Two Crisis

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Two crisis of Mexican

NeoliberalismIIPPE Conference

The Hague 2013 Alejandro Valle Baeza

Vallebaeza.wordpress.com


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Introduction

In 2008-09 Mexican economy had its thirdserious crisis in the last thirty years: 1982 External debt crisis (Also Banking and

exchange rate crisis), Neoliberal tendenciesreinforced since then.

1994, Banking and exchange rate crisis.

Political crisis: Ruling party with seriousproblems after decades on power. 2008 productive crisis mainly in exportation

manufacture sector


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In this presentation I try to explaindifferences between 2008-09 and 1994-95crises.The conventional explanation is: Mexicaneconomy is more stable now thanks toNeoliberal policies


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45

90

135

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225

1976 1983 2002 2009 2011

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Mxico. Salario mnimo real.Aos seleccionados


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The 1994-95 crisis

1986 Mexico joined the GATT 1989, controls of interest bank rates wereremoved.1990 began the process of developing theNorth American Free Trade Agreement(NAFTA) it was signed in 1992.1993 Foreign investment law is changedto attract more money from abroad


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During previous years to NAFTAimplementation, several public companieswere privatized, by examplequasi-monopoly phone company: Telmex1994 Nafta started to operate. Thecandidate of the ruling party was killed (bya solitary killer! remember JFK),Zapatista guerilla declares war againstMexican government.


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1994-95 crisis

Crisis started in December 1994 bysudden interruption of external capitalflows. Peso was devaluated: 3.38 pesosper US dollar in 1994 to 6.42 pesos in1995.US government and IMF guarantee loansby 51637 million dollars! Nevertheless26253 million was used.


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US intervention was not philanthropic butto save US pension funds who ownedMexican government bondsThis Mexican crisis had negative effects inmany other countries: so it was called the

Tequila effect. All the Mexican banks faced technicalbankruptcy problems. Government bailedout banks, i. e. socialized looses.


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Domestic sales of theautomobile industryfell 71.7%, however

exportation aminoratethe problem henceproduction diminishmuch less than that.

USA between 1929and 1932 automobilesales declined 75.2%.


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2008-09 crisis

Exports fell 14.8% in 2009Remittances from abroad fell 15.7% in2009 (from 25 to 21 billion doll)GDP growth -6.5% in 2009


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Mexican automotive industry is presentedas a history of neoliberal success this apropaganda bias; because its counterpartis the deterioration of that US industry.


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During 50s Detroit was therichest US city


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Mxico, exportacin de televisores.Datos mensuales en miles dlares

US Percent Changes in Chain Type Quantity Indexes for Value Added Computer an


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1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2

US, Percent Changes in Chain-Type Quantity Indexes for Value Added Computer an


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In January 2012 it was reported that asmall US company would start producingagain television sets. Seventeen yearsbefore, Zenith, then the last manufacturerof US ownership, already had become asubsidiary of the Korean LG.


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Conclusions

Neoliberalism has been a period of mediocre growth that has impoverishedMexican workers, forcing many to migrateTwo major crises have occurred afterinstalling Neoliberalism: 1995-95 and2008-09. The first was a financial crisisand the second a productive one.


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The Mexican success in certain industries(manufacture of automobiles andtelevisions) is the other face of the seriousproblems of U.S. industryThe best situation of Mexican tradebalance is not so much a legitimatetriumph but a gain resulting from thelosses U.S. Mexico is a side winner of competition war

Two Crisis

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