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The Lede: Mexico y Brazil 

The Lede, Monday, July 2, 2018
By David Royse

Good Day! It’s Monday of a holiday-shortened week. Got suggestions for coverage, or thoughts on what’s here? Email me: dave.royse@ledetree.com or hit me up on Twitter: @daveroyse

Trying to write this while keeping one eye on Mexico v Brazil in the World Cup. In light of that, I’m linking below to a story on how Mexico is seeing a tech industry boom.

The LEDE
Vamos a Mexico 

As many Americans think about Mexico right now mostly in the context of immigration to the United States and the current story about immigrant children being separated from their parents, what most Americans don’t know is that the economy south of the border has, over the last few years, undergone the same shift that many of the world’s most developed economies have. It has gone from a place of low-tech and low-wage assembling of things, to a place where the economy is more knowledge-based.

“Mexico is starting to make that transition from just being a place that people build things to a place where people design and build things,” former Obama White House Latin America adviser Dan Restrepo said recently in a blog post by Mexico IT, a government-private sector IT industry booster. “And that’s a very important move. That’s the move that South Korea pulled off. That’s the move that Japan pulled off. That’s the move of the economies that have truly emerged — that is what they do. They go from just being a platform for people to come do stuff more cheaply to a place where there is also significant intellectual value added.”

But here’s where the current news comes in. The heavily-anti-immigrant atmosphere being promoted by the Trump Administration is actually a major boon to the tech industry in Mexico. The country produces a huge number of engineers – far more on a per capita basis than the U.S. – and now, they’re staying home to work for American companies that are coming to them, instead of having them come to the States.

(By the way, that engineering stat is really interesting – in 2014, the United States produced just under 100,000 engineering graduates. Mexico produced about 75 percent that amount, about 75,000, with a population of just 130 million, barely over a third of the population of the United States.)

Some might call it an unintended consequence of the anti-immigration stance taken by the current administration (and many ordinary Americans), but it’s leading to a boom in tech companies figuring they may as well go to Mexico since educated Mexicans are increasingly unable to come or wary of coming here.

Amazon has opened a new engineering center in Mexico City. Oracle said last year it will expand (and create hundreds of jobs) in Jalisco, not California. An Ohio engineering firm called Bendix announced earlier this year it would put its new R&D center in Monterrey. From a Reuters story from late last year: 

“U.S. President Donald Trump’s efforts to reduce immigration to the United States, including new constraints on H-1B visas for skilled workers – which many tech companies rely on for attracting foreign talent – have prompted countries ranging from China to Canada to step up recruiting tech workers and startup companies that might once have found a home in the United States.”

Even the so-called “Dreamers,” Americans covered by DACA because they were brought here illegally as children, are part of the calculation of Mexican companies – and global companies working in Mexico.

“This may be a good soft landing for people who are incredibly well prepared and may be able to take advantage of building their American Dream back in Mexico,”  Bismarck Lepe, chief executive of Wizeline, a San Francisco tech firm with 260 employees in Mexico City and Guadalajara, said in that Reuters story.

To be sure, Mexico still has some huge problems, including a lack of safety in many places because of drug cartels. That’s why immigration to the States, particularly among the unskilled, continues, and why many educated Mexicans would rather have their families here than there. But it’s also worth pointing out that while Mexico is the jumping off point for much of the current illegal immigration to this country – many of the migrants aren’t actually from Mexico, but are from far worse-off Central American countries. (If you’re interested in this – the New York Times had a really good story over the weekend, tracking the journey of a young man from El Salvador to Texas, through Mexico, including how much his family paid to smugglers and what the journey was like.)

The FOLLOW
Vamos ao Brasil

The big emerging industry in Brazil right now is fintechs.  Why? Brazil’s banks are terrible.

That was the realization of Nubank founder David Velez.

From a story late last year in the Financial Times

“’I remember getting locked in those bulletproof doors a couple of times because I had my cell phone in my pocket and guards looking at me with guns,’ he says in Nubank`s chic offices in São Paulo. ‘I was like: ‘Oh my God, people are paying 450 per cent in APRs [annual percentage rate of interest] to get this type of horrible customer experience.’

“That was in 2012. The following year he launched Nubank, Brazil`s biggest “fintech”, or financial technology company, which offers consumers credit cards via their smartphones without requiring physical documents or branch visits.”

Just last week, the TMF group said Brazil now has the second highest number of fintech companies, after the United States.

MORE NOTES FROM THE AGE OF DISRUPTION: 

California Hotels
Are finding some green from allowing, courting cannabis users. LAT

SpaceX
Is sending a robot head up on ISS resupply to keep astronauts company. Business Insider

A couple other interesting stories worth a read:

Facial recognition in newspaper shooting case shows state of industry. NYT

There’s a difference in the views in Seattle of the new tech titan, Bezos, and the old one, Gates. AP
Thanks for reading!

About David Royse

David Royse is the Editor-in-Chief of Ledetree.com. He has been a professional journalist for more than 20 years, including stints with The Associated Press and The News Service of Florida. He enjoys writing about health and medical science, and hopeful stories about scientific breakthroughs and new technology.

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