Issue 10, August 2009
|Inside Mexico: Economy|
In the view of most experts, the Mexican economy has underperformed in the era of globalization. The root causes for this lie in a complicated mix of colonial and Revolutionary legacies, combined with critical failures on the part of the Mexican government to enact effective policies to maximize growth and reduce poverty. Nevertheless, Mexico is more stable and resilient going into the current economic crisis than it was going into previous economic crises in 1984 and 1995.
Economic inequality in Mexico is, and has always been, striking. This inequality has been in evidence since colonial times, when enormous advantages were enjoyed by Spanish colonial officials and the Catholic Church.
The result has been a highly unstable mix of concentrated wealth and widespread poverty that has been deleterious to overall economic growth.
Although Mexico ranks 53rd out of 177 countries on the UN Development Index, putting it at the lower end of the high development category, nearly half of all Mexicans live in poverty, and almost 15% live in extreme poverty.
In an era in which many countries’ economies grew dramatically through the worldwide expansion of free market mechanisms, Mexico has stagnated. Unable to enact both the macro and micro economic reforms necessary for it to fully participate in the new global economy, Mexico has been left with the worst of both systems – state control and a free market. The domestic market was opened up to global competition, but was unable to effectively compete.
In this section, we will examine how Mexico’s economy has evolved, what has contributed to its disappointing levels of growth and competitiveness, and where its future may lie.
In this section . . .