In 2023, an article in the Economist discussed the views of Santiago Levy, who had served as a deputy finance minister in the Mexican government and is now at the Brookings Institution in Washington, DC. According to the article: “Mexico could enjoy annual growth of around 4%, reckons Mr. Levy, if it became more business-friendly and invested in infrastructure.” The article also quoted a deputy governor of the Bank of Mexico as saying: “Currently, it is predominantly domestic issues holding back [foreign] investment.”

a. How does a 4% growth rate compare to the growth rate Mexico has experienced since 1980?

b. What are business-friendly government policies? What is infrastructure? Why would Levy expect these two changes in government policy to have such a large effect on economic growth in Mexico?

c. Is foreign investment important in increasing Mexico’s rate of economic growth? Is foreign investment as important to U.S. economic growth? Briefly explain.