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Economy

The Failed Modernization

Mexico represents a paradox for the international community and for its citizens. Since the beginning of the 21st century international banking entities have been predicting an outstanding growth of the Mexican economy. For example in 2004, the investment bank Goldman Sachs in the addendum for the BRICs report estimated that in 2050 Mexico’s GDP will be the fifth largest in the world, higher than the one of the European countries and will only fall behind the GDP of China, United States, India and Brazil.

However, there are no signs that this will happen. Following a neoliberal model, attemps of modernization in Mexico have provided disappointing results: an economy that functions below its real potential, with an average annual growth of 2% in the last three decades. Besides that, the gaps within the population have been constantly increasing. Officially, 55 million Mexicans live in poverty - which is almost half of the population. This number, however, has been challenged from many experts in the field, who claim that the real number is around 70 million, with 27 million people being food insecure at a degree of not knowing if they will be able to eat tomorrow. According to Oxfam Mexico, only 1% of the population controls 43% of the wealth in the country. 

By any terms, the Mexican economy resembles a roller coaster: at the beginning of the 20th century, more than half of the population was living in extreme poverty. Then, from 1940 to 1970, the Mexican Miracle provided for an average annual economic growth of 6% thanks to the economic stability and improvements which have never been seen before in Latin America.

The neoliberalism phase provoked a succession of economic crisis in 1982, 1987 and 1994. The so-called Tequila Effect triggered an economic downturn from 14% in 1995 and demolished the whole Mexican middle class, seeing all its savings and investments disappear and turned into debt.

The orthodox neoliberalism was promoted by the presidents Ernesto Zedillo, Vicente Fox and Felipe Calderón. They were emphasizing the importance of macroeconomic stability and integration into global markets, considering the Mexican economy as an appendix to the USA’s economy. This has costed Mexico its economic autonomy and especially losing the opportunity to further develop productive sectors such as agriculture. Such a dependence from external markets and especially from the US turned Mexico’s economy vulnerable to external factors, such as the 2008 financial crisis.

Although the effects of this hazard did not go unnoticed, when Enrique Peña Nieto as the new Mexican president took charge in December 2012, he was convincing the world and the Mexicans that the Mexican Moment is about to happen. With a lot of advertising, it was announced as nothing less as the economic rebirth of the country which will come with many “structural reforms” in many important sectors of the economy such as, energy, telecommunications, finance, education and political system.

The results did not meet the expectations. The government very soon became part of massive corruption scandals and serious human rights violations which ended up destroying the image of Peña Nieto and his tenure in office. In 2015, The Economist demolished the Mexican president with a front page that read: “A president who doesn’t get that he doesn’t get it”.

In 2016, for a second year in a row, the GDP per capita was at 8,201 US dollars, 500 US dollars less than in 2006 and the economic growth of Mexico is expected to continue to be just ordinary. Agustín Carstens, the former governor of the Bank of Mexico, who is now the general manager of the Bank of International Settlements, even predicted less GDP growth for 2017: from the previously forecast  2% - 2.5% to a growth of 1.8% - 2.3%.

Despite having a stagnant economy, the information and mass media sector in Mexico is at the first place in national growth rate, above some strategic areas such as financial or agriculture sectors. The creation and bidding of new TV and radio outlets, and the “internet boom”, has provoked a 8,6% growth in the telecommunication and media sector, which triplicates the national growth rate, according to the Instituto Nacional de Estadística.

However, this hasn’t fully benefited the Mexican society: one in five consumer complaints in the Procuraduría Federal del Consumidor is filed against a telecommunications company.

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