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