Why is Mexico's HDI rank high and GDP low?

Answer 1

It isn't. Both values represent a 'medium' income:

HDI - 0.750 on par to countries such as Saudi Arabia, Malaysia or Bulgaria. Among developing countries, it is ranked on the top 15; in the world it ranks on the 58th place.

GDP - US$1.04 trillion on par to countries such as Spain and South Korea, it is the 13th largest economy in the world.

GDP per Capita - US$9,200 on par to countries such as Argentina or Turkey. It ranks at the 63rd position in the world.

Maybe you think of the income per capita to be pretty low; the reality is that Mexico's currency, the peso, is undoubtedly undervalued against the dollar. It is just a financial strategy: with a weaker currency, Mexican exports are easier to sell abroad. However, products purchased in Mexico are valued in pesos, not dollars. This means stuff produced or manufactured in Mexico is much cheaper. One example is a BigMac which usually costs between US$3.3 and US$4.2 in the US. In Mexico, it costs between 30 and 50 pesos (US$2.4 - US$4).

If you take the same measure of GDP and GDP per capita using this Purchase Parity Power, meaning you take into account the same value of goods and services used in the United States, you can see another picture of Mexico:

• GDP = US$1.65 trillion, ranked as the 11th largest economy in the world.
• GDP per capita = US$14,566 on par to countries such as Chile and Romania.