Mexico and New Neoliberalism
This is an advance summary of a forthcoming article in the Oxford Research Encyclopedia of Latin American History. Please check back later for the full article.
Neoliberalism swept over Mexico like a tsunami. It transported Mexico’s economy from an earlier economic nationalism to a new phase based on principles of neoliberalism. In Mexico’s case, the debt crisis of 1982 unleashed the tsunami of neoliberal practices, sometimes referred to as the structural adjustment programs (SAP), or the Washington Consensus. When Mexico declared that it lacked adequate resources to meet its current external debt service payments, it (like other Latin American countries) entered into debt renegotiations. These renegotiations required Mexico to implement reforms such as the privatization of state owned enterprises, devaluation of currency, and reductions of the state budget. Numerous neoliberal shifts followed: 1986, joining GATT (General Agreement on Tariffs and Trade); 1992, revision of Article 27 of the Constitution; 1994, peso devaluation; 1994, signing of NAFTA (North American Free Trade Agreement); and multiple iterations of the Foreign Investment Laws, including opening up parts of the state owned petroleum sector. The goal was to stabilize the economy and make it attractive for foreign direct investment (FDI). FDI, as well as open trade, promised to bring economic well-being and political stability to Mexico. The evaluations of the reforms implemented since 1982 are mixed, with more weight given to “disappointing.” Data suggest that increasing global integration has marginalized Mexico. This poses a challenge to Mexico’s future well-being.