportunity it has been handed in a generation — clean energy as a competitive weapon, decarbonization as industrial strategy, proximity to the United States not as dependency but as structural advantage in a world that is repricing reliability.
It is a Mexico that finally has the conversation Spain had in 1977. Not because the moment is comfortable, but because the cost of not having it has become undeniable. Not a conversation about which party is right. A conversation about what kind of country we are building together, and what each of us — in government, in business, in civil society — is willing to contribute to that architecture.
That conversation cannot be had through nostalgia. Nostalgia asks what we lost. This moment asks something harder: what are we willing to build, together, knowing that the systems that matter most will outlast every administration, every electoral cycle, every storm?
The wind is coming. The external pressure is real. The opportunity — in nearshoring, in the energy transition, in the geopolitical realignment that is actively searching for reliable partners in this hemisphere — is as favorable as any Mexico has seen in decades.
What remains is the choice. Not the government’s choice alone. The choice of every entrepreneur who decides to build instead of extract. Every investor who extends their horizon beyond the next cycle. Every citizen who demands institutions that compound rather than consume.
I came home from that dinner without a clean answer. I think I have one now.
Becalmed is a description of today. It is not a destiny.
The vessel is there. The wind is rising. The question — the only question that has ever mattered — is whether enough people are willing to sail. Not someday. Now. The wind does not wait.
Que claridad de análisis y pensamiento. ¿Cómo detonarías que esta conversación comience a suceder cuando los incentivos a acercarse a “lo político” se han vuelto tan bajos para aquellos que no buscan —justamente— favorecerse de las rentas?