When it comes to understanding the economy, there are a lot of factors to acknowledge. A great deal of research has been done to organize the countries of the world and the states of the USA into a cohesive list of who has the biggest and smallest economies. So let’s find out which economy is bigger, Texas or Mexico.
The state of Texas has a bigger economy than the country of Mexico. The economy of Texas is currently worth $2 trillion, whereas the economy of Mexico is currently around $1.15 trillion. While Mexico’s economic growth is slowing down, Texas’ is growing exponentially.
In this article, we are going to dive deep into the economic statistics of both Texas and Mexico to better understand why Texas is wealthier than Mexico, as well as how the two economies actually work together!
Economy of Texas
First, let’s talk about the Lone Star state of Texas.
You may already know that Texas is the second most populated state in the country, with almost 30 million residents, but it’s also important to understand that Texas’ population is growing every day.
US citizens are migrating from other states to Texas for the low cost of living and ample job opportunities, thus constantly improving the state’s economy.
Texas makes a whole lot of its money from taxation, and while the state has no income tax, sales and business taxes are steadily growing as more people move to the state.
The state also makes an incredible amount of money on information technology, oil and natural gas, aerospace, defense, biomedical research, fuel processing, electric power, agriculture, and manufacturing.
The current GDP of Texas is estimated at $2 trillion, which means that if Texas was its own country, it would be the 9th largest economy on the planet.
Economy of Mexico
Mexico, Texas’ neighbor to the south, has about half of the GDP that Texas has.
At $1.1 trillion, Mexico is still considered to have an impressive economy, sitting at number 16 on the worldwide list.
While Mexico does fairly well, the country experiences an extreme amount of poverty and high unemployment rates, and therefore, the government does not receive a significant amount in taxation.
The majority of Mexico’s wealth comes from the export of products such as silver, fruits, vegetables, coffee, cotton, and oil.
Overall, oil is Mexico’s number one export, as the country produced 1.9 million barrels produced daily in 2021.
Over the past decade, the Mexican economy has only grown by a total of 2.8%, but the growth drastically slowed with the arrival of COVID-19.
Why is Texas Wealthier Than Mexico?
Both Texas and Mexico make a great deal of money on production and exportation; however, there are 5 main reasons why Texas is wealthier than Mexico.
- The population of Texas is growing significantly, which increases profits made from taxation.
- Large Fortune 500 companies are moving to Texas.
- Mexico struggled through the pandemic due to low tourism and oil sales.
- Mexico has weak political stability.
- Mexico has a high poverty and unemployment rate.
If Mexico can get back on its feet after the pandemic, we may see a steady rise in its GDP, but it’s unlikely that it will ever catch up to Texas as the state’s wealth will continue to grow as well.
Do Texas and Mexico Work Together?
It’s important to understand that Texas and Mexico actually make money off of each other, so their economic growth is somewhat linked.
Mexico is Texas’ largest trading partner. In fact, 5.2% of the state’s GDP comes from trade with Mexico, which is nearly $100 billion annually.
Trade between the two supports over 7 billion jobs in both Texas and Mexico, making it incredibly beneficial for both parties.
Motor vehicle parts, oil, fruits and vegetables, machinery, and more are constantly moved over the border between Texas and Mexico.
Although both countries lost billions in revenue during the worldwide lockdown, reports state that we can expect the trade routes to bounce back fairly quickly.
The partnership between Mexico and Texas increases economic wealth across the border, and we will likely see that as one grows, the other will also.
The state of Texas has a much larger economy than the country of Mexico. While Mexico’s current GDP is $1.1 trillion, Texas’ is an incredible $2 trillion.
Hopefully, you now understand the economic wealth of both Texas and Mexico, including how they make their money, work together, and even why Texas is so much richer than Mexico.
The bottom line is that Texas has a better and more stable infrastructure as well as a growing population to increase its economy, whereas Mexico, while doing well, is struggling to get back on its feet after the pandemic.