Political and Economic Change in Mexico

Neil Davey

Overview• 1519-1821: Spanish Colonialism• 1821: Independence and 1824: 1st

Constitution• 1864-1867: Second Mexican Empire -

Habsburg Monarchy (France)• 1876-1911: Porfirio Diaz’s Dictatorship• 1910-1920: Mexican Revolution• 1929: Formation of the PRI• 1934-1940: Lazaro Cardenas Presidency• 1983-Present: Neoliberal Reform

Pre-Colonial Mexico• 200-900: Classic Era, 900-1520: Post-

Classic– Height of Mexican Civilization–Mayas in Yucatan and Aztecs in

Tenochtitlan

Causes of Colonization

• Desire to spread Christianity• To gain personal wealth (gold/silver)• To find new trading routes and partners• Political expansion of the Spanish

Empire• Overpowering natives was not too

difficult

1519-1821: Spanish Colonialism

• Hernan Cortes set sail in 1519– Captured Tenochtitlan in 1521– Rule by viceroy under Spain; little

autonomy– Conversion to Catholicism

• Haciendas given to Spanish colonists• Mestizaje: racial mixing • Strict racial hierarchy and great inequality• Silver mines fueled Spanish economy

1810-1821: Mexican War

of Independence• Napoleon invaded Spain• Priest Miguel Hidalgo

began independence movement with liberals, peasants, and mestizos

• Post-war period marked by instability– Elite conservatives vs.

liberals–Monarchy or

democracy?

Post-war Independence

• 36 presidents between 1833 and 1855• Difficulty obtaining legitimacy• Rise in military control due to

instability• Treaty of Guadalupe Hidalgo: US

control of ~50% of Mexican lands after Mexican-American war in 1848

• The French invaded in 1864–Maximilian von Hapsburg was

emperor– Liberals removed French by 1867

1876-1911: Porfiriato Era

Political Change• Porfirio Diaz became dictator in

1876 after staging a coup d’etat and defeating Emperor Maximilian

• As President of Mexico, ruled 34 years– Authoritarian rule; cracked down

on opposition– Strict control of the army– Instability came to an end

temporarily– Increased US dependency

1876-1911: Porfiriato Era

Economic Change• Diaz was a proponent of modernization• Promoted industrialization and foreign

investment• Foreign investment in Mexican mining sector• Cientificos: technocratic advisors to Diaz• The poor lived on a very low standard

because of huge focus on commerce- Peasants were impoverished - Great inequality resulted - Led to the Mexican Revolution

1910-1920: Mexican Revolution

• Elite Mexicans wanted to overthrow Diaz• Francisco Madero called for revolution• Caudillos: Military strongmen– Emiliano Zapata led rebels in the South– Pancho Villa led rebels in the North

• Diaz steps down in 1911; Madero is president• Victoriano Huerta overthrows Madero in a plot

organized by US ambassador Henry Lane Wilson

• Huerta forms a military dictatorship, the US is upset, and bloodshed continues

End of the Revolution• Huerta is replaced by Venustiano Carranza

in 1914, who rules until 1920• 1917: Constitution of Mexico established

democratic political institutions• Cristeros Rebellion: Conflicts with Catholic

Church in the 1920s• Partido revolucionario institucional (PRI) is formed in 1929

1934-1940: The Cardenas Sexenio

Political Change• Lazaro Cardenas was a PRI president

• Sexenio (six year term) with big changes: state corporatism– Presidency became much

stronger; primary institution of the government

– Patron-clientelism ensued as labor and peasant organizations were sponsored by the gov’t

– System of one-party rule by the PRI was accentuated

1934-1940: The Cardenas Sexenio

Economic Change• Sexenio that significantly transformed the

Mexican economy: import substitution industrialization– Huge focus on domestic workers– Nationalization of industry (PEMEX)– Investment in public works– Support of the peasantry through

redistribution of land from landlords to peasants

Import Substitution Industrialization

• Replacing foreign imports with increased domestic production

• Reduction of foreign dependency by increasing tariffs

• Protects national industries • Mexicanization – devotion to Mexico

without attempting to appease foreign nations

Russia, China, and Mexico

• Does the Mexican Revolution sound familiar?• All 3 revolutions characterized by violent

and sudden changes• Russia (1917), China (1911), and Mexico

(1910) all transformed from authoritarian rule to “one-party” state

• Socialist ideals followed revolutions (Communist Party, Cardenas economic policy)

• Mexico did liberalize and democratize more

Pendulum Theory• Miguel Aleman, president

after Cardenas, rejected socialist reforms and encouraged foreign investment

• Next president shifted back to Cardenas-style reforms–Modernization vs.

dependency• Tecnicos: Educated business

leaders who took control of the PRI in 1970s

Mexican Miracle and Crisis

• Sustained economic growth and minimal inflation during PRI years 1940-1970

• PRI dominated all politics during this time• 1968 Olympics massacre and 1985 Mexico

City Earthquake showed PRI weaknesses• 1982 and 1994 economic crises• Partido de la Revolucion Democratica (PRD) was formed in 1989

Modern Reforms• Liberalization in economy, free trade, and increased foreign investment • Globalization: Mexico began to integrate

into global economy; signed North American Free Trade Agreement (NAFTA) on Jan. 1st, 1994

• Neoliberalism: free markets, privatization, limited government involvement since 1983

• Formation of Federal Electoral Institute (IFE) in 1990 to ensure fair elections

• Election of 2000: Won by Vicente Fox (PRD), first non-PRI president in seven decades

Political Crisis of 1994• President Carlos Salinas’ term ends in 1994• PRI candidate Luis Colosio is assassinated– Ernesto Zedillo is handpicked by Salinas

and wins 1994 election• Zapatista Army of National Liberation:

revolutionary leftist group based in Chiapas, Mexico’s southernmost state– Zapatistas against neoliberal reforms and economic globalization

Economic Crisis of 1994

• Government finances of past two decades, low oil prices, and hyperinflation

• Attempt by Zedillo to increase exports• Sudden devaluation of the peso in

December 1994• The Chiapas Rebellion worried investors– Larger risk premium on Mexican assets

• Peso crashed as a result of the floating exchange rate

Current Statistics• Gini Index (World Bank, 2012):

• PPP: $1.748 USD– 11th largest economy in the world (Iran

and Nigeria are smaller)• GDP growth: 3.6% and Inflation: 3.9%• GDP by sector: 3.9% Agriculture, 32.6%

Industry, 63.5% Services• Primary export partner: US (78%)

UK Iran Russia China Mexico Nigeria34.0 38.3 40.1 47.0 48.3 48.8