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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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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