Mexico in an Economically Turbulent World

The majority of developing countries, particularly those on the American continent, accompanied us through the transition of the 1980s, which was a lost decade for progress. That painful experience, plus the prevalence of neoliberals in the United States and Great Britain, influenced Latin America to adopt measures reducing the government’s presence in internal economic activity at a time when this activity was being opened up to the rest of the world.

In Mexico, the privatization and opening of the commercial and financial markets reached the highest levels in the region, and the fruit it bore was the transformation of our country between 1990 and 2001; our exports had the second fastest growth rate in the world, with an accumulated increase of 289 percent in sales abroad during those years, second only to China, whose exports grew 329 percent. Evidently, this explosion of exports was helped by NAFTA, but its impact on the national economy was limited. In the decade of 1991 to 2000, Mexico’s GDP grew at a rate of 3.3 percent, according to information provided by the IMF; this is equal to the average in Latin America and the Caribbean but falls far short of our aspirations of cutting the gap that separates us from the advanced economies. For example, in those same years, the developing economies in Asia grew at an annual rate of 7.4 percent.

The last two PRI governments of the 20th century changed the strategy of growth by making the economy more open to commercial trends and global finance and investments; this happened during a wave of liberalization and elimination of internal financial control by the countries at the world’s economic center. This lack of market regulation was started in the United States by Ronald Reagan’s Republican administration and, through some ups and downs, was continued by subsequent administrations, including Bill Clinton’s Democratic one, until the explosion of the financial crisis of 2008, which was derived from a prolonged expansion of the global economy and has been named the “Great Recession” in order to differentiate it from the Great Depression of 1929 to 1933. This deafening fall of financial capitalism was preceded by cycles of peaks and falls in the businesses of the United States, Japan and other developed economies that, although they did not reach the abyss of 2008 and 2009, were the preamble to the long-awaited burst of the speculative bubbles that formed between 2001 and 2007 and were caused by unregulated economic activity.

The financial volatility of those years led to the banking system crisis that caused a fall of the world’s economy unparalleled since World War II, and the recovery that followed it appears too worn out to start the last trimester of 2011; in its place, the ghost of another recession has appeared, particularly in the eurozone. The current problem is that the governments of the developed economies have almost exhausted the political possibilities of grabbing a hold of the monetary instruments to avoid another economic contraction. This isn’t to forget the brief, weak recovery that occurred with high levels of unemployment in rich countries.

For all of the 21st century, Mexico has been governed by the PAN political party, which has, because of its ideology and for comfort, preserved in its neoliberal doctrine and policies a monetary stability over all things, just as the two previous PRI governments had done. The results on the growth have been disastrous: in the period between 2001 and 2010, the GDP “grew” at an annual rate of 1.8 percent, half of the average growth for Latin America and the Caribbean and half of Mexico’s growth from 1991 to 2000. The GDP has been more or less stagnant for the last 10 years in Mexico!

What is worse is that the economic authorities and the same president keep saying that Mexico is growing and that its strength is being praised by the world, and so they see no necessity to increase the fiscal deficit to counter the damaging effect of the U.S.’ slowing economy and that of other developed economies. To insist on stability even though it produces economic starvation is hugely nonsensical in our turbulent world these days.