Historical Context – Stability, Economic Growth, Inequality

Among Latin American countries, Mexico is considered to have had one of the most stable histories since its Revolutionary period ended in the late 1920’s, (Santiso, others). Unlike many other Latin American countries, for 90 years, Mexico has experienced a period without revolution, and a stable transition from one leader to the next. As a result, economic growth was greater than it might have been otherwise – though this does not mean that this growth was equitable or constant. In addition to its long history of “political stability”, Mexico’s growth is credited to some degree to its location next to the United States, a major trading partner and influence on Mexico’s policies and economy (Santiso, others).

Since 1994, Mexico has become even more dependent on its economic ties with the US, from the US’s bailout of the US after the 1994 liquidity crisis, to the implementation of NAFTA.   “The economy has slowly achieved a great transformation of its productive machinery,” and it’s risk premium has been delinked from other Latin American countries (Santiso, 154-155).  As a result of Mexico’s increasing ties to the U.S. market through NAFTA, Mexico grew it’s non-oil exports, helping it to escape the dependence on oil of other Latin American economies, and the “Dutch disease” of heavy reliance on global demand for commodities.  However, analysts say that much more needs to be done towards transforming Mexico’s oil industry to a market-driven one in which the state plays a significantly smaller role, and improving the government’s tax collection.

This stability and growth is not only due to Mexico’s relationship with the United States.  As the country has moved towards a more democratic system, it is also strengthening its institutions, including the federal election commission, and an autonomous central bank.

“At the beginning of the 1980’s, oil exports represented more than 2/3rds of Mexico’s exports, in 2005, slightly more than 1/10th.” (p156).  Increasingly high-technology manufacturing has become an important component of the country’s exports.

According to Santiso,, “In spite of belonging to the same partisan dynasty, for decades each new president tried to differentiate his new reign from his immediate predecessor in successive autonomous gestures in order to consolidate his authority not only over the state but also over the party” (pp 139-140) “alternating between interventionism and laissez faire policies” (p 140)

Timeline:

Mexican war of Independence

  • Started in 1810 by priest Miguel Hidalgo y Costilla, who was captured and executed in 1811
  • Was in many ways a civil war between indigenous, criollos, and peninsulares.
  • José María Morelos assumed leadership of the rebel army
  • 1813 convened the Congress Chilpancingo, which issued the first official declaration of independence.
  • In 1821 a military coup in Spain led to conservative criollo forces in Mexico allying with rebel armies for independence.  The Treaty of Córdoba was signed with Spain, recognizing Mexican independence.  Iturbide was named “emperor”

First Mexican Republic – 1824-72.   Mexican American War took a large amount of northern territories from Mexico.  Conservatives and Liberals clashed over the role of the church in government, and of large landowners vs. workers and peasants.

1876-1911            Porifrio Diaz in power.  Diaz instituted land laws that restricted peasants from claiming land without formal legal title.  95% of Mexico’s land was owned by 5% of the population.

1910                       Mexican Revolution begins when Madero was jailed for running a campaign against Diaz. Madero wrote a letter from jail calling for “free suffrage and no re-election” and called for Diaz to be overthrown.

1911                       The federal army is defeated.  Madero signs the Treaty of Ciudad Juarez with Diaz.  Madero wins a new election.  Fighting continued when Madero failed to return lands to peasants and implement social reforms.

1913                       Madero forced to resign, and then assassinated in a coup led by Madero’s former commander in chief Victoriano Huerta.  Huerta installed as president.  Revolutionary groups led by Zapata and Pancho Villa continued fighting, and Woodrow Wilson refused to recognize Huerta’s government.

1914                       Huerta left office as fighting continued and US forces seized the port of Veracruz.  Venustiano Carranza took the presidency.

1917                       Mexican Constitution instituted many social reforms regarding agrarian land and labor.

1920                       Carranza assassinated under a revolt led by General Obregon and other military leaders.  General Álvaro Obregon elected president.

1928                        Obregon assasinated, marking the end of the violent “revolutionary period”

1929                       National Revolutionary Party begins (renamed PRI in 1946)

1934-1940           Lázaro Cárdenas president.  Instituted sweeping reforms returning land to peasants, and nationalized the oil industry.

1940-2000          Relatively peaceful succession of PRI presidents every 6 years.  In response to protests for meaningful elections (as opposed to handpicked successors of the outgoing president), presidents instituted various reforms, ultimately including mayoral elections where the PAN party won in Mexico City and Baja.

2000                       PAN candidate Vicente Fox won the election and took over the presidency from Ernesto Zedillo.  Fox was followed by PAN candidate Felipe Calderon, whose term expires in 2012.

Citations:

Santiso, Javier, “Latin America’s Political Economy of the Possible”, MIT Press, 2006.  pp 139-164

Opportunidades: Mexico’s Conditional Cash transfer program

Stecklov, Guy, et al. “Do Conditional Cash Transfers Influence Migration? A Study using Experimental Data from the Mexican PROGRESA Program.” Demography 42.4 (2005): 769,769-790. Sociological Abstracts. PROQUESTMS. 24 Oct. 2011 <http://search.proquest.com/docview/60048008?accountid=12261>.

“Analysis based on the data collected before and after {PROGRESA’s} onset show that conditional transfers reduce U.S. migration but not domestic migration.” “Our results suggest that conditional transfers may be helpful in managing rural out-migration, particularly to the United States.”

Traditionally been very difficult to establish causation for migration.  Because of the experimental design of the PROGRESA program, this study helps overcome this hurdle.  Migration is influenced by social factors (social networks) and economic factors.  Typically, as migration flows increase from a community and migration networks are strengthened, improved economic conditions for a community have less impact on lessening migration. (p774) “Thus, the manner in which networks moderate the effect of PROGRESA on migration is ambiguos”

PROGRESA started in 1997 as a program to address rural poverty.  Cash transfers to mothers for food and for education are linked to specific requirements such as health check-ups, and school attendance. The program name changed to OPORTUNIDADES in 2001 under the Fox administration, and expanded into urban areas.  B7 2002 the budget was $1.9 billion US. (p771)

Study finds that migration rose over time (from 1997-1999) for both PROGRESA and control households, but less for PROGRESA households, especially for migration to the U.S. (p 777)

Conditional Cash Transfers and Agricultural Production: Lessons from the Oportunidades Experience in Mexico, Journal of development studies [0022-0388] Todd yr:2010 vol:46 iss:1 pg:39 -67  accessed at http://www.tandfonline.com.libproxy.newschool.edu/doi/full/10.1080/00220380903197945

Rural Mexico, Drugs, and Migration

The Narcoeconomy and Small-town, Rural Mexico
Author: McDonald, James H.
Citation: Donald, J. (2005). The Narcoeconomy and Small-town, Rural Mexico. Human Organization, 64(2), 115-25. Retrieved from OmniFile Full Text Mega database

Though estimates vary, something on the order of 80 percent of the cocaine, 80 percent of the marijuana, and perhaps 30 percent of the heroin entering the U.S. is either produced in or comes through Mexico (Andreas 1998:160).

The unfortunate reality in this part of rural Mexico is that young people, primarily men, have three options. First, they can be farmers with little or no land who can only aspire to a life that will result in poverty. second, they can migrate, most likely to the United States, in search of jobs and higher wages. Third, they can get involved with the local narcoeconomy, sometimes in conjunction with being a migrant. The final option will have an increasingly strong attraction for young men living on the poor margins as the rural economy continues to collapse and the U.S. economy continues to falter, further constricting the job market for U.S.-bound migrants.

NAFTA was once heralded as a means to slow down migration to the United States and reinvigorate the Mexican economy. By contrast, data suggests that NAFTA has stimulated migration because of greatly reduced options for achieving a viable livelihood in rural as well as urban Mexico. From 1990-2000, the number of migrants living in the United States has more than doubled from an estimated 2 million to 4.8 million (Ferriss 2003). It could equally be argued that rural poverty, spawned by NAFTA, has also provided fertile ground for the narcoeconomy in rural areas and narco-migration to the United States.

Gullette, G. (2007). Development Economics, Developing Migration: Targeted Economic Development Initiatives as Drivers in International Migration. Human Organization, 66(4), 366-79. Retrieved from OmniFile Full Text Mega database

This paper explores how market liberalization, privatization, and deregulation can result in low economic growth or unequally distributed economic expansion, which may lead to social inequality and new motives for emigration.

Mis-directed aid to Mexico not enough to slow migration north

http://go.galegroup.com.libproxy.newschool.edu/ps/i.do?action=interpret&id=GALE%7CA265978418&v=2.1&u=nysl_me_newsch&it=r&p=ITOF&sw=w&authCount=1

National Catholic Reporter August 19, 2011, v47 i22, p12(1)

“Although advocates lobby for greater U.S. development aid to migrants’ countries of origin, most U.S. aid to Mexico goes to law enforcement and drug-control projects, especially with the Merida Initiative, a $1.8 billion program aimed at stemming the flow of drugs from Central America and Mexico to the United States. ”

“Of more than $760 million in U. S. foreign aid to Mexico in 2009, only $11 million was earmarked for development projects that could help provide livelihoods for people to stem migration, according to a study by the nonprofit organization Bread for the World. “

Javier Santiso – Political Economy of the Possible

pp 138-164: Mexico – the Great Transformation

Some important elements set Mexico apart from its Latin American counterparts:

1) A long period of stability, as key to economic growth. During the 20th century, leadership of the state passed without violence from one leader to the next, and the PRI (Institutional Revolutionary Party) held power for 50+ years. Leaders shifted from left to right, from giving out communal land (for example) and strengthening social programs to cutting back expenditures and following reform programs dictated by the World Bank.

“In spite of belonging to the same partisan dynasty, for decades each new president tried to differentiate his new reign from his immediate predecessor in successive autonomous gestures in order to consolidate his authority not only over the state but also over the party” (pp 139-140) “alternating between interventionism and laissez faire policies” (p 140)

2) Added credibility in global credit markets due to its proximity to and dependence on U.S. markets since NAFTA (similar to what Spain gained from its link with the EU) (p 156). However, this comes with a cost, extreme dependence on U.S. markets. Raw material export fell from 74% to 45% (p158), manufactured products increased from 26%- 55%from 1986-2001 (p158-159) The US absorbs 85% of these exports (p 159)

A major challenge for Mexico is to increase it’s tax receipts, only 15% of GDP (p160)
Mexico has achieved some progress with its institutions, for example – greater central bank independence from political cycles, which has led to greater control of inflation (p160), and the creation of the Instituto Federal Electoral provides independent supervision of elections (p164)

Mexican immigrants to the U.S. remitted more than 16.5 billion to Mexico in 2004 (p162) – has an enormous impact on both the economy and the social fabric of Mexico.

1810 Mexican independence

1821-1867 – 56 different administrations – unstable political environment, lower economic growth.

1876-1880 and 1884-1911 – Porfirio Diaz in power, more stability and economic growth

1934 – Lazaro Cardenas, followed by 12 regular presidential successions orderly every 6 years.

1946- Formation of PRI

1968 – Tlatelolco massacre before Olympic games, student demonstrations

1982 – fall in oil prices, economic crisis

1989 – Brady Plan – rescue plan to help Lat Am countries access credit, economic reform paired with debt reduction

1994 – NAFTA officially enacted, Zapatista revolt begins, “Tequila Crisis”

2000- PAN president elected. Beginning of a decoupling of economic decisions from presidential elections, and the international capital risk premium from the rest of Latin America (pp 152, 155)

2005 oil just 1/10th of exports, down from 2/3rds in the early 1980’s (p 156)

look up: social programs: Solidaridad

Mexico removes tarrifs as trucks are allowed in U.S.

http://www.businessweek.com/ap/financialnews/D9QGQS201.htm

The US has delayed allowing Mexican trucks to deliver products deep into the U.S for 11 years, despite NAFTA’s provisions, citing safety concerns. NAFTA, signed in 1994, had called for Mexican trucks to have unrestricted access to highways in border states by 1995 and full access to all U.S. highways by January 2000. Canadian trucks have no limits on where they can go. On Friday October 21st the first truck, carrying electronics, was scheduled to enter the U.S., as safety concerns have been addressed with electronic tracking equipment. Mexico has cancelled punitive tariffs on some US goods in respons.

Some U.S. congressmen and U.S. labor continue to oppose this. http://www.nbcsandiego.com/news/local/1st-Mexican-Truck-to-Enter-US-Interior-Within-Days-132179983.html

Mexico after 2000

Vicente Fox was elected President of Mexico in the 2ooo presidential election  a historically significant election that made him the first president elected from an opposition party since Francisco I. Madero in 1910 and the first one in 71 years to defeat, with 42 percent of the vote, the then-dominant Institutional Revolutionary Party (PRI)

Presidency of Felipe Calderon

Felipe Calderon is the current President of Mexico. He assumed office on December 1, 2006, and was elected for a single six-year term through 2012. He is a member of the Partido Accion Nacional(PAN), one of the three major Mexican political parties. Prior to the presidency, Calderón served as National President of the party, and as Secretary of Energy in Vicente Fox‘s cabinet.

-Felipe Calderón is the president who has created the most universities (96) in the history of Mexico

-He is also the only president in history that has granted full coverage and a secure spot in elementary schools to children from 6 to 11 years old

He created the The Office of Social Aid for Victims of Violence, (in Spanish: Procuraduría Social para Víctimas de la Violencia)  in 2011.

-During Calderón’s administration, more than 1,000 hospitals have been created, and more than 2,000 have been reconstructed and amplified.

-During Fox’s administration, only 40 million people had access to a public health care system. Currently, more than 100 million Mexicans have access to their country’s health care system due to Calderón’s effort on implementing a universal health care system.

– Calderón has created more than 16,500 kilometers of interstate highways.

-He implemented the Tortilla Stabilization Plan where “the president opted to use price ceilings on tortillas that protected local consumers of corn. This price control came in the form of the Tortilla Price Stabilization Pact between the government and many of the main tortilla producing companies, including Grupo Maseca and Bimbo, to put a price ceiling at $8.50 pesos per kilogram of tortilla. The hope was that a ceiling on corn prices would provide incentive for the market to lower all prices nationally”

-In 2006, he declared a “War on Drugs” as a result more than 30,000 people have died since he took office.