State policy, distribution and neoliberal reform in Mexico

Journal of Latin American Studies

Volumn 29, Issue 2, 1997, Pages 419-456

  Pastor, Manuel ^a   Wise, Carol ^b  

^a UNIVERSITY OF CALIFORNIA   (United States)

^b JOHNS HOPKINS UNIVERSITY   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

DEVELOPING COUNTRY; ECONOMIC REFORM; INCOME DISTRIBUTION; NEOLIBERALISM; REFORM FAILURE; STATE POLICY;

MEXICO;

EID: 0031452822     PISSN: 0022216X     EISSN: None     Source Type: Journal    
DOI: 10.1017/S0022216X97004744     Document Type: Article

References (115)

1. See, for example, B. Balassa et al., Development Strategies in Semi-Industrial Economies (Baltimore, 1982), D. Lal, The Poverty of Development Economics (London, 1983), and P. Bustelo, 'Neoliberalismo y nuevos paises industriales', Revista de Economia, no. 727 (March 1994, Madrid), pp. 77-93.
2. See, for example, B. Balassa et al., Development Strategies in Semi-Industrial Economies (Baltimore, 1982), D. Lal, The Poverty of Development Economics (London, 1983), and P. Bustelo, 'Neoliberalismo y nuevos paises industriales', Revista de Economia, no. 727 (March 1994, Madrid), pp. 77-93.
3. See, for example, B. Balassa et al., Development Strategies in Semi-Industrial Economies (Baltimore, 1982), D. Lal, The Poverty of Development Economics (London, 1983), and P. Bustelo, 'Neoliberalismo y nuevos paises industriales', Revista de Economia, no. 727 (March 1994, Madrid), pp. 77-93.
4. These figures on growth, income shares, and productivity are cited from 'Increased Productivity, Key to Development', CEP AL News, vol. 16, no. 6 (June 1996), pp. 1-3, and 'Poverty in Latin America and the Caribbean is Greater Now Than in the 1980s', CEP AL News, vol. 16, no. 7 (July 1996), pp. 1-3.
5. These figures on growth, income shares, and productivity are cited from 'Increased Productivity, Key to Development', CEP AL News, vol. 16, no. 6 (June 1996), pp. 1-3, and 'Poverty in Latin America and the Caribbean is Greater Now Than in the 1980s', CEP AL News, vol. 16, no. 7 (July 1996), pp. 1-3.
6. This is a main theme of the essays in B. P. Bosworth, R. Dornbusch and R. Laban (eds.), The Chilean Economy: Policy Lessons and Challenges (Washington, DC, 1994). Despite the Chilean record of impressive growth, there remain problems for income distribution. See D. Raczynski and P. Romaguera, 'Chile: Poverty, Adjustment, and Social Policies in the 1980s', in N. Lustig (ed.), Coping with Austerity (Washington, DC, 1995), PP. 286-90.
7. This is a main theme of the essays in B. P. Bosworth, R. Dornbusch and R. Laban (eds.), The Chilean Economy: Policy Lessons and Challenges (Washington, DC, 1994). Despite the Chilean record of impressive growth, there remain problems for income distribution. See D. Raczynski and P. Romaguera, 'Chile: Poverty, Adjustment, and Social Policies in the 1980s', in N. Lustig (ed.), Coping with Austerity (Washington, DC, 1995), PP. 286-90.
8. D. Solis and C. Torres, 'Libre mercado no garantiza nada', Wall Street Journal Americas (El Mercurio, Santiago, Chile), 17 June 1996, p. B8, and M. Fineman, 'Zedillo Address Touts "New Era," Targets Rebels', Los Angeles Times, 2 Sept. 1996, p. A1.
9. D. Solis and C. Torres, 'Libre mercado no garantiza nada', Wall Street Journal Americas (El Mercurio, Santiago, Chile), 17 June 1996, p. B8, and M. Fineman, 'Zedillo Address Touts "New Era," Targets Rebels', Los Angeles Times, 2 Sept. 1996, p. A1.
10. The macroeconomic history in this section draws on N. Lustig, Mexico: The Remaking of an Economy (Washington, DC, 1992) and E. Buffie, 'Mexico 1958-86: From Stabilizing Development to Debt Crisis', in J. Sachs (ed.), Developing Country Debt and the Third World Economy (Chicago, 1989), pp. 141-68; analysis of the more recent period is drawn from M. Pastor and C. Wise, 'The Origins and Sustainability of Mexico's Free Trade Policy', International Organization, vol. 48, no. 3 (1994), pp. 459-89, and R. Dornbusch and A. Werner, 'Mexico: Stabilization, Reform, and No Growth', Brookings Papers on Economic Activity, no. 1 (1994), pp. 253-315, as well as interviews with Mexican macroeconomic policy-makers in 1992, 1993 and 1995.
11. The macroeconomic history in this section draws on N. Lustig, Mexico: The Remaking of an Economy (Washington, DC, 1992) and E. Buffie, 'Mexico 1958-86: From Stabilizing Development to Debt Crisis', in J. Sachs (ed.), Developing Country Debt and the Third World Economy (Chicago, 1989), pp. 141-68; analysis of the more recent period is drawn from M. Pastor and C. Wise, 'The Origins and Sustainability of Mexico's Free Trade Policy', International Organization, vol. 48, no. 3 (1994), pp. 459-89, and R. Dornbusch and A. Werner, 'Mexico: Stabilization, Reform, and No Growth', Brookings Papers on Economic Activity, no. 1 (1994), pp. 253-315, as well as interviews with Mexican macroeconomic policy-makers in 1992, 1993 and 1995.
12. The macroeconomic history in this section draws on N. Lustig, Mexico: The Remaking of an Economy (Washington, DC, 1992) and E. Buffie, 'Mexico 1958-86: From Stabilizing Development to Debt Crisis', in J. Sachs (ed.), Developing Country Debt and the Third World Economy (Chicago, 1989), pp. 141-68; analysis of the more recent period is drawn from M. Pastor and C. Wise, 'The Origins and Sustainability of Mexico's Free Trade Policy', International Organization, vol. 48, no. 3 (1994), pp. 459-89, and R. Dornbusch and A. Werner, 'Mexico: Stabilization, Reform, and No Growth', Brookings Papers on Economic Activity, no. 1 (1994), pp. 253-315, as well as interviews with Mexican macroeconomic policy-makers in 1992, 1993 and 1995.
13. The macroeconomic history in this section draws on N. Lustig, Mexico: The Remaking of an Economy (Washington, DC, 1992) and E. Buffie, 'Mexico 1958-86: From Stabilizing Development to Debt Crisis', in J. Sachs (ed.), Developing Country Debt and the Third World Economy (Chicago, 1989), pp. 141-68; analysis of the more recent period is drawn from M. Pastor and C. Wise, 'The Origins and Sustainability of Mexico's Free Trade Policy', International Organization, vol. 48, no. 3 (1994), pp. 459-89, and R. Dornbusch and A. Werner, 'Mexico: Stabilization, Reform, and No Growth', Brookings Papers on Economic Activity, no. 1 (1994), pp. 253-315, as well as interviews with Mexican macroeconomic policy-makers in 1992, 1993 and 1995.
14. This first phase of adjustment failed partly because the government underestimated the extent of structural reform necessary to restore equilibrium and partly because external credit and assistance was so limited. For a more complete review of this period, see Lustig, Mexico: The Remaking of an Economy, especially pp. 34-8.
15. For more detail on these pacts, see R. R. Kaufman, C. Bazdresch and B. Heredia, 'Mexico: Radical Reform in a Dominant Party System', in S. Haggard and S. B. Webb (eds.), Voting for Reform: Democracy, Political Liberalization and Economic Adjustment (New York, 1994), pp. 361-410.
16. Ibid. pp. 381-3.
17. Authors' confidential interviews conducted in Mexico City during 1991 and 1992 with a broad sample from within the Mexican business community concerning those factors which most influenced their support for NAFTA. As trade opening became positively linked with inflation reduction, those microeconomic losers from external competition were gradually persuaded of the merits of the overall programme.
18. These explanations are reviewed by J. Ros, 'Mercados financieros, flujos de capital y tipo de cambio en México', Economia Mexicana, vol. 4, no. 1 (1995), pp. 5-67; F. Gil-Diaz and A. Carstens, 'One Year of Solitude: Some Pilgrim Tales About Mexico's 1994-1995 Crisis', American Economic Review, vol. 86, no. 2 (1996), pp. 164-9; and G. A. Calvo and E. G. Mendoza, 'Petty Crime and Cruel Punishment: Lessons from the Mexican Débâcle', American Economic Review, vol. 86, no. 2 (1996), pp. 170-5.
19. These explanations are reviewed by J. Ros, 'Mercados financieros, flujos de capital y tipo de cambio en México', Economia Mexicana, vol. 4, no. 1 (1995), pp. 5-67; F. Gil-Diaz and A. Carstens, 'One Year of Solitude: Some Pilgrim Tales About Mexico's 1994-1995 Crisis', American Economic Review, vol. 86, no. 2 (1996), pp. 164-9; and G. A. Calvo and E. G. Mendoza, 'Petty Crime and Cruel Punishment: Lessons from the Mexican Débâcle', American Economic Review, vol. 86, no. 2 (1996), pp. 170-5.
20. These explanations are reviewed by J. Ros, 'Mercados financieros, flujos de capital y tipo de cambio en México', Economia Mexicana, vol. 4, no. 1 (1995), pp. 5-67; F. Gil-Diaz and A. Carstens, 'One Year of Solitude: Some Pilgrim Tales About Mexico's 1994-1995 Crisis', American Economic Review, vol. 86, no. 2 (1996), pp. 164-9; and G. A. Calvo and E. G. Mendoza, 'Petty Crime and Cruel Punishment: Lessons from the Mexican Débâcle', American Economic Review, vol. 86, no. 2 (1996), pp. 170-5.
21. Private savings, for example, had dropped from 13.7% of GDP in 1980 to just 5.0% by 1992. See J. Ros et al., 'Prospects for Growth and the Environment in Mexico in the 1990s', World Development, vol. 24, no. 2 (1996), p. 315.
22. See P. Lerne, 'Rebuilding Confidence in Mexico.' A report of the Economic Research Division of Goldman Sachs, New York, Feb. 1995.
23. For more analysis of the peso crash, see M. Pastor, 'Pesos, Policies, and Predictions: Why the Crisis - and Why the Surprise?' in C. Wise (ed.), The Post-NAFTA Political Economy: Mexico and the Western Hemisphere, unpubl. manuscript, Washington, DC, 1996; N. Lustig, 'The Mexican Peso Crisis: The Foreseeable and the Surprise', Brookings Discussion Paper No. 114, Washington, DC, 1995 ; and J. Sachs, A. Tornell and A. Velasco, 'The Collapse of the Mexican Peso: What Have We Learned?', National Bureau of Economic Research Working Paper 5142, Cambridge, MA, 1995.
24. For more analysis of the peso crash, see M. Pastor, 'Pesos, Policies, and Predictions: Why the Crisis - and Why the Surprise?' in C. Wise (ed.), The Post-NAFTA Political Economy: Mexico and the Western Hemisphere, unpubl. manuscript, Washington, DC, 1996; N. Lustig, 'The Mexican Peso Crisis: The Foreseeable and the Surprise', Brookings Discussion Paper No. 114, Washington, DC, 1995 ; and J. Sachs, A. Tornell and A. Velasco, 'The Collapse of the Mexican Peso: What Have We Learned?', National Bureau of Economic Research Working Paper 5142, Cambridge, MA, 1995.
25. For more analysis of the peso crash, see M. Pastor, 'Pesos, Policies, and Predictions: Why the Crisis - and Why the Surprise?' in C. Wise (ed.), The Post-NAFTA Political Economy: Mexico and the Western Hemisphere, unpubl. manuscript, Washington, DC, 1996; N. Lustig, 'The Mexican Peso Crisis: The Foreseeable and the Surprise', Brookings Discussion Paper No. 114, Washington, DC, 1995 ; and J. Sachs, A. Tornell and A. Velasco, 'The Collapse of the Mexican Peso: What Have We Learned?', National Bureau of Economic Research Working Paper 5142, Cambridge, MA, 1995.
26. Our figures on the distribution of household income are taken from the household surveys of income and spending undertaken by Mexico's National Institute of Statistics (INEGI). The national results are available for 1984, 1989 and 1992 as both raw data and a series of comparative tables on CD-ROM; the most recent survey (1994) has been in general release only as a 'hard copy' book which includes summary, but not comparative (multi-year) tables. We readily acknowledge the difficulty with which reliable and comparable household income surveys are obtained; our hope is that the use of the same source at least allows for the over-time comparisons drawn in the text. For an analysis and critique of the INEGI household survey with specific regard to its measurement of poverty, see J. Boltvinik, 'La pobreza en Mexico 1984-1992 según INEGI-CEPAL', Economia Informe, no. 237 (1995).
27. If one focuses on the income earned solely by the head-of-household, the distributional picture under Salinas worsens; specifically, the four lowest deciles showed markedly negative growth from 1989 to 1991, suggesting that the more favourable picture reflected in the data may be largely due to the increased workforce participation of women, youths and other non-traditional wage earners.
28. The 1984-9 and 1989-92 growth figures are taken directly from the comparative tables offered in Instituto Nacional de Estadística, Geografía e Informática (INEGI), Encuesta National de Ingresos y Gastos de los Hogares (1994 CD-ROM). A similar figure for 1992-4 is not available directly and must be calculated by 'splicing' two different samples. The use of the method suggested by INEGI, combining reported household income and the CPI, yielded an estimate but when we tried to check the calculation procedure against the directly reported INEGI figures for the earlier time period, there were significant discrepancies. Our 'best' alternative method of linking the time periods was via the growth in real per capita GDP, which was 1.64 per cent over 1989-92 as against a reported 1.7 per cent increase in real monetary income for households over the same period. This standard gives the pattern reported in the text but does not use the same method and hence is not strictly comparable to the other growth figures; moreover, it may understate gains in consumer welfare since the concurrent overvaluation of the peso tended to enhance purchasing power at every level of income. of course, as we stress below, this overvaluation prop is now gone and lower income groups are subsequently experiencing the full pain of the earlier redistribution.
29. These insights were confirmed in June 1995 during the authors' fieldwork interviews with two professional members of Mexico City's banking community : Jorge Arreola, Banco Nacional de Obras y Servicios Públicos, and Gerardo Vargas, Banco Nacional de México.
30. This section is based on the following sources: C. Alba Vega, 'La microindustria ante la liberalización económica y el Tratado de Libre Comercio', Foro International, vol. 23, no. 3 (1993), pp. 453-83; Centro de Estudios Económicos del Sector Privado, 'Evolución y problemática de las empresas en 1994', Actividad Económica, no. 183 (1995), pp. 1-23; C. Ruiz Duran, 'México: Crecimiento e innovación en las micro y pequeñas empresas', Comercio Exterior, vol. 43, no. 6 (1993), pp. 525-9; F. Sanchez Ugarte, 'Acciones en favor de las micro, pequeñas, y medianas industrias en México', Comercio Exterior, vol. 43, no. 6 (1993), pp. 539-43; United Nations Industrial Development Organisation (UNIDO), Mexico: The Premise of NAFTA (Vienna, 1994); E. Dussel Peters, 'From Export-Oriented to Import-Oriented Industrialization: Changes in Mexico's Manufacturing Sector, 1988-1994', in G. Otero (ed.), Neoliberalism Revisited (Boulder, 1996), pp. 63-83; and, on confidential fieldwork interviews conducted by the authors within Mexico's small enterprise sector from 1991 to 1994.
31. This section is based on the following sources: C. Alba Vega, 'La microindustria ante la liberalización económica y el Tratado de Libre Comercio', Foro International, vol. 23, no. 3 (1993), pp. 453-83; Centro de Estudios Económicos del Sector Privado, 'Evolución y problemática de las empresas en 1994', Actividad Económica, no. 183 (1995), pp. 1-23; C. Ruiz Duran, 'México: Crecimiento e innovación en las micro y pequeñas empresas', Comercio Exterior, vol. 43, no. 6 (1993), pp. 525-9; F. Sanchez Ugarte, 'Acciones en favor de las micro, pequeñas, y medianas industrias en México', Comercio Exterior, vol. 43, no. 6 (1993), pp. 539-43; United Nations Industrial Development Organisation (UNIDO), Mexico: The Premise of NAFTA (Vienna, 1994); E. Dussel Peters, 'From Export-Oriented to Import-Oriented Industrialization: Changes in Mexico's Manufacturing Sector, 1988-1994', in G. Otero (ed.), Neoliberalism Revisited (Boulder, 1996), pp. 63-83; and, on confidential fieldwork interviews conducted by the authors within Mexico's small enterprise sector from 1991 to 1994.
32. This section is based on the following sources: C. Alba Vega, 'La microindustria ante la liberalización económica y el Tratado de Libre Comercio', Foro International, vol. 23, no. 3 (1993), pp. 453-83; Centro de Estudios Económicos del Sector Privado, 'Evolución y problemática de las empresas en 1994', Actividad Económica, no. 183 (1995), pp. 1-23; C. Ruiz Duran, 'México: Crecimiento e innovación en las micro y pequeñas empresas', Comercio Exterior, vol. 43, no. 6 (1993), pp. 525-9; F. Sanchez Ugarte, 'Acciones en favor de las micro, pequeñas, y medianas industrias en México', Comercio Exterior, vol. 43, no. 6 (1993), pp. 539-43; United Nations Industrial Development Organisation (UNIDO), Mexico: The Premise of NAFTA (Vienna, 1994); E. Dussel Peters, 'From Export-Oriented to Import-Oriented Industrialization: Changes in Mexico's Manufacturing Sector, 1988-1994', in G. Otero (ed.), Neoliberalism Revisited (Boulder, 1996), pp. 63-83; and, on confidential fieldwork interviews conducted by the authors within Mexico's small enterprise sector from 1991 to 1994.
33. This section is based on the following sources: C. Alba Vega, 'La microindustria ante la liberalización económica y el Tratado de Libre Comercio', Foro International, vol. 23, no. 3 (1993), pp. 453-83; Centro de Estudios Económicos del Sector Privado, 'Evolución y problemática de las empresas en 1994', Actividad Económica, no. 183 (1995), pp. 1-23; C. Ruiz Duran, 'México: Crecimiento e innovación en las micro y pequeñas empresas', Comercio Exterior, vol. 43, no. 6 (1993), pp. 525-9; F. Sanchez Ugarte, 'Acciones en favor de las micro, pequeñas, y medianas industrias en México', Comercio Exterior, vol. 43, no. 6 (1993), pp. 539-43; United Nations Industrial Development Organisation (UNIDO), Mexico: The Premise of NAFTA (Vienna, 1994); E. Dussel Peters, 'From Export-Oriented to Import-Oriented Industrialization: Changes in Mexico's Manufacturing Sector, 1988-1994', in G. Otero (ed.), Neoliberalism Revisited (Boulder, 1996), pp. 63-83; and, on confidential fieldwork interviews conducted by the authors within Mexico's small enterprise sector from 1991 to 1994.
34. This section is based on the following sources: C. Alba Vega, 'La microindustria ante la liberalización económica y el Tratado de Libre Comercio', Foro International, vol. 23, no. 3 (1993), pp. 453-83; Centro de Estudios Económicos del Sector Privado, 'Evolución y problemática de las empresas en 1994', Actividad Económica, no. 183 (1995), pp. 1-23; C. Ruiz Duran, 'México: Crecimiento e innovación en las micro y pequeñas empresas', Comercio Exterior, vol. 43, no. 6 (1993), pp. 525-9; F. Sanchez Ugarte, 'Acciones en favor de las micro, pequeñas, y medianas industrias en México', Comercio Exterior, vol. 43, no. 6 (1993), pp. 539-43; United Nations Industrial Development Organisation (UNIDO), Mexico: The Premise of NAFTA (Vienna, 1994); E. Dussel Peters, 'From Export-Oriented to Import-Oriented Industrialization: Changes in Mexico's Manufacturing Sector, 1988-1994', in G. Otero (ed.), Neoliberalism Revisited (Boulder, 1996), pp. 63-83; and, on confidential fieldwork interviews conducted by the authors within Mexico's small enterprise sector from 1991 to 1994.
35. This section is based on the following sources: C. Alba Vega, 'La microindustria ante la liberalización económica y el Tratado de Libre Comercio', Foro International, vol. 23, no. 3 (1993), pp. 453-83; Centro de Estudios Económicos del Sector Privado, 'Evolución y problemática de las empresas en 1994', Actividad Económica, no. 183 (1995), pp. 1-23; C. Ruiz Duran, 'México: Crecimiento e innovación en las micro y pequeñas empresas', Comercio Exterior, vol. 43, no. 6 (1993), pp. 525-9; F. Sanchez Ugarte, 'Acciones en favor de las micro, pequeñas, y medianas industrias en México', Comercio Exterior, vol. 43, no. 6 (1993), pp. 539-43; United Nations Industrial Development Organisation (UNIDO), Mexico: The Premise of NAFTA (Vienna, 1994); E. Dussel Peters, 'From Export-Oriented to Import-Oriented Industrialization: Changes in Mexico's Manufacturing Sector, 1988-1994', in G. Otero (ed.), Neoliberalism Revisited (Boulder, 1996), pp. 63-83; and, on confidential fieldwork interviews conducted by the authors within Mexico's small enterprise sector from 1991 to 1994.
36. See J. Zabludovsky, 'Trade and Industrial Policy for Structural Adjustment in Mexico', in T. Fukuchi and M. Kagami (eds.), Perspectives on the Pacific Basin Economy (Tokyo, 1989), pp. 439-69.
37. J. Heath, 'The Impact of Mexico's Trade Liberalization: Jobs, Productivity and Structural Change', in Wise (ed.), The Post-NAFTA Political Economy, pp. 15-16.
38. Ibid., pp. 19-20.
39. For a theoretical explanation of why liberalisation might induce a widening of wage differentials within Mexico, see E. Learner, 'Wage Effects of a US-Mexican Free Trade Agreement', NBER Working Paper No. 3391, Cambridge, 1992. Indirect evidence for the wage dispersion effect also comes from comparing household distribution data with household income by sources; wages, salaries, and overtime actually rose slowly but steadily between 1984 and 1992 even as distribution by household decile worsened, a pattern which is consistent with rising inequality within labour markets.
40. Originally launched in 1965, Mexico's maquila programme allows duty-free imports of capital equipment for use in manufacturing and assembly, with the stipulation that investors pay duty only on the value-added within Mexico, and that 80 % of a plant's output must be exported. For more detail on the maquila industry, see L. Sklair, Assembling for Development: The Maquila Industry in Mexico and the United States (San Diego, 1993).
41. G. Hufbauer, NAFTA: An Assessment (Washington, DC, 1993), p. 152.
42. UNIDO, Mexico: The Promise of NAFTA, p. 36.
43. A comparison of the average values of the wage/benefit package in manufacturing with those of the maquiladoras is reported in F. Rosen, 'Is Inflation the Enemy?', El Financiero Internacional, 4-10 March 1996, pp. 1, 8. The article is based on data supplied by the Ministry of Labour and the Instituto Nacional de Estadistica, Geografía, e Informática; the manufacturing figures square with what we report in Figure 3.
44. For example, Cementos Mexicanos (CEMEX) accounts for almost 70% of national cement production, and Vitro accounts for 90% of glass output; three companies still control 75% of the country's petrochemicals market, and Grupo Industrial Maseca controls over 70% of the maize flour market. See UNIDO, Mexico: The Promise of NAFTA, p. 67; M. de los Angeles Pozas, Industrial Restructuring in Mexico (San Diego, 1995); and Dussel Peters, 'From Export-Oriented to Import-Oriented Industrialization', pp. 72-8.
45. For example, Cementos Mexicanos (CEMEX) accounts for almost 70% of national cement production, and Vitro accounts for 90% of glass output; three companies still control 75% of the country's petrochemicals market, and Grupo Industrial Maseca controls over 70% of the maize flour market. See UNIDO, Mexico: The Promise of NAFTA, p. 67; M. de los Angeles Pozas, Industrial Restructuring in Mexico (San Diego, 1995); and Dussel Peters, 'From Export-Oriented to Import-Oriented Industrialization', pp. 72-8.
46. For example, Cementos Mexicanos (CEMEX) accounts for almost 70% of national cement production, and Vitro accounts for 90% of glass output; three companies still control 75% of the country's petrochemicals market, and Grupo Industrial Maseca controls over 70% of the maize flour market. See UNIDO, Mexico: The Promise of NAFTA, p. 67; M. de los Angeles Pozas, Industrial Restructuring in Mexico (San Diego, 1995); and Dussel Peters, 'From Export-Oriented to Import-Oriented Industrialization', pp. 72-8.
47. This information is paraphrased from Hnrique Vilatela Riba, general director of the Foreign Commerce National Bank, as reported in 'Export Earnings Up From Last Year', El Financiero Internacional, 8-14 July 1996, and confirmed by the authors' confidential interviews in Mexico's Ministry of Economics (Hacienda), October 1996.
48. Heath, 'The Impact of Mexico's Trade Liberalization', pp. 22-3.
49. Those smaller firms which are part of 'commodity chains'-i.e. linked to larger producers will do better, but hard data on these linkages are scarce.
50. This analysis is based on Centro de Estudios Económicos del Sector Privado, La economia subterranea en México (México, 1987); A. L. Ozorio, S. Graham and L. Alves, 'Poverty, Deregulation, and Informal Employment in Mexico', The World Bank, Washington, DC, July 1994, mimeo; and the authors' interviews conducted in June 1995, with top policy-makers at the Ministry of Social Development in Mexico City.
51. This analysis is based on Centro de Estudios Económicos del Sector Privado, La economia subterranea en México (México, 1987); A. L. Ozorio, S. Graham and L. Alves, 'Poverty, Deregulation, and Informal Employment in Mexico', The World Bank, Washington, DC, July 1994, mimeo; and the authors' interviews conducted in June 1995, with top policy-makers at the Ministry of Social Development in Mexico City.
52. A second phase of horizontal industrial promotion, based on policy tools that benefited the manufacturing sector as a whole and did not add to the central government's fiscal burden, was initiated by Salinas in 1989.
53. This section draws on Lustig, Mexico: The Remaking of an Economy, pp. 120-5 ; Dussel Peters, 'From Export-Oriented to Import-Oriented Industrialization', pp. 64-72; Ros et al., 'Prospects for Growth and the Environment in Mexico', pp. 313-14; and F. Clavijo and S. Valdivieso, 'La política industrial de Mexico, 1988-1994', in F. Clavijo and J. Casar (eds.), La industria mexicana en el mercado mundial: Elementos para una politica industrial, vol. I (Mexico, 1994), pp. 27-92.
54. This section draws on Lustig, Mexico: The Remaking of an Economy, pp. 120-5 ; Dussel Peters, 'From Export-Oriented to Import-Oriented Industrialization', pp. 64-72; Ros et al., 'Prospects for Growth and the Environment in Mexico', pp. 313-14; and F. Clavijo and S. Valdivieso, 'La política industrial de Mexico, 1988-1994', in F. Clavijo and J. Casar (eds.), La industria mexicana en el mercado mundial: Elementos para una politica industrial, vol. I (Mexico, 1994), pp. 27-92.
55. This section draws on Lustig, Mexico: The Remaking of an Economy, pp. 120-5 ; Dussel Peters, 'From Export-Oriented to Import-Oriented Industrialization', pp. 64-72; Ros et al., 'Prospects for Growth and the Environment in Mexico', pp. 313-14; and F. Clavijo and S. Valdivieso, 'La política industrial de Mexico, 1988-1994', in F. Clavijo and J. Casar (eds.), La industria mexicana en el mercado mundial: Elementos para una politica industrial, vol. I (Mexico, 1994), pp. 27-92.
56. This section draws on Lustig, Mexico: The Remaking of an Economy, pp. 120-5 ; Dussel Peters, 'From Export-Oriented to Import-Oriented Industrialization', pp. 64-72; Ros et al., 'Prospects for Growth and the Environment in Mexico', pp. 313-14; and F. Clavijo and S. Valdivieso, 'La política industrial de Mexico, 1988-1994', in F. Clavijo and J. Casar (eds.), La industria mexicana en el mercado mundial: Elementos para una politica industrial, vol. I (Mexico, 1994), pp. 27-92.
57. Secretaría de Comercio y Fomento Industrial (SECOFI), 'Mexico: Programme of Industrial Policy and International Trade', Mimeo, Mexico City, May 1996.
58. Ibid. p. 2.
59. A. Fishlow et al. (eds.), Miracle or Design? Lessons From the East Asian Experience (Washington, DC, 1994).
60. The general lack of awareness of government programmes to assist smaller firms is indicated in our interviews with this sector between 1991 and 1994.
61. S. Edwards, Crisis and Reform in Latin America: From Despair to Hope (Washington, DC, 1995), PP. 277-86.
62. Dussel Peters, 'From Export-Oriented to Import-Oriented Industrialization', p. 64.
63. Economic Commission for Latin America and the Caribbean (ECLAC), Strengthening Development: The Interplay of Macro- and Microeconomics (Santiago, 1996), p. 80.
64. Authors' interview with Alberto Montoya, director of the Special Employment Programme at the Ministry of Social Development, June 1995, Mexico City.
65. Ozorio, Graham and Alves, 'Poverty, Deregulation, and Informal Employment in Mexico', p. 36.
66. Authors' interview with Guillermo Bernal, General Director, 'Empresas de Solidaridad', June 1995 Mexico City.
67. Heath, 'The Impact of Mexico's Trade Liberalization', p. 24.
68. SECOFI, 'Programme of Industrial Policy and International Trade', pp. 1-26.
69. This section is based on the following background sources: M. Foley, 'Privatizing the Countryside: The Mexican Peasant Movement and Neoliberal Reform', Latin American Perspectives, vol. 22, no. 1 (1995), pp. 59-76; J. Fox, 'Political Change in Mexico's New Peasant Economy', in M. Cook, K. Middlebrook and J. Molinar Horcasitas (eds.), The Politics of Economic Restructuring: State-Society Relations and Regime Change in Mexico (San Diego, 1994); J. R. Heath, 'Evaluating the Impact of Mexico's Land Reform on Agricultural Productivity', World Development, vol. 20, no. 5 (1992), pp. 695-711; C. Hewitt de Alcantara (ed.), Economic Restructuring and Rural Subsistence in Mexico: Corn and the Crisis of the 1980s (San Diego, 1994); and G. D. Thompson and P. N. Wilson, 'Ejido Reforms in Mexico: Conceptual Issues and Potential Outcomes', Land Economics, vol. 70, no. 4 (1994), pp. 448-65, as well as confidential interviews with Mexican policy-makers in June 1995.
70. This section is based on the following background sources: M. Foley, 'Privatizing the Countryside: The Mexican Peasant Movement and Neoliberal Reform', Latin American Perspectives, vol. 22, no. 1 (1995), pp. 59-76; J. Fox, 'Political Change in Mexico's New Peasant Economy', in M. Cook, K. Middlebrook and J. Molinar Horcasitas (eds.), The Politics of Economic Restructuring: State-Society Relations and Regime Change in Mexico (San Diego, 1994); J. R. Heath, 'Evaluating the Impact of Mexico's Land Reform on Agricultural Productivity', World Development, vol. 20, no. 5 (1992), pp. 695-711; C. Hewitt de Alcantara (ed.), Economic Restructuring and Rural Subsistence in Mexico: Corn and the Crisis of the 1980s (San Diego, 1994); and G. D. Thompson and P. N. Wilson, 'Ejido Reforms in Mexico: Conceptual Issues and Potential Outcomes', Land Economics, vol. 70, no. 4 (1994), pp. 448-65, as well as confidential interviews with Mexican policy-makers in June 1995.
71. This section is based on the following background sources: M. Foley, 'Privatizing the Countryside: The Mexican Peasant Movement and Neoliberal Reform', Latin American Perspectives, vol. 22, no. 1 (1995), pp. 59-76; J. Fox, 'Political Change in Mexico's New Peasant Economy', in M. Cook, K. Middlebrook and J. Molinar Horcasitas (eds.), The Politics of Economic Restructuring: State-Society Relations and Regime Change in Mexico (San Diego, 1994); J. R. Heath, 'Evaluating the Impact of Mexico's Land Reform on Agricultural Productivity', World Development, vol. 20, no. 5 (1992), pp. 695-711; C. Hewitt de Alcantara (ed.), Economic Restructuring and Rural Subsistence in Mexico: Corn and the Crisis of the 1980s (San Diego, 1994); and G. D. Thompson and P. N. Wilson, 'Ejido Reforms in Mexico: Conceptual Issues and Potential Outcomes', Land Economics, vol. 70, no. 4 (1994), pp. 448-65, as well as confidential interviews with Mexican policy-makers in June 1995.
72. This section is based on the following background sources: M. Foley, 'Privatizing the Countryside: The Mexican Peasant Movement and Neoliberal Reform', Latin American Perspectives, vol. 22, no. 1 (1995), pp. 59-76; J. Fox, 'Political Change in Mexico's New Peasant Economy', in M. Cook, K. Middlebrook and J. Molinar Horcasitas (eds.), The Politics of Economic Restructuring: State-Society Relations and Regime Change in Mexico (San Diego, 1994); J. R. Heath, 'Evaluating the Impact of Mexico's Land Reform on Agricultural Productivity', World Development, vol. 20, no. 5 (1992), pp. 695-711; C. Hewitt de Alcantara (ed.), Economic Restructuring and Rural Subsistence in Mexico: Corn and the Crisis of the 1980s (San Diego, 1994); and G. D. Thompson and P. N. Wilson, 'Ejido Reforms in Mexico: Conceptual Issues and Potential Outcomes', Land Economics, vol. 70, no. 4 (1994), pp. 448-65, as well as confidential interviews with Mexican policy-makers in June 1995.
73. This section is based on the following background sources: M. Foley, 'Privatizing the Countryside: The Mexican Peasant Movement and Neoliberal Reform', Latin American Perspectives, vol. 22, no. 1 (1995), pp. 59-76; J. Fox, 'Political Change in Mexico's New Peasant Economy', in M. Cook, K. Middlebrook and J. Molinar Horcasitas (eds.), The Politics of Economic Restructuring: State-Society Relations and Regime Change in Mexico (San Diego, 1994); J. R. Heath, 'Evaluating the Impact of Mexico's Land Reform on Agricultural Productivity', World Development, vol. 20, no. 5 (1992), pp. 695-711; C. Hewitt de Alcantara (ed.), Economic Restructuring and Rural Subsistence in Mexico: Corn and the Crisis of the 1980s (San Diego, 1994); and G. D. Thompson and P. N. Wilson, 'Ejido Reforms in Mexico: Conceptual Issues and Potential Outcomes', Land Economics, vol. 70, no. 4 (1994), pp. 448-65, as well as confidential interviews with Mexican policy-makers in June 1995.
74. A. de Janvry et al., 'NAFTA and Mexico's Maize Producers', World Development, vol. 23, no. 8 (1995), p. 1350.
75. See K. Shwedel, 'La competitividad del sector agroindustrial', in F. Clavijo and J. Casar (eds.), La industria mexicana en el mercado mondial, vol. II (Mexico, 1994), pp. 7-13.
76. Hufbauer, NAFTA: An Assessment, p. 126.
77. The estimate is cited in Thompson and Wilson, 'Ejido Reforms in Mexico', p. 448; others, such as Heath, 'Evaluating the Impact of Mexico's Land Reform on Agricultural Productivity', argue that there is little difference between productivity rates on ejidos versus small private farms.
78. The estimate is cited in Thompson and Wilson, 'Ejido Reforms in Mexico', p. 448; others, such as Heath, 'Evaluating the Impact of Mexico's Land Reform on Agricultural Productivity', argue that there is little difference between productivity rates on ejidos versus small private farms.
79. The new law did leave intact legal restrictions on the size of individual and group holdings. No one company can hold more land than the equivalent of the legal limit for individuals, multiplied by the number of members; the total land holding for any single corporation cannot exceed 25 times the individual limit. For more detail, see Foley, 'Privatizing the Countryside', pp. 64-7.
80. Confidential authors' interviews conducted with top PRI officials in Mexico City during August 1991.
81. This viewpoint is summarized in L. Stanford, 'The "Organization" of Mexican Agriculture: Conflicts and Compromises', Latin American Research Review, vol. 28, no. 1 (1993), pp. 188-201.
82. This was the tone of a talk given by Jose Maria Imaz, Coordinator of Foreign Relations for the El Barzón movement, Latin American Studies Program, Johns Hopkins University, School of Advanced International Studies, Washington, DC, 18 April 1996.
83. This paragraph and the two following it are based on the survey findings cited in A. de Janvry et al., 'Ejido Sector Reforms: From Land Reform to Rural Development', in L. Randall (ed.), Reforming Mexico's Agrarian Reform (New York, 1996), pp. 71-106.
84. Because of data collection problems, Chiapas was not included in the de Janvry et al. survey.
85. See 'Agriculture Leading NAFTA Trade Growth in 1996', NAFTA Works (SECOFI NAFTA Office of the Mexican Embassy in Washington, DC), no. 6 (June 1996), p. 2.
86. S. Robinson et al., 'Agricultural Policies and Migration in a United States-Mexico Free Trade Area', Working Paper no. 617, Department of Agricultural and Resource Economics, University of California at Berkeley, 1991.
87. de Janvry et al., 'Ejido Sector Reforms', pp. 85-9.
88. de Janvry et al., 'NAFTA and Mexico's Maize Producers', pp. 1350-1.
89. de Janvry et al., 'Ejido Sector Reforms', p. 76.
90. For a full description of PRONASOL activities see Secretaría de Desarrollo Social (SEDESOL), Solidarity in National Development: New Relations Between Society and Government (Mexico, 1993).
91. As an income subsidy rather than a price support, PROCAMPO is compatible with the rules of the World Trade Organisation (WTO) and NAFTA. See Banco de México, The Mexican Economy, 1994 (Mexico, 1995).
92. K. Appendini, 'Transforming Food Policy Over a Decade', in Hewitt de Alcantara, Economic Restructuring and Rural Subsistence in Mexico, pp. 155-6.
93. M. Gates, 'The Debt Crisis and Economic Restructuring: Prospects for Mexican Agriculture', in Otero (ed.), Neoliberalism Revisited, p. 54.
94. de Janvry et al., 'Ejido Sector Reforms', pp. 81-4.
95. S. Levy and S. van Wijnbergen, 'Transition Problems in Economic Reform', Policy Research Working Papers, the World Bank, Aug. 1992, pp. 17-19.
96. Systematic and comparable World Bank data of the sort used in Table 7 are not available after 1990; analysis of social expenditure trends under the Salinas sexenio is further complicated by the considerable overlap between long-standing social spending categories and newer commitments under PRONASOL. Because of this, we base our assessment of the continued plateau in social spending as a share of GDP in the 1990s on the authors' interviews at the Ministry of Social Development, Mexico City, June 1995.
97. See the World Bank, 'Mexico: Second Primary Education Project', Staff Appraisal Report (Washington, DC, 1994).
98. G. Psacharopoulos, 'Time Trends of the Returns to Education: Cross National Evidence', Economics of Education Review, vol. 8, no. 3 (1989), pp. 225-31.
99. See T. Zearley, 'Creating an Enabling Environment for Housing: Recent Reforms in Mexico', Housing Policy Debate, vol. 4, no. 2 (1993), pp. 239-49.
100. All trends cited here were drawn from the World Bank's 'World Data' CD-ROM, 1994.
101. C. Cruz Rivera et al., 'The Impact of Economic Crisis and Adjustment on Health Care in Mexico', Innocenti Occasional Papers, No. 13, Feb. 1991.
102. R. Gonzalez-Block et al., 'Health Services Decentralization in Mexico', Health Policy and Planning, vol. 4, no. 4 (1989), pp. 301-14.
103. See C. Graham, Safety Nets, Politics, and the Poor: Transitions to Market Economies (Washington, DC, 1994).
104. See D. Dresser, Neopopulist Solutions to Neoliberal Problems: Mexico's National Solidarity Program (San Diego, 1991), p. 1. The structure of PRONASOL made it very open to characterisation as a social tranquiliser: since recipient communities were required to organise to articulate their demands, the most organised of the poor - i.e. those most likely to protest were also the most likely to receive funds. At the same time, the demand-based nature of PRONASOL and its Latin American counterpart programmes could be viewed as positive in that they require grass-roots mobilisation to trigger funding.
105. PRONASOL's mixed results and structure are discussed in the edited collection of essays on the programme by W. A. Cornelius, A. L. Craig and J. Fox, Transforming State-Society Relations in Mexico: The National Solidarity Strategy (San Diego, 1994).
106. Authors' interview with Guillermo Bernai, General Director of the 'Empresas de Solidaridad' programme, Mexico City, June 1995.
107. Mexico, whose economy is the 16th largest in the world, now has the fifth largest collection of billionaires, outranking much larger economies such as Canada, Britain, France, and Italy on that indicator. See R. Willis, 'Savings Incentives Become a Priority', El Financiero Internacional, 8-14 July 1996.
108. These figures on the Mexican recovery are cited from various issues of NAFTA Works, the economic newsletter of the SECOFI NAFTA Office of the Mexican Embassy in Washington, DC.
109. Based on the authors' confidential interviews within Mexico's Ministry of Economics (Hacienda), October 1996.
110. See A. Guillermoprieto,'Mexico: Murder Without Justice', New York Review of Books, 3 Oct. 1996, pp. 31-6. With the launching of its 'Alliance for the Recovery of Economic Growth' in October 1996, the Zedillo administration has made modest efforts to alleviate adjustment stress, including a plan to cap credit card rates and to purchase a share of troubled bank loan portfolios through the government's Deposit Insurance Fund.
111. This view is expressed, for example, in the collection of edited essays by Clavijo and Casar, La industria mexicana en el mercado mundial.
112. Recent industrial analysis suggests that businesses have increasingly grouped together into multi-sectoral clusters which share similar sorts of skilled labour and technology. For a view of this process in the US, see P. Doeringer and D. Terka, 'Business Strategy and Cross-Industry Clusters', Economic Development Quarterly, vol. 9, no. 3 (1995), PP. 225-37.
113. For an elaboration of these policies, see Levy and van Wijnbergen. 'Transition Problems in Economic Reform', de Janvry et al., 'NAFTA and Mexico's Maize Producers', and de Janvry et al., 'Ejido Sector Reforms'.
114. For an elaboration of these policies, see Levy and van Wijnbergen. 'Transition Problems in Economic Reform', de Janvry et al., 'NAFTA and Mexico's Maize Producers', and de Janvry et al., 'Ejido Sector Reforms'.
115. A. Alesina and D. Rodrik, 'Distributive Policies and Economic Growth', Quarterly Journal of Economics, vol. CIX, no. 436 (1994), pp. 465-90.