Economic Changes and the Need for a New Federalism: Lessons from Mexico's Northern States

Abstract

Introduction Mexico's recent crisis has brought to the fore what is perhaps the most relevant feature of its current model of development: close interdependence with the global system, and particularly with the United States. Over the past twelve years, its strategy of economic opening proclaimed Mexico's participation in the globalization process as a sine qua non condition for modernization. As 1995 began with the peso crisis, the consequences of this opening revealed a side of globalization that might well be termed perverse. In this paper we pose questions regarding the role the states of northern Mexico have played in this shift from the current model of development. More specifically, we discuss the substantial modifications, which might be termed mutations, that have occurred in their economies and territories during the last few years. These changes oblige us to reassess the federalism model and the role that each of the states plays in the country's economic, social, and political future, understood as it is within the framework of growing economic liberalization, both continentally and globally. The central hypothesis here is that the recent economic changes have produced numerous transformations in Mexico's territorial organization but that, in turn, such transformations have not led to serious consideration of the relationship between the central government and the states most affected by the opening process. We have identified four different levels of analysis which are pertinent to this discussion: - The new definition of the existing connection between national and regional space and globalization. - The most significant regional changes in levels of development of the different states, their most important activities, and their relative position in the interregional division of labor. - The profound transformations of the cities, where the access to goods and services in many cases has led to serious conflicts, thus affecting the fundamental ideas put forth by the globalization process. - The impact of economic liberalization on regions constrained by limited local resources and by a fiscal policy conditioned by the central government. From Inward-Oriented Development to an Outward-Oriented Model The model of development which guaranteed Mexico's sustained economic growth for several decades was based on an import-substitution strategy and on the development of an increasingly important domestic market. Starting from a weak economic base, strongly affected by the events of the 1910 Revolution, Mexico was able to construct an economic model suited to the international situation. An important industrialization process was begun and, although it was insufficiently widespread, considerable accumulation in the secondary and tertiary sectors guaranteed the expansion of domestic markets, the development of a strong middle class, and Mexico's transformation into a relatively modern country. In emphasizing stabilization, this development model produced considerable imbalances because it favored the concentration of the economy in the nation's geographical center, the Mexico City metropolitan area. But these were also the result of the state's resistance to creating a more egalitarian territorial system and its willingness to subsidize the urban concentration in the capital. Even the oil boom from 1978-1982 acted to reinforce the concentration process and to resist better regional distribution of income and investments. The change to an outward-oriented model, after the failure of the previous development model, was achieved through the gradual adjustments implemented during the de la Madrid administration from 1982-88. These adjustments had to overcome ideological and corporate opposition which, in some cases, stemmed from sectors within the state apparatus. Under the Salinas de Gortari presidency from 1988-94, however, the transformations were accelerated and intensified. …