Mexico since 1980

Mexico since 1980 addresses a fundamental question: why have the profound economic, political, and social changes that have taken place in Mexico since the early 1980s not produced a major transformation of the country? To explain this paradox, the authors focus on how the lack of liberal democratic institutions in the postrevolutionary period fostered the formation of rent-seeking coalitions of asset holders and the government. In order to provide incentives for investors to channel capital to different economic activities, the government granted monopoly privileges or designed economic policies that curtailed competition in order to compensate for the risks of expropriation and the lack of enforcement of property rights. At the same time, the government implemented a patronage system to respond to the demands of peasants, urban workers, and bureaucrats in exchange of political support for the PRI, a party that remained in power until 2000.In economic and political terms, the authoritarian rule delivered stability and growth for a half-century. The GDP per capita increased on average 3.2 percent per year in the period 1932–81, while the PRI held sway in national and local elections. Yet the rent-seeking coalition reaped most of the economic benefits. In the early 1980s the Mexican economy was closed to foreign competition. Monopolies and oligopolies dominated the industrial structure, public enterprises participated in a wide range of sectors, and income distribution was ranked among the worst in Latin America. In the political arena, the PRI controlled the executive, the legislative, and the judicial branches of government at federal and state levels.A quarter-century later change was apparent. The Mexican government liberalized its economy, signed a free trade agreement with the United States and Canada, fostered foreign direct investment, and privatized most public enterprises. From the mid-1980s on, opposition parties won elections in municipalities and states, and the presidency in 2000. The authors define these accomplishments as the “second Mexican revolution” because, taken together, they should be a milestone in Mexico’s history. However, at the beginning of the twenty-first century, the overall outcome has been disappointing due to the extremely heavy burden inherited from the past. The rule of law and the enforcement of property rights fare poorly, and institutional arrangements still allow the discretion of public officials.The analysis of commercial and social policy, the performance of the banking sector, and the major trends in Mexican politics — central issues developed in chapters 3 to 6 — demonstrate that the depth and scope of reforms faced constraints rooted in the authoritarian regime. Therefore, shifts in policies were often incomplete, or worse, they replicated well-known patterns. For instance, the Mexican Telephone Company (Telmex) faced no competition after its privatization in 1990, and only recently new players are struggling to participate in the telecommunications sector. Likewise, trade liberalization represented a radical departure from the protectionism implemented since World War II, but “neither joining the GATT nor signing NAFTA was a panacea for Mexico’s diverse economic ills” (p. 82). The same holds true for reforms to the pension system, credit policy, mortgage market, and judicial system.However, the laggard economic growth of recent years and the failed or insufficient reforms should not discredit the efforts aimed at constructing institutions that strengthen the rule of law and the universal enforcement of property rights. Mexico needs to complete its “second revolution” under a new institutional arrangement capable of creating a truly democratic state.This book deepens our understanding of Mexico’s past and present. The authors carefully explain the connections of each piece of their analysis and shed light on broader issues of economic and political development in emerging economies. However, I believe there is an omission that requires attention to complete the picture: the influence of the external background. The foreign debt crisis, the end of the cold war, the currency crisis of the late 1990s, the globalization of financial and capital markets, to mention just a few, were influences that are overlooked. Although comparisons with Latin America abound, readers might benefit from direct references to how external events shaped internal affairs. True, Mexico had a revolution, but the world also experienced one.Scholars from diverse backgrounds will find Mexico since 1980 useful for its conceptual insights into how authoritarian regimes work; as an accessible account of a major economic, social, and political reform process; and as an outstanding synthesis of a puzzling period of Mexican history.

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