Querétaro, Mexico, April 2, 2018 --  

Mexico's rising middle class has established a base north of the capital.

The sprawling new Ferroservicios plant stretches for a mile south of the highway leading to the airport in this booming Mexican city.¹ Handling frozen food and grain shipments transported over the American border and from the Mexican port of Veracruz, the factory is just one of dozens that cover the landscape outside this gleaming town two hours northwest of Mexico City.

Two decades ago, Querétaro was like much of Mexico. During my first visit in 2003, the charming colonial city of baroque churches and 17th century mansions petered out just past the ancient aqueduct by the old convent. Today, the city sprawls for miles over the horizon, with gleaming new towers ringing the center and industrial parks stretching for an hour outside of town, building airplanes, electronics, automobiles, and other products for export to the United States and other countries around the world.

Today's Querétaro features geeks having Saturday brunch in cafes on city squares that look indistinguishable from their counterparts in Palo Alto. The per capita income for the metro area reached 239,000 pesos in 2017 — about $13,000.² While this is still less than a quarter of the GDP per capita of Americans, the much lower cost of living in Mexico means that a middle class lifestyle is now widely available in this city.

To be sure, Mexico is not without its problems. Drug violence is rampant in many parts of the country, and pockets of poverty are not hard to find, especially in the south of the country in states like Chiapas, Oaxaca and Guerrero. Querétaro's progress, while spectacular, is still atypical. its average income is twice as high as the rest of the country in GDP terms.³

But the city serves as a showcase and model of what Mexico can achieve by opening up to the world by seizing opportunities like the North American Free Trade Agreement. The Ferroservicios plant by the airport operates along the Kansas City Southern Railroad of Mexico, an old Mexican-built railway refurbished and operated by the American company in a deal struck a few years after NAFTA passed. Trains filled with grain and frozen foods rumble down from the United States past the border at Laredo, then return from Querétaro with manufactured products from the dozens of neighboring factories that continue to sprout like mushrooms in the region.

This has been a huge boon for industrial workers in Mexico as well as agricultural producers in the United States. (Agricultural workers in Mexico and industrial workers in the United States, to be sure, are less happy.) But any student of economics who wants to see the law of comparative advantage in action should come to Querétaro. A former sleepy colonial town with well-educated but underemployed workers used to sit on the side of a sleepy rail line that just happened to lead to the United States. Today it is one of the richest cities in the country.

Notes:

1. Ferroservicios, Corporate Website, as posted April 2, 2018

2. CodigoQRO, PIB per Cápita en el Municipio de Querétaro Está 108 Por Ciento Arriba del Nivel Nacional, May 11, 2017

3. Ibid