Question

A large component of survival in many countries with low per capita GNIs is the informal economy. Which of the following does NOT make up a portion of Mexico’s formal economy and GNI? Payments to smugglers to cross into border towns of the United States. Manufacturing in the maquiladoras of Northern Mexico. Oil exports to Chile. Export of poinsettias in December. Tourism, particularly on the Yucatan peninsula.

Answer 1

Payments to smugglers to cross into U.S. border towns are not a part of Mexico's formal economy or GNI. Instead, manufacturing in maquiladoras, oil exports, poinsettia exports, and Yucatan peninsula tourism contribute to the formal economy and GNI.

Step-by-step explanation:

The component of the economy in Mexico that does NOT contribute to the formal economy and Gross National Income (GNI) is payments to smugglers to cross into border towns of the United States. Such payments are part of the informal economy or underground economy, which operates outside the regulated and taxed structures of the formal economy. In contrast, activities like manufacturing in the maquiladoras of Northern Mexico, oil exports to Chile, the export of poinsettias in December, and tourism on the Yucatan peninsula are all integral parts of Mexico's formal economy and contribute to the GNI. These activities are regulated, taxed, and recognized by the government, unlike the earnings from smuggling, which are usually not declared or taxed, and thus do not show up in official economic statistics.