Economic Development Models in Mexico: A Historical Overview
SHARING THE DEVELOPMENT MODEL 1970-1976
In the late sixties stabilizing development model followed until then showed signs of exhaustion. Investment, both public and private, had lost its dynamism, the trade balance showed déticits appellants, is beginning to feel increasing inflationary pressures and agricultural production had fallen into stagnation. The import substitution model was not for Himself Suticiente to allow high growth rates on a permanent basis, for the domestic market was saturated and did not contemplate any alternative model.
Additionally, social and political contradictions accumulated over the years of development had resulted in stabilizing a crisis of legitimacy, as evidenced in the student movement of 1968 and revealed in the growing inequality in income distribution. Certainly the economía had grown rapidly in those years, but despite this the population was undergoing major social and economic gaps. In the Field prevailing extreme poverty and social welfare indicators sogal demonstrating the critical situation of indigenous, peasant and urban masses. In short, the growth of the fifties and sixties did not translate into better living standards for most people and, rather, had led to a greater concentration of wealth in a few ‘nanos: total population, 10 % concentrated richest 51% of the years, while the Mexicans than 50% received only 15% of income.
The objectives of this model were: • To improve income distribution. • “Raising the employment generation. Increasing state involvement in the economy. . • To reduce the imbalances in the Mexican economy in relation to international trade. “• Maximizing natural resources. • Strengthen the system of mixed economy. • Improve the quality of life for all población.Sin But good intentions raised by the new model did not reach, however, implantation of this economic policy was counterproductive results like these:
• 64.8% devaluation of the peso against the dollar, changing the weight of $ 12.50 to $ 20.60 per dollar. .
• Accelerated growth of external debt to increase from $ 4000 million owed to NNAL in 1970 to $ 20 000 million ñnalizar six years. 4
• Excessive control of foreign investment.
• Conflicts with employers.
• refusal to lockout and reverse capital flight.
ACCELERATED GROWTH MODEL (1976-1982) `
(ALLIANCE FOR PRODUCTION)
As we saw during the six years previous class from 1970 to 1976, inherited desequilibrioseconómicos stabilizing development caused a severe economic crisis, the federal government tried a new economic model of shared development, which in reality could not be applied so that trends economy continued its course, causing a worsening of the crisis and needtoinstall reañrmando seek new alternatives to national economic growth.
On arriving at the José López Portillo government encountered four fundamental problems:
1. ‘The inability of industry to keep growing.
2. The capitalization of the field.
3. Social pressures to improve income levels.
4. The Growing indebtedness to foreign institutions.
Following previous Io, intense expressions of social and political unrest were both farmers, laborers and heavy clashes with the corporate sector. Social unrest was widespread. The government was unable to respond aelasepresiones headquarters of the failure of economic strategy. Political instability was another element that the administration had to face.
Lopez Portillo said he could not continue with economic growth followed by Camino and had to push an economic policy with greater benefits for the majority of the population. Eccnómica crisis and political crisis were very strong and obvious, After assuming power, the new federal government:
a) Recognized that the path followed since the ’40s has been exhausted.
b) I declare that to recognize those limitations and backlogs inherited onwards would involve promoting a policy-oriented economic recovery in economic growth, which in turn would generate greater benefits for the majority of the population.
C) I call the social harmony and solidarity, postulated as essential to revive the economy, meet the needs of social consumption and demand for jobs.
All this would be agreed Through an alliance between the major classes of society, which bears the name “People’s Alliance, National Democratic for production.” With this alliance also sought to restore the credibility and the Conñanza regime, which was needed to implement any economic strategy..
Additionally, the relative tolerance of peasant invasions of private property was withdrawn and instead was applied a systematic crackdown on them and a significant brake on the pace and amount of new land deals. Thus was fulfilled with a condition that had managed the business from the previous administration.
The proposed new policy was raised. From a series of
reforms:
• Administrative.
• Prosecutors.
• From the public and private investment.
• Of Commerce exteriors.
• From support to sectors of the economy.
• From queregulaba legislation the political system in relation to opposition political parties.
The Lopez Portillo tried to reform;
`A) develop the oil industry, which would allow to attract new resources to handle the crisis and promoting a series of go, major changes in the productive apparatus.
b) To meet the demand for food and promote recovery in the agricultural sector in terms of their dynamism and strength.
C) Re-orient industrial production to basic consumer goods mercadointernoygenerar jobs.
d) Expanding social services that are the responsibility of the state (education, health, housing, etc.)., developing various programs to multiple NNES. ,
Oil policy
As indicated earlier, given the discovery of oil reserves, rising prices internacionalesideliîcrudo, opportunity and the need to generate significant new foreign exchange through export of hydrocarbon i, made the Mexican government gave a strong impetus to development of the national oil industry, so that they could take advantage in the international market provided countries with oil export capacity. Petroleos l \ / lexicanos (PEMEX) then began a vigorous phase of unprecedented rapid growth, which subsequently resulted in significant increases in oil extraction and export, which in turn resulted in significant revenue to the country.
INTERNATIONAL FINANCIAL
International Monetary Fund (IMF)
The International Monetary Fund emerged as a proposal during the Conference at Bretton Woods (New Hampshire, USA), between 1 and 22 July 1944, even during the war (2nd World War). Since then he has served as a center institutionalized International Monetary System capitalist bite (the world society was outside the system). Delas is a UN specialized agency which carries out three types of interrelated functions:
• Establishes system standards l \ / lonetario International.
• Assists Tinança in certain cases to member countries, and
• Acts as an advisory body to governments.
A asignadasal functions Fl \ / ll, according to its constitutive coâenio were as follows:
· Promote international cooperation through a permanent institution to provide a mechanism for consultation and cooperation on economic issues.
Facilitate the expansion and balanced growth of international trade, thereby contributing to promoting and maintaining high occupancy levels and real incomes, as well as the development of the productive resources of all partner countries as targets of policy primordiaies economic.
· Promote stability of exchange rates, ensuring that the exchange relations between its members were ordered ‘and avoid depreclaciones for competition purposes.
• Help establish a multilateral system of payments for the achievement of current account transactions made between countries and eliminate exchange restrictions that impede global growth.
° give confidence to members by making available the resources of the fund in terms charitable, giving them the opportunity to correct maladjustments in their balance of payments without resorting to measures to destroy the national and international prosperity. “The three main points that summarize the basis that the IMF should take as an important element of the new international monetary system were:
1. Establishing a gold standard ~ dollar; ”
2. The implementation of a Code of policies and mechanisms to adjust the balance of payments and
3. The creation of a fund to support these processes of adjustment.
Among the forms of financial assistance provided by the find:
a) The first and most important, is called service and aims to support countries with difficulties in their balance of payments. Consequently, the IMF implements certain “recommendations” of economic policy adjustment in these economies (compliance).
b) A second type of financial assistance is one that lends Trans † irienClo specific fund resources are administered by the IMF, and finally;
C) Are the operations carried out with the Special Drawing Rights (SDRs).
World Bank (BlRF)
The International Bank for Reconstruction and Development or World Bank was created at the same time as the IMF, at that famous meeting of Bretton Woods (islevv Hampshire, Etl), ‘on July 22, 1944, with the main objective of helping reconstruction and development of territories of member countries by facilitating capital investment.
Inter-American Development Bank (IDB)
The Inter-American Development Bank was founded in 1959 with the objective of promoting economic and social progress in Latin America and the Caribbean. This regional development financial institution has the following main functions:
• Encourage investment of public and private capital in projects that promote the development of the region.
• Use their own resources to finance projects of high social and economic priority.
• Provide technical assistance for the preparation, financing and implementing development programs. P.
• No profit.
Originally consisted of 20 countries, 19 from Latin America and the U.S., later were annexed 8 countries in the Americas and 18 extra for a total of 47 countries that currently make. The regional members are: Argentina, Bahamas, Barbados, Belize, Bolivia, Brazil, Chile, Colombia, Costa SRIC, Ecuador, El Salvador, Guatemala. Guyana, Haiti, Honduras, Jamaica, Nlexico, Nicaragua, Panama, Paraguay, Peru, Dominican Republic, Suriname, Trinidad and Tobago, Uruguay and Venezuela. The non-regional countries are: Austria, Belgium, Canada, Croatia, Denmark, USA, Finland, France, Israel, Italy, Japan, Norway, Baios’, Portugal, United Kingdom, Sweden and Switzerland.
Their main sources of financing are:
“The subscribed capital, formed by contributions from member countries.
• The reserves and funds that the bank captures the capital markets worldwide.
~ The funds in the administration who are making contributions that _ some member countries to finance projects in areas específicas.Los biggest beneficiaries of funding provided by the bank are public institutions of member countries of Latin America and the Caribbean, however , since 1994 is channeled up to 5% of its capital to finance projects by private companies without government guarantees that they file. The Bank is headed by the Board of Governors, which delegates the supervision of the operations I Bank’s Executive Board. The daily work of the IDB are run by a management team.
Each member country appoints a governor whose voting power is proportional to the capital that the country subscribes to the Bank. The executive directors playñan their roles in the IDB headquarters in Washington DC and are appointed for three years. IDB President, elected by Ia Board of Governors for a term of five years duration, is who runs the daily activities of the organization and makes the legal representative of the institution, together with the advice of the five vice presidents in everyday tasks .
SHARED DEVELOPMENT MODEL
Shared Development Model wanted to achieve benefits for social disti S ectors. The l \ / lovimiento Student of 1968 allowed the reorganization and strengthening Mexican dei riday go. Government intervention in the economy and the average public spending increases external financing you were important features of the Model of Shared Development.
POLÍTlCA REFORM
In order to restore the legitimacy of government, loss of repression following the 1968 Student lvlovirniento Luis Echeverria undertook a series of policy actions aimed at generating a democratic opening in the country.
In June 1971, proposed putting into practice the “popular alliance, creating the National Tripartite Committee, comprising employers, workers and government, as a consultative body which tried to reconcile the differing interests of these sectors. Towards the end of that year, there was an electoral reform bill was drafted with the New Federal Election Law, enacted in early next year, with some important changes such as those relating to reducing the number of members for a party obtain registration; it also increased the number of party deputies, reaiustandose the b. .. Se,. _demografica districts
election. Ages were reduced for entitlement to aspire to the federal councils (21 years) or senator (30 years) has authorized a commissioner representing each party in the Federal Electoral.Se establecía.La.Credenciašpermanerite øaaièxxiai, rules for propaganda campaigns and the parties’ participation in the mass media.
In October 1977, President Lopez Portillo presented Congress with his initiative to reform the constitution and his plan for a new electoral law which was enacted late next December under the title: Federal Law of Political Organizations and Processes Election (LOPPEQ, whose central feature was the benefit of minority political groups, because some parties consider that you already enjoyed a record, opened real possibilities for political otøas interest organizations have access to the system.
The Political Reform was tested in 1979 in elections for deputies. Of the 300 districts of simple majority, the PRI lost only 4 with the PAN, which will also tally 39 of proportional representation. L The Mexican Communist Party (PCN1) obtained 18, the Authentic Party of the Revolution l \ / lexicana (P / – \ RI \ / l) is 12 and the Partido Popular Socialista (PPS) won 11. You are nicieron creditors to record the Socialist Workers Party (PST) and the Democratic Party l \ / lexicano (PDL \ / l), achieving 10 members each.