Mexico s Development. Whitney McKenzie. GOV493: Senior Seminar at Gallaudet University

Transcription

1 Running head: MEXICO S DEVELOPMENT Mexico s Development Whitney McKenzie GOV493: Senior Seminar at Gallaudet University

2 Mexico s Development 1 Mexico s Development Mexico is surrounded by water with the Pacific Ocean to the west and Gulf of Mexico to the east. Northern Mexico is border with United States of America, and Southern Mexico is border by Guatemala, Belize, and the Caribbean Sea (CIA: World Fact Book: Mexico, 2009). According to the CIA: World Fact Book (2009), as of July 2009, it is estimated that the population of Mexico is 111,211,789. Life expectancy of the total population is 76 years (CIA: World Fact Book: Mexico, 2009). History of Mexico Many years ago, Mexico was considered New Spain. During the colonial period, New Spain was operated by the majority of elites, who were both European born (peninsulares) and their descendants in Mexico (criollos) (Mexico, 2009). These elites received their land and political power from being connected to the Spanish throne and the Catholic Church. If a person did not have blood relation as aforementioned, the person was discriminated against. In 1821, two leaders of a rebellion in Southern Mexico, which one was supposed to suppress the rebellion, but instead he became a leader for the rebellion, issued a declaration of independence from Spain (Watkins). Also, they made a plan for a monarchy, and the terms of the plan included: Mexico was independent of Spain Roman Catholicism was the sole religion of Mexico No distinction was to be made among the citizens of Mexico on the basis of their place of birth (Spain versus Mexico) Mexico would be a constitutional monarchy to be called the Empire of Mexico A representative assembly would formulate a constitution for Mexico (Watkins).

3 Mexico s Development 2 Mexico was recognized as a republic a few months later in 1821 (Mexico, 2009). The Mexican government established United Mexican States with the constitution of 1824, and the power was distributed through three different branches similar to United States (Merrill & Miró, 1996). In 1910, the Mexican Revolution started to be active as a revolt against Porfirio Díaz, who strongly ruled as one man (Washington, 1958). The first decade of the revolution was marked by violence in different forms. In the 1917 constitution, the ideals of the Mexican Revolution were incorporated and four decades later, the Mexican constitutional government had bought them closer to the ideals (Washington, 1958). Economic History After Mexico s independence and revolution, the government became highly indebted to foreign investors. Most of all investments, such as land and other industries, were owned by foreign interests. After several decades, protectionist trade policies were put into place, and the state gave favors and benefits to select groups. Many of the poor were at a disadvantage by the trade policies. In order to calm the discontent poor, the corporatist government spent public money on social programs, meanwhile owing more and more foreign debt (Mexico, 2009). In the 1970s and 1980s, the decline of oil prices took Mexican s economy with them because the high oil prices were the only item that kept the economy operating (Mexico, 2009). The Mexican peso lost value and had no foreign investment due to the stock market crash. Since Mexico defaulted on most of their debt, they had to be bailed out with new loans from the IMF and United States. The IMF and United States only gave Mexico the loans on the condition of that it progress through a series of macroeconomic reforms. The reforms were called Structural Adjustment Programs (SAPs) (Mexico, 2009). These programs required Mexico to change from having a corrupt and heavily state-influenced economy to an open free market system driven by export growth (Mexico, 2009). The free market economy for Mexico did not support the government

4 Mexico s Development 3 expenditures and the government took on more debt. In 1994, when the NAFTA passed, expectations were raised for broader economic growth. In the wake of the NAFTA, Mexico s economy did grow, but it did not grow as much as what was expected. The currency crashed again, and a peasant uprising and severe political threats from assassinations threaten the government (Mexico, 2009). Ethnic Minorities Within Latin America, the population of the indigenous was between 20 to 30 million (EAEA - 1, Ethnic Minorities in Mexico, 2013). They count for 20% of the population within Mexico. Also, they live isolated, away from urban areas. The indigenous population was considered to be Zapatistas or Chiapas. Their rebellion was against the 70 years, one party rule of the PRI in Mexico (Wehling, 1995). Also, the rebellion was the most recognized rebellion in Mexican history (EAEA - 1, Ethnic Minorities in Mexico, 2013). For the Chiapas, economic development did not mean that it was only a matter of economic growth, they also thought that it includes culture, national project, and belonging to a society which grants identity, dignity and ethical values. Roles of Women Mexican women before the revolution were constantly in the shadow of men (Jandura). The lives of these women were consumed by family, marriage, and the Catholic Church. The women would find a place for themselves when the Mexican Revolution of happened to fight against discrimination from Diaz s regime. Two of the most recognized women in the Mexican Revolution were Dolores Jimenez y Muro and Hermila Galindo. Jimenez y Muro was an important political writer, and Galindo was a political speaker and advocate for Carranza s campaign and regime (Jandura). Jimenez y Muro ability to get her voice heard by high-ranking

5 Mexico s Development 4 revolutionary officials is how she is known. Galindo is known by her distinguished political career and feminist movements. Women were also successful in the battlefield just as successful in being political figures and role models. Not only they fought in the revolution, they also cooked, foraged for food, and cared for the sick or wounded soldiers (Jandura). According to Pansters (2013), women are viewed as caretakers of morality within a family. Over two decades after the 1970s, drastic changes were made in the role of women in the Mexican economy. It was more acceptable for educated women to pursue careers after the 1970s. In the mid-1990s, most of the working women were paid less than men. Even though there were still traditional attitudes, the social attitudes changes with the growing presence of working women (Merrill & Miró, Mexico - Role of Women, 1996). In a 1995 survey, a growing number of men and women believed that family responsibilities should be shared, such as child care and housekeeping (Merrill & Miró, Mexico - Role of Women, 1996). According to Merrill & Miró (Mexico - Role of Women, 1996), the views of shared responsibilities were strongly related to income and educational level. Never before 2012, have a woman been a presidential candidate for any of Mexico s main political parties (Women in Mexican Politics, 2012). A formal secretary of education and of social development, Josefina Vázquez Mota, won the primary of conservative National Action Party (PAN), which was a first in Mexican history. She was an underdog in the July election. It is possible that macho voters are open to a female candidate, but no one knew for sure. In 1953, women received the right to vote (Women in Mexican Politics, 2012). Women voters are less likely to vote than men in Mexico, and it has always been that way.

6 Mexico s Development 5 Government According to Pansters (2013), Mexico official name is Estados Unidos Mexicanos, and is a federal republic. Mexico operates under a centralized government with three divided branches similar to the United States government. In the past, the executive branch had strong control over the legislative branch. Recently, the legislative branch s power increased due to strengthening of the multiparty system. 21 st Century Government Ending 70 years of one-party rule in Mexico, the PRI lost the presidency to the PAN candidate in There were number of contributing factors of broken promises of the PAN candidate s reforms. The contributing factors were: The governmental system simply did not have mechanisms built into it for consensus building and collaboration among the now three main parties: the PAN, PRD, and PRI. Legislative gridlock and the pervasive power of special interests prevented badly needed renovations to Mexico s democracy. The government struggled to accommodate both anti-poverty programs and larger progrowth economic policies. Two outside events further stymied the Fox Administration. China joined the WTO in 2000, allowing it greater access to world markets for its manufactured goods (which often undersold Mexico s); and the terrorist attacks of 9/11/2001 ended budding US-Mexico cooperation as American attentions were turned to counterterrorism and war in Afghanistan (Mexico, 2009). By 2006, many voters believed that the government was corrupt, especially when the PAN candidate barely won the election. The verdict was contested of charges of electoral fraud, and

7 Mexico s Development 6 the country was paralyzed for over two months in order to check the validation of the votes. Even though the candidate entered the Presidency with a weak mandate, he exceeded some expectations by passing some electoral, pension, and tax reforms (Mexico, 2009). Features of the Mexican Government There are several features of the Mexican government. They include a compromised social contract between the government and the governed, lack of institutions, Corruption, lack of a completely free press, the influence of non-state actors, human rights abuses, difficulty of reform, and manipulation of populism and marginalization of populations. Social Contract The government and the governed people s relationship should be outlined in a social contract saying what the government is supposed to do for its people. There are several flaws of the social contract between the leaders and the people, which includes: A cycle is at work: the government underperforms in promoting economic growth, maintaining public safety, and providing basic infrastructure; the people s expectations are lowered accordingly; the government s targets are then lowered, and the cycle repeats. People go outside the formal system to get their needs met. Those institutions whose function it is to hold the government accountable an active, investigative press and tenacious watchdog and advocacy groups are rare. Special interest groups find allies in poorly paid government officials; bribery becomes part of the political culture. (Mexico, 2009).

8 Mexico s Development 7 Lacking Institutions Mexican institutions, that are lacking, has their root in the post-revolution authoritarianism of the PRI since the Mexican political leaders have been known for operating utilizing their personalities instead of bureaucracies and agencies responsible for civil rights (Mexico, 2009). The police and the justice system in Mexico are known to have the worse problems of corruption and inefficiency than any other public agencies, according to a Transparencia Mexicana survey (Mexico, 2009). According to the survey (Mexico, 2009), the people have little faith in the civilian government to protect public safety, which leads to higher rating in public opinion polls for the military effectiveness. Corruption Corruption is the most important feature that is a problem in the Mexican Government. In Mexican government institutions, personal connections matter more than the laws. The Mexican government is highly vulnerable to corrupt influences from the powerful interests who are willing to pay for special treatment (Mexico, 2009). According to Morris (1991), corruption can be defined as all illegal or unethical use of governmental activity as a result of considerations of personal or political gain. Consequences of corruption. Corruption affects many aspects of the Mexican government. Corruption can affect efficiency and management, it integrates a divide elite, facilitate the hidden political influence of a non-sanctioned group, and even promote the needed accumulation of capital. Corruption can lead to military coups. Risks of corruption. According to Haro (2005), there are risks of corruption, especially in the public bidding procedure, that have been observed in Mexico. The risks are insufficient justification of goods or services to be contracted, inappropriate requirements, national versus

9 Mexico s Development 8 international tenders, etc. The lack of compliance of the laws can result in onerous purchases of goods that are never used or only partially used (Haro, 2005). Stronger preventive oversight is needed to improve insufficient justification of goods or services to be contracted. Manufacturers participation is limited by some of the requirements that are established in the procurement procedure. Failing to meet the requirements of the procedure leads to disqualification of the bidder. In order to fight these restrictions, the government proposed reforms to the laws to clarify indication of the relevance and purpose of established requirements. The issuance of a national tender for the procurement of goods is another risk for corruption. Anti-corruption. The anti-corruption campaign operations are important to understand the role of corruption in Mexico and its linkage to the sexenio (Morris, 1991). There are three basic similarities between De la Madrid and the initial impressions of Salina s strikes against corruption. The first similarity is that there are three essential components in the anit-corruption campaign. The three essential components are rhetoric and mobilization, the prosecution of public officials, and structural and legal reforms (Morris, 1991). The second similarity is that anti-corruption campaigns have inherent certain dangers, such as how to deal with former presidents who shy away from their credibility. The third similarity is that anti-corruption campaigns are very unsuccessful even with the serious tone and optimism they have. Lack of a Completely Free Press A highly developed, vibrant, and competitive culture if investigative journalism is what Mexico lacks. There are several reasons for the lack of a completely free press. The reasons are: This is largely due to restrictive laws, pressure placed on whistle-blowers, and lack of diverse news outlets.

10 Mexico s Development 9 Mexico is considered by some to be the second most dangerous place for journalists, after Iraq. Journalists often self-censor to avoid retaliation by government and private subjects of their stories. Those that do go after the important stories are often stymied by powerful monopolies that control the air waves. Their stories simply do not get out to the public. (Mexico, 2009). The Influence of Non-State Actors Mexico has underdeveloped infrastructures that connect the country s diverse areas. The leaders of the capital have difficulty extending their power to other cities outside of Mexico City. In order to fill this vacuum, a variety of non-state actors does the job and wields enormous power. Local officials or large landowners often use the local government as their personal pets. Human Rights Abuses The Mexican government has a spotty human rights record on all oppositions they dealt with, such as political opposition, investigative reporters, drug cartels, or the Zapatista rebels (Mexico, 2009). One particular case happened in the 1990s where over 300 women disappeared in Ciudad Juarez. International watch dog groups made allegations of arbitrary imprisonment, torture, and even murder (Mexico, 2009). Difficulty of Reform Unlike the mainstay of advanced democracies, Mexico has not had much success with positive reforms. The system is marked by violence, intrigue, and dramatic swings between liberal and conservative factions. There are little incentives and few routes for politicians to make tough

11 Mexico s Development 10 compromises for the public good. Also, there is little continuity because the President and the Congressional leaders cannot serve a second term. Manipulation of Populism and Marginalization of Populations Throughout Mexican history, politicians have manipulated populist sentiment to distract from the government s failings, which includes exploiting class, urban/rural, indigenous, and anti- American sentiment through inflammatory rhetoric and empty political promises (Mexico, 2009). The rural population has always struggled with the operation of the government. Economy Due to circumstances out of Mexico s control, economic reforms stalled at the turn of the 21 st century. The circumstances included: Chinese competition became more intense after China joined the World Trade Organization in 2000 and came to enjoy better access to world markets for its cheap exports. The burst of the US dot com bubble and the economic decline that accompanied the aftermath of 9/11 reduced demand for Mexican imports in the US. The terrorist attacks also distracted the US from efforts to boost economic cooperation with Mexico, and led to bottlenecks at the border amid heightened security. Increasing drug violence and political wrangling scared investors away from Mexico. Immigration to the US (legal and illegal) reached new highs, despite increased border patrols. (Mexico, 2009). Why Mexico is Fully Unable to Reap the Rewards of Globalization Mexico s economy underperforms in the world when relative to its size and assets. One of the advantages that Mexico enjoys is a 2000 mile land border with the world s largest and most

12 Mexico s Development 11 powerful economy, but Mexico cannot compete with China in low-cost manufactured goods, or with India in services. Several reasons that Mexico cannot fully reap the rewards of globalization are lack of economic institutions and infrastructure, politics, cronyism, dependence on national resource wealth, lack of investment in human resources, and migration (Mexico, 2009). Lack of economic institutions and infrastructure. According to Friedman (Mexico, 2009), Mexico s economic transformation to free market principles stalled before critical phases were implemented which included: "Mexico did complete most macroeconomic or structural adjustment reforms. Under pressure from US and the IMF, the government overhauled fiscal and monetary policy to move the country toward an export orientation. It rolled back government spending, lowered or eliminated protectionist trade barriers, attracted foreign direct investment (FDI), and privatized state assets. It thereby established most of the conditions necessary for the free market to function. It did not, however, complete the next phase: microeconomic reforms necessary to make the free market work. This critical phase includes building institutions to facilitate the activities of the free market banks, economic regulations, contract laws, training and technology, education, mechanisms that allow for collaboration and efficiencies, coherent tax policies, etc. As a result, Mexican companies have been unable to take advantage of the leveled playing field. Entrepreneurs were not supported, the work force lost ground to better educated workers in other countries, and monopolies discouraged the growth of new businesses. (Mexico, 2009). Putting it simply, Mexico failed to develop the necessary institutions and infrastructure to promote its own competitiveness in the free market it had joined (Mexico, 2009). Mexico s

13 Mexico s Development 12 features, such as weak laws and the culture of corruption in all Mexican systems, have limited its attractiveness to investors and entrepreneurs who require important components of a strong democracy. The components that are required by the investors and entrepreneurs are the state honoring the contracts, punishing lawbreakers, and creating an atmosphere of trust and stability. Politics. At the same time as Mexico was trying to build new political institutions at the same time it needed to build new economic institutions (Mexico, 2009). Economic policies have swung in the absence of steady and incremental reforms just like in the past. Foreign investors are discouraged with Mexico s lack of stability. Cronyism. By buying up state-owned industries, the oligarchs took advantage of the uncertainty to increase their wealth, and made investors fled. Everything was being controlled by ownerships, such as telecommunications, electricity, television, etc. Economy inequality has fueled migration and organized crime. Dependence on natural resource wealth. According to experts, Mexico is impacted by what is called the Resource Curse (Mexico, 2009). The Resource Curse affects developing countries with significant natural resource reserves that can be sold as commodities on the global market (Mexico, 2009). The countries who suffer this curse only benefits short term, not long term because long-term development suffers. Lack of investment in human resources. Compared to workers in China and India, Mexican workers are under-skilled. The under-skilled workers lead to a lacking education system. The people who join the dangerous, unregulated, and often illegal work of the informal sector of the economy, are those who cannot find jobs. Migration. Migration is related to the lack of investment in human resources. Many Mexicans lack access to education and training, which leads to unskilled workers to migrate.

14 Mexico s Development 13 Many skilled workers leave the country for better opportunities to work. The people who are educated and are able to find good jobs are discouraged to stay in Mexico because of the increase in violence. Current Statistics According to International Human Development Indicators UNDP (2011), Mexico human development index ranking is 61, which has increased since The life expectancy has increased since 2009, from 76 years to 77 years, which is not much, but it is better. Mexico ranks 50 out of all the countries for economic freedom (The Heritage Foundation, 2013). As of 2013, corruption remains current in all levels of societies, and the respect for the rule of law has deteriorated due to drug trafficking and related violence. Mexico s budget deficit is widening, and the public debt remains below 50% of GDP. The banking industry remains relatively stable, and foreign participation has grown rapidly according to The Heritage Foundation (2013). Mexico s Outlook According to The Economist Intelligence Unit (2012), in 2012, there were demonstrations to protest against the PRI s alleged frauds that were allegedly committed during the election campaign. Also, a watered-down version of a political reform has been approved by a majority of state legislatures, which was necessary to begin making constitutional changes. The PRD, who made allegations against the PRI for fraud, believed that the PRI was vote-buying and overspend on their campaign (The Economist Intelligence Unit, 2012). The next presidential election for Mexico will be in By the time of the 2018 election, the three main parties are likely to drastically change their leadership (The Economist Intelligence Unit, 2012). Under the PRI administration, the bilateral relationship with the US

15 Mexico s Development 14 will remain the overriding foreign policy focus (The Economist Intelligence Unit, 2012). Protecting the economy s current growth momentum against any potential contagion from a global slowdown is a priority for the Mexican authorities. In the coming months, the new government s reforms will take shape. Without materially impairing creditworthiness in the short term, policymakers will continue to run a mild deficit after years of near balance in the fiscal accounts. Economic Growth Mexico had an inward-looking, oil-dominated economy three decades ago with the PRI ruling the country for 71 years, maintaining a stronghold on the economy and the country as a whole according to O Neil (2013). The PRI presidents were successful in domestic industries. The policies that the PRI presidents championed limited trade, with primarily machinery, chemicals, and metals coming in, and oil, which accounted for three out of every four dollars of Mexico's exports, going out (O'Neil, 2013). In today s world, Mexico changed its past by maintaining free-trade agreements with over 40 countries. The changes began in 1982, at the onset of the Latin American debt crisis. According to World Bank (Mexico Overview, 2013), Mexico has the second largest economy in Latin America. The country has remained resilient to the U.S. slowdown and the financial turmoil of Europe. It is estimated in 2010 that 52 million people, around 42.6% of Mexico s total population, lived in poverty (Mexico Overview, 2013). The people who lived in extreme poverty have reduced slightly from 10.6% to 10.4%. The new federal administration, under President Enrique Peña Nieto, is focusing its efforts and programs along five working lines that are included in the National Development Plan. The goals are Mexico in Peace, Inclusive Mexico, Mexico with Educational Quality for all, Prosperous Mexico, and Mexico an actor with

16 Mexico s Development 15 global responsibility (Mexico Overview, 2013). Currently, the federal government is working on achieving two constitutional reforms, which are major and long-standing, on energy and telecommunication. These reforms are intended to boost competitiveness and growth in the energy and telecommunication sectors of Mexico. The country has huge potential for accelerating economic growth (Mexico Overview, 2013). The country was able to maintain a strong growth of 3.9% in 2012 according to the World Bank (Mexico Overview, 2013). Mexico has long term issues that the country needs to work on, which includes the need to advance reforms to boost growth and to address fiscal challenges associated with a decline in oil revenues and spending pressures from health and pensions (Mexico Overview, 2013). In 2011, the Mexican economy grew by 3.9% (The Economist Intelligence Unit, 2012). Mexico does not expect private consumption growth to rise above an annual 3.6% average in (The Economist Intelligence Unit, 2012). Job creation in Mexico has worsened over the past decade in terms of pay and benefits, despite reported low levels of unemployment, underemployment, and informality. In the forecast period, fixed investment growth will average 7.1%. The average GDP of Mexico between 2011 and 2016 will be 3.7%. Even though the total lending for the fiscal year 2013 would be significantly reduced, the World Bank is working with the new administration, which took office in December 2012, on preparation of the new Country Partnership Strategy. The country team prepared short policy notes that are the basis for the new strategy. The short policy notes addresses four main challenges the focuses on inclusive growth. The short policy notes are Increase productivity; Ensure that poorer segments of society benefit from and are able to contribute to growth; Combine the economic and environmental aspects of sustainable development; and

17 Mexico s Development 16 Strengthen public finances and improve government efficiency. (Mexico Overview, 2013) The World Bank institution is supposed to focus on two overarching objectives, poverty reduction and shared prosperity, as told by the World Bank President. Mexico was the Bank s largest borrower, as of February 28th, 2013 (Mexico Overview, 2013). The country is US$14.7 billion in debt, which constitute as 10% of the World Bank s total portfolio. The active portfolio of Mexico contains 14 World Bank projects. Mexico has disaster risk management from the Bank. They have a strategy that focuses on risk identification, risk prevention and management, risk financing, and post-disaster reconstruction (Mexico Overview, 2013). Conclusion Mexico has a lot of history, which includes numerous dictatorships, and presidents. The country has the ability to import and export utilizing the sea borders. The main feature of the Mexican government is corruption. The county is fighting every day with corruption with the anticorruption campaign, but corruption is still persistence. Mexico has enormous potential to grow economically with the help of the World Bank. Even though the world economy have decline, Mexico remain persistence. If the country continues to grow, the country can become more of an advanced democracy.

18 Mexico s Development 17 Bibliography CIA: World Fact Book: Mexico. (2009). CIA World Fact Book, Mexico. (2009, August). Retrieved from World Savvy Monitor: emid=1096 International Human Development Indicators - UNDP. (2011). Retrieved from UNDP: Women in Mexican Politics. (2012, February 11). Retrieved from The Economists: EAEA - 1, Ethnic Minorities in Mexico. (2013, February 22). Retrieved from European Association for the Education of Adults: Mexico Overview. (2013). Retrieved from The World Bank: Haro, G. (2005, December 20). Mexico: Identifying Risks in the Bidding Process to Prevent Corruption. In OECD Publishing, Fighting Corruption & Promoting Integrity in Public Procurement (pp ). Paris, France: Organisation for Economic Co-ooeration and Development. Jandura, T. (n.d.). Women in the Mexican Revolution. Retrieved from The University of Arizona: Merrill, T. L., & Miró, R. (1996). Mexico - Role of Women. Retrieved from Library of Congress: Merrill, T. L., & Miró, R. (1996). Mexico - The Federalist Republic, Retrieved from Library of Congress: Morris, S. D. (1991). Corruption and Politics in Contemporary Mexico. Tuscaloosa: University of Alabama Press. O'Neil, S. K. (2013, March/April). Mexico Makes It. Foreign Affairs, 92(2), Pansters, W. G. (2013). Culture of Mexico. Retrieved from Countries and their Cultures: The Economist Intelligence Unit. (2012). Country Report: Mexico. Country Report, 16(8), 1-32.

19 Mexico s Development 18 The Heritage Foundation. (2013). Mexico Economy: Facts, Population, GDP, Corruption, Business, Trade, Inflation. Retrieved from 2013 Index of Economic Freedom: Washington, W. (1958, April). Mexican Resistance to Communism. Foreign Affairs, 36(3), Watkins, T. (n.d.). The Economic History of Mexico. Retrieved from San José State University Department of Economics: Wehling, J. (1995, January 10). Zapatismo: What the EZLN is Fighting For. Retrieved from