Mexico

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Full Report: Mexico

Overview

1910: An export-oriented development strategy under Porfirio Díaz's dictatorship courts foreign capital, bringing with it dynamic growth and rapid integration into the world economy. Real and financial assets are increasingly enjoyed by a few local and foreign investors. Personal and political freedom is restricted in the name of modernization. Political opposition grows.

1911-1916: Two main rebel factions emerge, split roughly along North-South lines. Insurrection spreads throughout Mexico, and years of revolution wreak economic havoc. The assassination of Emiliano Zapata, leader of the Southern faction, and United States recognition strengthen the power of the Northern coalition.

1917: The Northern coalition promulgates a radical and comprehensive constitution, turning Mexico into a federal republic governed by a president and a bicameral national congress. The constitution is quite advanced for its time, asserting political, economic, and social rights for the Mexican people.

1918-1928: Mexico elects Álvaro Obregón, a leader of the Northern rebellion, as president. Obregón begins to realize the objectives of the Constitution of 1917. The revolution moves from its military phase to its reconstruction phase. Agrarian reform and education take center stage. Anticlerical policies spark bloody revolts by cristeros (militant Roman Catholics) which are crushed by military force.

1929-1933: Obregón's successor, Plutarco Elías Calles, founds the National Revolutionary Party (PNR). Opposition to the PNR is allowed only in the form of competing factions within the party. The introduction of a six-year presidential term ushers in a period of more orderly political succession. The PNR's left wing counters the party's rightward drift by nominating a populist presidential candidate in 1933.

1934-1938: The PNR is renamed the Party of the Mexican Revolution (PRM). Mexico's nationalistic government under President Lázaro Cárdenas promotes domestic industrialization through high import barriers. Cárdenas announces a drastic reform program, including land redistribution, industrial expansion, and the 1938 nationalization of foreign-owned oil wells. The country enjoys strong economic growth.

1939-1945: Under President Cárdenas's chosen successor, military commander Manuel Ávila Camacho, Mexico joins the Allies in declaring war against Germany. The PRM is renamed the Institutional Revolutionary Party (PRI). Public sector investment in agriculture increases, and economic growth continues at a healthy pace.

1946-1957: Government involvement in the economy grows under elected President Miguel Alemán Valdés. The government's import-substitution strategy focuses almost exclusively on domestic industrial capacity. Income distribution becomes increasingly unequal, fueling discontent among the nation's poor.

1958-1963: Social and economic policy shifts to focus on the rural and agrarian sector. The strongly nationalistic government of Adolfo López Mateos reduces foreign involvement in the economy. Reports of brutality and human rights abuses by law enforcement officials increase, but are rarely addressed.

1964-1969: The PRI remains in power, now with a more business-oriented administration under President Díaz. Simmering social unrest leads to student-led riots in 1968. The ensuing massacre of students by security forces reveals to the world the thinly veiled authoritarianism of the political regime. Government spending is alarmingly high, and fiscal mismanagement begins to erode economic growth.

1970-1975: The anti-business stance of leftist President Luis Echeverría's government deters foreign investment, but the discovery of oil reserves in Mexico enables the government to go on a borrowing spree and further increase public spending. This sudden infusion of revenue briefly masks the warning signs of the financial and economic crisis to come.

1976-1981: Widespread corruption undermines the government, now under President Jose López Portillo. The PRI is fragmented, and political reform allows the opposition right-wing National Action Party (PAN) to register gains. The government's spending habits, emboldened by the discovery of oil reserves, and the collapse of the global commodities market put the economy in recession.

1982-1987: Mexico's inability to pay the interest on its international debt sparks a regional debt crisis as Latin American countries are cut off from international supplies of capital. Faced with massive debt and recession, the government liberalizes the economy. The standard of living falls as privatization incurs unemployment. Austerity measures hit the poor hardest. Environmental conditions deteriorate.

1988-1993: Debt renegotiation and austerity measures help turn the economy around without addressing social inequity. Mexico shifts its economic policy to be more outward-looking and joins the North American Free Trade Agreement (NAFTA). Under pressure from the United States, Mexico begins to address its environmental issues, especially along the countries' shared border.

1994-1997: Social unrest among the poor finds its voice in an armed rebellion in the Southern state of Chiapas. President Salinas flees the country amid a rash of political assassinations and corruption charges. A 1994 devaluation of the peso causes investment panic and a financial crisis that resonates throughout Latin America. Massive foreign assistance is required to stabilize the economy.

1998-2000: The PRI loses its grip, and opposition candidate Vicente Fox of the PAN wins the 2000 presidential election. The already shaky economy suffers a series of blows, but it does grow intermittently. Mexico increases its efforts to address environmental degradation and a growing narcotics trade.

2001-2003: Political culture grows more plural with an opposition president, negotiations with indigenous rebel groups, and the release of records from the repression era. Economic management is disciplined, but poverty and social problems are hard to resolve. The global slowdown hurts Mexico's increasingly trade-oriented economy. Cultural life is thriving, with Mexico a popular international destination.

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Political

1934-1939: Lázaro Cárdenas, the first president to campaign for office, begins a series of socialist policies. The most significant is large-scale land reform through the system of ejidos, or communal farms. The PNR becomes the Party of the Mexican Revolution (PRM) and gains wider representation. Cárdenas surprises Mexicans by nominating Manuel Ávila Camacho, a military officer, as his successor.

1940-1945: After attempting to remain neutral, Mexico joins the Allies in declaring war on Axis powers when German submarines sink two Mexican tankers. Land reform slows, and emphasis shifts to promoting private ownership of land. Government support for labor dwindles. Officials rename the PRM the Institutional Revolutionary Party (PRI) to signal the end of the revolution's transitional phase.

1946-1957: PRI nominee Miguel Alemán, a lawyer by profession, ushers in a new generation of civilian, and less nationalistic, politicians. The government's growing involvement in the economy provides ample opportunity for kickbacks and sparks public outcry. Alemán's successor, Adolfo Ruíz Cortines, attempts to tackle corruption with some success, while continuing his predecessor's pro-industry policies.

1958-1963: López Mateos is elected president, giving voice to the PRI's agrarian, and to a lesser extent labor, constituencies. Participation in the political process increases as women get the right to vote. Foreign policy is strongly nationalistic; the government buys up foreign utility concessions and disrupts amicable relations with the United States by refusing to break diplomatic ties with Cuba.

1964-1969: López Mateos' successor, the controversial Gustavo Díaz Ordaz, allows business interests once again to precede those of labor in order to maintain economic growth. Antigovernment feeling runs high amid several sectors of society and culminates in a student-led uprising in 1968. The ensuing massacre of students reveals for all to see the authoritarian nature of the political system.

1970-1975: The ideological pendulum swings back to the left as Mexico joins other developing nations in fighting imperialism and foreign economic control. President Echeverría lowers the voting age to 18 and appoints young leftists and intellectuals to government positions. He is applauded throughout Latin America as a champion of leftist causes.

1976-1981: Government corruption, profligate spending, and mismanagement of oil revenue under the PRI's President López Portillo lead to widespread criticism of the one-party political system. At the same time, political reform leads to an increase in minority party representation. The stage is set for significant political opposition.

1982-1987: The pro-business, conservative National Action Party (PAN) registers significant gains. The PRI is fragmented. Cuauhtémoc Cárdenas, the former president's son, resigns from the PRI and forms the Party of the Democratic Revolution (PRD). Declaring himself a presidential candidate, he wins support among the poor as a mestizo nationalist. But the political system is not yet fully open to competition.

1988-1993: Carlos Salinas de Gortari of the PRI wins a slim victory over Cárdenas under allegations of election fraud. In spite of that, he succeeds in winning over Mexicans by turning the economy around and cracking down on corruption. His modest political reforms set the stage for a more open political process, but not soon enough.

1994: Zapatista rebels take arms in Chiapas against the government, citing oppression and indifference to poverty. Military response ends in a stalemate. Salinas flees Mexico amid allegations of his involvement in political assassinations and corruption. Despite its poor image, the PRI succeeds in replacing him with Ernesto Zedillo after its initial candidate, Donaldo Colosio Murrieta, is assassinated.

1995-1997: Political conflict continues in the South. In 1996 the government and the Zapatista Army of National Liberation (EZLN) reach an agreement to end fighting, but the massacre of 45 peasants the following year brings renewed tensions. New electoral legislation is signed into law to help open up the political arena.

1998-2000: The PRI's dominance over the political arena weakens. It loses the majority in the National Assembly and in several states. Opposition candidate Vicente Fox wins the 2000 presidential election, a first since 1910, in elections that are considered the fairest in Mexico's history.

2001-2003: President Fox names a diverse Cabinet and initiates negotiations with the rebels in Chiapas. He vows to emphasize education and to press constitutional reforms. The PRI remains a major force, particularly in the South. In 2002, Fox acknowledges he has not achieved as much as he hoped. Foreign Minister Jorge Castaneda resigns in anger at the U.S.'s lack of focus on bilateral relations.

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Economic

1934-1938: The state-led development strategy relies on public-sector investment, still heavily skewed toward agriculture, to integrate the national economy. The government expropriates all foreign oil operations and nationalizes the oil and petrochemicals industry in 1938, winning President Cárdenas widespread praise within Mexico. The country enjoys strong economic growth and low external debt.

1939-1945: Mexico supplies the World War II Allies with war equipment and its own population with consumer goods. This marks Mexico's transition from a primarily agricultural economy to an industrial one. The government owns and operates most strategic industries, including energy, transportation, communications, and some manufacturing. The National Finance Bank is reorganized to foster industrial expansion.

1946-1957: The government continues its inward-looking development strategy of import substitution. The peso is undervalued, and state credit is available through several state-owned development banks to foster industrial development. Government increases its involvement in the economy and invests in major infrastructure improvements, paying little attention to the demands of labor and rural populations.

1958-1963: The economy continues to grow with government support. Its strength brings increased foreign investment and control by foreign, mainly U.S. interests. In a nationalistic strategy, the government buys many foreign utility concessions in 1960. Government policy shifts from an urban focus to a rural one, with massive land redistribution and new land made available for small-scale production.

1964-1969: Government spending increases rapidly in an ominous sign of things to come. Business interests once again receive priority. Manufacturing is the government's dominant growth sector. Electric power and mining companies are nationalized. The government encourages the establishment of maquiladora (assembly) plants along the border to offer foreign investors proximity to the U.S. and low labor costs.

1970-1975: Fiscal mismanagement undermines economic growth. With the discovery of oil reserves, Mexico ends its policies of stabilization and embarks on a massive public spending program. Low real interest rates discourage domestic savings. Government's anti-business stance deters foreign investment. Warning signs of an impending financial and economic crisis are swept under the rug.

1976-1981: Mexico becomes one of the world's largest producers of oil, and one of its leading debtors as the government goes on a borrowing spree. Creditors are easily found given Mexico's immense oil revenues. The government assumes ownership of hundreds of unprofitable firms, but the government's spending habits and the collapse of commodity markets put the economy into recession.

1982-1984: The economy contracts. High interest rates, falling oil prices, and rising inflation put Mexico near bankruptcy. Mexico's inability to service its debt sparks a global crisis, and emerging markets are cut off from international capital. To stem massive capital flight, President Portillo plans to nationalize private banks. The U.S. Treasury and Federal Reserve Board intervene with a rescue package.

1985-1987: Austerity measures, imposed in part by the IMF, reverse economic growth trends but fail to restore sustainable growth rates. The stringent economic stabilization program helps reduce fiscal deficit and restores export growth, but at the cost of unemployment and lower real wages. Two-thirds of foreign investment are concentrated in the maquiladora areas along the U.S. border.

1988-1992: Mexico reaches an agreement with external creditors on debt reduction and restructuring. Government ends restrictions on foreign ownership of business and promotes privatization. Commercial banks begin to be re-privatized. Import substitution gives way to participation in global free trade. As a result of these measures, Mexico sees a brief economic upturn that slows again in the early '90s.

1993-1996: The barely stable economy suffers another blow with the devaluation of the peso in 1994. Investor panic causes Mexico's stock exchange to plummet, setting off a domino effect in the rest of Latin America. A U.S.$ 20 billion bailout and increased exports through the North American Free Trade Agreement (NAFTA) help stabilize the economy and bring about signs of recovery in 1996.

1997-2000: Mexico's GDP grows at a steady rate for three consecutive years. Significant oil revenues in 2000 enable the government to repay its debt to the IMF, but at the same time the United States's economic slowdown deals a blow to the Mexican economy, and growth stagnates. The positive effects of trade liberalization, privatization, and increased competition have weakened.

2001-2003: Macroeconomic management earns the plaudits of the U.S. and international lenders. But the global slowdown hurts the increasingly trade-oriented economy, limiting growth to 3 percent or less. Job creation falls short of President Fox's promises, eroding his popularity. He proposes tax reforms to fund social programs, but many fear that the poor remain highly vulnerable.

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Social

1934-1945: Agrarian reforms establish ejidos (communal farms) and collectivization. Extensive land redistribution then improves land tenure among the country's rural population. Previously tenuous state relations with the Church improve. Overall, government invests minimally in social infrastructure.

1946-1959: While education and public health receive some attention, income distribution becomes increasingly unequal, and the social needs of the rural poor go largely unaddressed. Popular acceptance of post-1940s development strategy begins to wane and is replaced by growing discontent in both rural and urban settings.

1960-1967: The government attempts to keep students and labor under control so as not to disrupt economic growth. As the maquiladora (assembly plant) program draws thousands to the United States border region, illegal immigration into the U.S. becomes easier and more frequent.

1968: Social unrest comes to a head when students stage protests demanding political freedom. When the government orders a crackdown on the main university in Mexico City, thousands of students stage an antigovernment protest which is met with armed military units and tanks. In the ensuing panic, dozens of students are massacred.

1969-1981: In an environment of continued unrest, government launches many social welfare programs, including investment in rural schools and health clinics. Redistribution of land, begun in the '40s and suspended in the '60s, resumes, as do credit subsidies to cooperative agriculture. The oil boom of the late '70s makes Mexico richer, but the majority of the population continues to live in poverty.

1982-1993: The standard of living falls as the rich get richer and isolate themselves from economic conditions. The poor bear the burden of inflation, devaluation, and the withdrawal of subsidies. Privatization puts thousands of people out of work, and government is unable to supply them with new jobs. Poor families send more members, including children, into the labor market.

1994-1995: The emergence of the Zapatista National Liberation Army (EZLN) captures the attention of Mexican society and rekindles social movements. Zapatista leader Subcomandante Marcos encourages the creation of autonomous indigenous communities and asserts the right of indigenous people to control the natural resources found on Indian land.

1996-2000: Sporadic clashes continue between armed civilian groups. Unemployment is high in urban areas, and the rural poor struggle to make a living as imports, primarily from the United States, rise.

2001-2003: Continued unemployment and poverty shadow Mexico's success and dilute enthusiasm for the Fox administration. A devastating earthquake kills hundreds and underscores the nation's vulnerability. Mexico City's ever-vibrant cultural life attracts global attention and draws artists, musicians, and cultural trendsetters from around the world.

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Environmental

1934-1959: With the exception of the Air and Water Conservation Law of 1940, few regulations exist pertaining to the appropriate use of natural resources. Mexico's population doubles from the mid-30s to 1960 and puts increasing strain on these resources. Rapid industrial expansion contributes to environmental degradation.

1960-1980: Massive urban migration and unplanned shantytowns overload urban infrastructure systems. Along the U.S. border, the proliferation of maquiladoras (assembly plants) adds to environmental stress with undisciplined and illegal disposal of waste materials and sprawling development. The government creates the Undersecretary's Office for the Improvement of the Environment.

1981-1989: Pollution becomes a serious concern along the border as electronics, chemical, and furniture industries move into the area, discharging large volumes of industrial solvents. Mexico City's air quality is among the worst in the world. Resources for environmental monitoring and cleanup are stretched even thinner in the aftermath of a major earthquake in 1985.

1990-1994: Mexico faces extensive environmental deterioration, especially in the areas of deforestation, soil erosion, overfishing, and contamination. Presidents Bush and Salinas launch the Integrated Border Environmental Plan in conjunction with their NAFTA negotiations. Salinas creates the Ministry of Environment, Natural Resources and Fisheries, and puts into place a polluter-payment system.

1995-2000: Environmental concerns finally make their way into the national agenda. The National Development Plan of 1995-2000 puts reaching sustainable development on near-equal footing with maintaining economic growth.

2001-2003: President Vicente Fox promises to enact legislation to combat pollution and bridge the gap between Mexico's environmental standards and those of the United States. Mexico City plans a 10-year program to improve air quality by means of public transportation, emissions standards, and faster, less congested roads. Mexico's deforestation rate is ranked the world's second worst, after Brazil.

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Rule of Law

1934-1940: Cárdenas augments presidential power by subordinating the entire apparatus of the official party under the chief executive. He also expands the role of the state, making it the sole mediator among competing interest groups and the arbiter of political disputes. The military is close at hand and ready to support the state in the event of opposition.

1941-1951: Mexican presidents are nominated by dedazo ("pointing the finger") by which the outgoing president designates his successor, to be rubber stamped by less-than-transparent national elections. Corruption runs rampant as the state plays a larger role in the economy.

1952-1965: Brutality and systematic human rights abuses by members of internal security forces are pervasive and go largely unpunished. Students and labor are kept under control so as not to disrupt economic growth. Mexico's rural indigenous people periodically rise in protest against poverty and encroachment by large farmers.

1966-1975: Several guerilla organizations operate in rural areas but remain fragmented. Many of their leaders are tracked down and killed by military forces. Armed forces open fire against thousands of students as they protest for free speech and more rights. Politically motivated "disappearances" are not uncommon. Drug trafficking and production engender a new form of criminal activity.

1976-1985: Personnel at the Federal Directorate of Security are found to be in league with drug traffickers. The agency is disbanded and replaced by the Center for Investigation and National Security (CISN), but it, too, is suspected of illegal activity. Government denies the existence of a White Brigade, a group of army and police officers using illegal tactics to destroy guerilla movements.

1986-1993: Zedillo supports military involvement in internal law enforcement and anti-drug efforts. Allegations of police brutality decline, but torture, wrongful arrests, and involvement in drug trafficking among government and law enforcement officials continue. The attorney general, claiming to crack down on illegal activities among officials, is himself suspected of ties with drug traffickers.

1994-1996: A rash of political assassinations in 1994 highlights the unlawful nature of the political process. Unrest in Chiapas leads the Mexican army to embrace a counterinsurgency mission against the Zapatistas to quell the rebellion. The Zapatistas agree in principle to lay down arms during peace talks in 1996, but they remain a political force.

1997-1999: The United States and Mexico coordinate their efforts to combat drug trafficking, but these efforts are marred by continued corruption among counternarcotics officials. Under greater international scrutiny, the number of cases of human rights violations decreases.

2000-2001: The relatively transparent 2000 presidential election restores some faith in the political process, but Mexico still has a poor human rights record and is under pressure from the United States to deal with drug trafficking. Stiffer penalties and militarization of the counternarcotics effort have led to few arrests. Illegal immigration into the U.S. continues to cause tension along the border.

2002-2003: The government releases files from the "dirty war" repression era and, after many years of glossing over the period, opens an investigation into the 1968 massacre of student protestors. In the Northern frontier city of Juarez, the unsolved murders of hundreds of women draw international attention. Former New York mayor Rudy Giuliani becomes a consultant to the Mexico City police.

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Trade Policy

1934-1951: High protective tariffs and other barriers to imports foster the development of consumer goods industries geared toward domestic markets. In the agricultural sector as well, the government offers tax incentives for production directed toward the home market.

1952-1970: Government gradually adopts full-scale import-substitution industrialization as a development policy, raising import controls on consumer goods but relaxing them on capital goods. By 1970, Mexico has a diverse export base and is largely self-sufficient in food crops, steel, and many consumer goods.

1971-1978: Significant oil discoveries in the '70s turn Mexico from a net importer into a significant exporter of oil and petroleum products. But as the peso becomes increasingly overvalued, non-oil exports suffer.

1979-1987: Mexico begins to feel the strains of its import-substitution policy in the late '70s as commodity markets collapse. Mexico becomes a net importer of foodstuffs as production of basic crops stagnates. The financial and economic crisis of the early '80s causes Mexico to reevaluate its stance on trade and liberalize its economy in a first step toward free trade.

1988-1993: Looking outward, Mexico enters into free-trade agreements with other Latin American countries. The neoliberal development strategy depends on the promotion of manufactured exports and thus on expanded U.S.-Mexico trade. Despite opposition from Mexican farmers who fear growing imports of cheap American grain, Mexico enters the General Agreement on Tariffs and Trade (GATT) and joins NAFTA in 1993.

1994-2000: Mexico is fully integrated in world trade. NAFTA contributes to the process of adjustment by enabling Mexico to reduce its current account deficit through increased exports rather than through decreased imports from the U.S. Mexico becomes the first Latin American member of the Asia-Pacific Economic Cooperation forum (APEC) as well as a founding member of the World Trade Organization (WTO).

2001-2003: Some farmers protest the tide of imports that NAFTA has generated. Corn farmers in Chihuahua and Chiapas demonstrate against U.S. corn shipments, and many fear they will go out of business when the corn market opens fully in 2008. The U.S. downturn hurts Mexican exports. Rising oil prices in early 2003 offer unexpected revenue.

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Money

1934-1940: The state promotes industrialization by encouraging import substitution, mobilizing domestic savings, and directing state credit toward priority investment projects. Its policies on interest and exchange rates are conservative so as to attract external capital to support industrialization.

1941-1951: The National Finance Bank (Nafinsa), originally created as an investment bank, is reorganized to foster industrial expansion. To reduce the costs of imported capital goods and to expand productive capacity, the government undervalues the peso.

1952-1969: The country's currency remains stable during these years of the "Mexican miracle." Fiscal and monetary policies are prudent, and inflation is low, at least by Latin American standards. But the increasing availability of international capital enables expansionary policies that create large fiscal deficits. The peso progressively becomes overvalued, laying the foundation for a financial crisis.

1970-1975: Mexico finances internal deficits with massive external borrowing. The government is determined to maintain a fixed exchange rate despite rising inflation. By the late '70s, falling oil prices combine with rising international interest rates to throw Mexico's external payments far out of balance.

1976-1981: By 1976, Mexico is in financial crisis. The government curbs public-sector spending, restricts credit, and allows the peso to float, ending 20 years of exchange-rate stability. The discovery of petroleum deposits in 1977 briefly alleviates fiscal pressures and induces a false sense of security. Officials relax their policies of fiscal restraint and postpone adjustment measures.

1982-1987: Mexico can no longer service its external debt, precipitating an international economic crisis. Finance Minister Silva Herzog solicits a rescue package from the U.S. Treasury, Federal Reserve Board, and banks. Government nationalizes private banks in a vain effort to stem capital flight. Austerity measures and a peso devaluation erase fiscal and trade deficits, but cause reduced imports and recession.

1988-1993: Mexico broadens the tax base, tightens tax collection, and restrains wages and prices. As a result, the inflation rate falls, and the country's public finances improve. A combination of U.S.$3.5 billion from the IMF through the Brady Plan (advocated by the U.S. Secretary of the Treasury), assistance from the World Bank, and negotiations with foreign creditor banks reduces foreign debt.

1994-1995: A series of political shocks and a devaluation in 1994 cause investor panic. The government raises interest rates to retain foreign investment, increasing payments owed by Mexican borrowers and creating a financial crisis. The government also raises taxes and the prices of many publicly provided services. A $20 billion bailout from the U.S. goes a long way toward alleviating the crisis.

1996-2000: Spending reductions begin to pay off, and the public-sector deficit becomes a modest surplus. Monetary policy is successfully geared toward reducing inflation. The value of the peso stabilizes, in large part a result of the flexible exchange-rate regime and stability in international financial markets in the late '90s.

2001-2003: President Fox prepares a fiscal reform plan, including a controversial VAT on food and medicine. His strategy is one of increased competition, a strong internal market, and strict fiscal discipline. In 2002 the peso comes under inflationary pressure -- albeit still modest at around 4 percent. The Central Bank tightens monetary policy, but the peso trades at four-year lows in early 2003.

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Categories: Overview | Political | Economic | Social | Environmental | Rule of Law | Trade Policy | Money
Graphs: Growth | Income | Inflation | Unemployment | Well-being | Trade Volume | Trade (CAB) | Debt | Spending

Related: Video | LinksView all categories for years from to | See Full Report | Print