1. STUDENT NOTES – 4 CH. 5 MEXICO

2. V. POLITICAL ENVIRONMENT AND ECONOMIC CHANGE
PRI vowed to fulfill demands of the masses – land, education reform, labor rights
All predicated under patron-client system and strong presence in the economy (ISI)
Strategy for industrialization based on domestic manufacture of previously imported goods to satisfy domestic market demands.
State capitalism
“Mexican Miracle” ( )

3. V. POLITICAL ENVIRONMENT AND ECONOMIC CHANGE
Mexico became major oil exporter.
Revenues were invested in all sectors and poverty reduction programs started.
Economy vulnerable to change in oil prices
Oil prices dropped in 1982
United States tightened monetary policy; increased interest rates.
Foreign debt mounted.
Implications of crisis on structures of power and privilege
Import substitute created inefficiencies in production.
Failed to generate sufficient employment
Cost government far too much in subsidies
Increased dependency on industrialized countries
Shift in employment from formal to informal caused fragmentation

4. V. POLITICAL ENVIRONMENT AND ECONOMIC CHANGE
Mexico’s international economic policies altered by crisis
Government pursued outward-oriented policies.
Relaxed trade and investment barriers and encouraged production of exports
$50 billion economic assistance program by United States, Europe, and IMF
Imposed economic stabilization package—containing austerity measures, higher interest rates, and limits on wages.

5. V. POLITICAL ENVIRONMENT AND ECONOMIC CHANGE
Demands to deal with economic and political crisis
Weakening of political power centers provided opportunity to reorient economic development strategy
Deregulation gave private sector more freedom.
Salinas privatized some 900 state-owned enterprises
Overhaul of federal system, delegating more power to state and local governments
North American Free Trade Association (NAFTA)
Increased vulnerability to international economy
Linked Mexican and United States economies
Led to economic crises of 1994 and recession of 1995

6. V. POLITICAL ENVIRONMENT AND ECONOMIC CHANGE
From 1980 to 2000, Mexico transformed from a closed economy driven by oil to one led by diversified services and exports
FDI $330 billion
Maquiladores – manufacturing centers (80% of exports)
Oil now less than 20% of total exports
Gini coefficient 2008 – 48 (largely unequal)
Globalization has increased government transparency – economic freedom led to political freedom and PRI could NOT regain political control

7. V. POLITICAL ENVIRONMENT AND ECONOMIC CHANGE
Oportunidades (Zedillo) – gov gives families stipends to keep young children in school
Seguro Popular (Fox) – national health insurance program

8. VI. PUBLIC POLICY: CURRENT CHALLENGES
½ under poverty line
Few jobs to accommodate youth in labor force
Development gap
Income gap
Weak rule of law
Women paid less
Major environmental problems (waste)

9. VI. PUBLIC POLICY: CURRENT CHALLENGES
Mérida Initiative
US sends financial aid in trafficking

10. VI. PUBLIC POLICY: CURRENT CHALLENGES
Mexico’s proximity to US a major influence
WWII: US needed migrant laborers
2009: 11% of Mexicans living abroad, most in the US
US stake in Mexico: political stability, economic development

11. VI. PUBLIC POLICY: CURRENT CHALLENGES
Transition to Democracy:
Elections are as democratic, transparent as any other country in Americas
Talk of changing Constitution of 1917 to weaken presidency and strengthen Congress
Should be classified as a democracy, one of best functioning in Latin America