Mexico’s market reforms in historical perspective

Abstract

This paper examines Mexico’s main economic policies and problems during the last two centuries. Focusing on episodes of radical shifts in development strategy concerning the role of the market and the State, it argues that Mexico’s real obstacles to development have often been misperceived, and such misperception may be occurring today. This argument is tested, initially, by reviewing the causes of Mexico’s economic stagnation during most of the nineteenth century. The period of economic expansion between 1940 and 1981, which ended with the collapse of the oil boom in 1981 is also examined. A critical review is made of the radical shift in development strategy implemented in the mid-1980s in response to the external debt crisis associated with the apparent exhaustion of the strategy of import substitution and State-led industrialization. Finally, some thoughts are presented on the current challenges faced by the Mexican economy when, after more than 15 years of macroeconomic reform, it seems stuck in a low-growth situation.