Mexican Economic Development : 1940-2006
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Transcript of Mexican Economic Development : 1940-2006
Mexican Economic Development: 1940-2006
“The Mexican Miracle”
• 1940-1980– Remarkable growth– Annual Avg. GDP Growth=6.5%
• Reasons for Success– Government stability – Oil Revenue– Emphasis on Industrialization
• Subsidies for domestic industries– Import Substitution
• High tariffs– Nationalization of industry.
• Oil, railroad, electricity, & thousands of companies.
Parastatal
• Company or agency owned (or partially owned) by the government.
• By 1980, the government controlledover 1,000 firms.
• PEMEX (Mexican Petroleum)– Net worth of $415 billion– Employs approx 140,000
Mexican Debt Crisis, 1980s-90s
1. WHAT WERE THE CAUSES?
2. WHY DID THE U.S. WANT TO HELP?
Mexican Debt Crisis, 1980s-90s
CAUSES• Heavy borrowing to industrialize caused Foreign Debt
– Gambled on high oil prices– 1980s: Prices DROPPED
• Import Substitution=Industrial inefficiency– Uncompetitive in global market– Led to a trade deficit
• Runaway Inflation: 1987=159%
Total Debt1970=6 billion 1982=80 billion1976=26 billion 1987=107 billion
(70% of GNP)
Bailout of 1995
• International investors withdrew $5 billion from Mexican market.
• Lacked ability to pay debt.– Borrowed $50 billion from IMF and the U.S.
PRI Becomes Market-Oriented
New policies of Late ‘80s through ‘90s.1. Debt Reduction2. Austerity Measures– Cut deficit in half in 3 years.– Raised taxes– Reduced social services
3. Privatization– Sold parastatals– Only about 100 left today.
4. Opening Up the Economy
• Protectionism to neoliberalism• Import substitution to structural adjustment – Allow FDI.
• 1986: Joined General Agreement on Tariffs and Trade (GATT)– Precursor to WTO.– Diversified exports (not just oil)
• 1992: Signed North American Free Trade Agreement (NAFTA)
North American Free Trade Agreement (NAFTA)
• United States, Mexico and Canada• Eliminate tariff barriers• Greatly reduce
other barriers (i.e., licensing fees and quotas for foreign companies)
Maquiladoras
• Foreign-owned factories in Mexico.
• Goods are imported to Mexico.
• Made in Mexico.• Then exported.• Largely located in
North
Zapatistas• State of Chiapas• Indigenous Mayan farmers
Concerns• Abject poverty• Few elite controlled arable
land (seized ejidos)• NAFTA
– Ended ejidos• PRI “Democracy”• No self-rule
– Elite land owners and PRI
Zapatistas• Zapatista Army of National
Liberation (EZLN)• Subcomandante Marcos• January 1, 1994 (NAFTA
enacted)– EZLN seized 6 towns
• Mexican army clashed with EZLN
• Cease fire after 12 days– Approx. 200-400 died.
• San Andres Accords, 1996– Protect indigenous languages– Greater local autonomy– NEVER IMPLEMENTED
• Few EZLN goals realized