Two crisis of Mexican Neoliberalism
IIPPE Conference The Hague 2013 Alejandro Valle Baeza Vallebaeza.wordpress.com
Introduction
In 2008-09 Mexican economy had its third serious crisis in the last thirty years:
1982 External debt crisis (Also Banking and exchange rate crisis), Neoliberal tendencies reinforced since then. 1994, Banking and exchange rate crisis. Political crisis: Ruling party with serious problems after decades on power. 2008 productive crisis mainly in exportation manufacture sector
In this presentation I try to explain differences between 2008-09 and 1994-95 crises. The conventional explanation is: Mexican economy is more stable now thanks to Neoliberal policies
% 10 12 14 6 8
-8
1961 1963 1965 1967 1969
-6
1971
1973 1975 1977 1979
-4
1981
1983 1985 1987 1989
-2
1991
1993 1995 1997
Mexico, PIB ( annual variation %)
1999
2001 2003 2005 2007
2009
2011
Mxico. Salario mnimo real. Aos seleccionados
225
$ 2011/da
180 135 90 45
0
1976 1983 2002 2009 2011
The 1994-95 crisis
1986 Mexico joined the GATT 1989, controls of interest bank rates were removed. 1990 began the process of developing the North American Free Trade Agreement (NAFTA) it was signed in 1992. 1993 Foreign investment law is changed to attract more money from abroad
During previous years to NAFTA implementation, several public companies were privatized, by example quasi-monopoly phone company: Telmex 1994 Nafta started to operate. The candidate of the ruling party was killed (by a solitary killer! remember JFK), Zapatista guerilla declares war against Mexican government.
1994-95 crisis
Crisis started in December 1994 by sudden interruption of external capital flows. Peso was devaluated: 3.38 pesos per US dollar in 1994 to 6.42 pesos in 1995. US government and IMF guarantee loans by 51637 million dollars! Nevertheless 26253 million was used.
US intervention was not philanthropic but to save US pension funds who owned Mexican government bonds This Mexican crisis had negative effects in many other countries: so it was called the Tequila effect. All the Mexican banks faced technical bankruptcy problems. Government bailed out banks, i. e. socialized looses.
Domestic sales of the automobile industry fell 71.7%, however exportation aminorate the problem hence production diminish much less than that.
USA between 1929 and 1932 automobile sales declined 75.2%.
2008-09 crisis
Exports fell 14.8% in 2009 Remittances from abroad fell 15.7% in 2009 (from 25 to 21 billion doll) GDP growth -6.5% in 2009
Mexican automotive industry is presented as a history of neoliberal success this a propaganda bias; because its counterpart is the deterioration of that US industry.
During 50s Detroit was the richest US city
500000
1000000
1500000
2000000
2500000
3000000
0
1993/01 1993/08 1994/03 1994/10 1995/05 1995/12 1996/07 1997/02 1997/09 1998/04 1998/11 1999/06 2000/01 2000/08 2001/03 2001/10 2002/05 2002/12 2003/07 2004/02 2004/09 2005/04 2005/11 2006/06 2007/01 2007/08 2008/03 2008/10 2009/05 2009/12 2010/07 2011/02 2011/09
Mxico, exportacin de televisores. Datos mensuales en miles dlares
US, Percent Changes in Chain-Type Quantity Indexes for Value Added Computer and electronic products ( 1977-2011)
70 60 50 40 30 20 10 0 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 -10
In January 2012 it was reported that a small US company would start producing again television sets. Seventeen years before, Zenith, then the last manufacturer of US ownership, already had become a subsidiary of the Korean LG.
Conclusions
Neoliberalism has been a period of mediocre growth that has impoverished Mexican workers, forcing many to migrate Two major crises have occurred after installing Neoliberalism: 1995-95 and 2008-09. The first was a financial crisis and the second a productive one.
The Mexican success in certain industries (manufacture of automobiles and televisions) is the other face of the serious problems of U.S. industry The best situation of Mexican trade balance is not so much a legitimate triumph but a gain resulting from the losses U.S. Mexico is a side winner of competition war
