Mexican Economy during the 70´s and 80´s 2
Mexican Economy under the President Salinas 4
President Carlos Salinas De Gortari 4
General aspects 5
Economical environment 6
NAFTA (North American Free Trade Agreement) 6
The economic collapse 6
Mexican Economy under the President Ernesto Zedillo Ponce de León 7
Impact of devaluation 8
MexicanEconomy under the President Vicente Fox Quesada 9
President Vicente Fox Quesada 9
The economy under Vicente Fox 10
Mexican Economy under the President Felipe Calderon 12
Felipe Calderón 12
General Aspects 12
An economy is the ways in which people use their environment to meet their material needs. It is the realized economic system of acountry or other area. It includes the production, exchange, distribution, and consumption of goods and services of that area. The study of different types and examples of economies is the subject of economic systems. A given economy is the end result of a process that involves its technological evolution, history and social organization, as well as its geography, natural resource endowment, andecology, among other factors. These factors give context, content, and set the conditions and parameters in which an economy functions.
Mexican Economy during the 70´s and 80´s
The Mexican economy maintained its rapid growth during most of the 1970s, it was progressively undermined by fiscal mismanagement and a resulting sharp deterioration of the investment climate. The GDP grew more than 6percent annually during the administration of President Luis Echeverría Álvarez (1970-76), and at about a 6 percent rate during that of his successor, José López Portillo y Pacheco (1976-82).
The balance of payments disequilibrium became unmanageable as capital flight intensified, forcing the government in 1976 to devalue the peso by 58 percent.
In the mid-1970s, Mexico went frombeing a net importer of oil and petroleum products to a significant exporter. Oil and petrochemicals became the economy's most dynamic growth sector. Between 1978 and 1981, the economy grew more than 8 percent annually, as the government spent heavily on energy, transportation, and basic industries. Manufacturing output expanded modestly during these years, growing by 8.2 percent in 1978, 9.3percent in 1979, and 8.2 percent in 1980.
Mexico's external indebtedness mounted and the peso became increasingly overvalued, hurting nonoil exports in the late 1970s and forcing a second peso devaluation in 1980. Production of basic food crops stagnated, forcing Mexico in the early 1980s to become a net importer of foodstuffs. The portion of import categories subject to controls rose from20 percent of the total in 1977 to 24 percent in 1979.
The macroeconomic policies of the 1970s left Mexico's economy highly vulnerable to external conditions. These turned sharply against Mexico in the early 1980s, and caused the worst recession since the 1930s. By mid-1981, Mexico was beset by falling oil prices, higher world interest rates, rising inflation, a chronicallyovervalued peso, and a deteriorating balance of payments that spurred massive capital flight. This disequilibrium, along with the virtual disappearance of Mexico's international reserves, forced the government to devalue the peso three times during 1982. The devaluations depressed real wages and increased the private sector's burden in servicing its dollar-denominated debt. Interest payments onlong-term debt alone were equal to 28 percent of export revenue. Cut off from additional credit, the government declared an involuntary moratorium on debt payments in August 1982, and the following month it announced the nationalization of Mexico's private banking system.
By late 1982, incoming President Miguel de la Madrid had to reduce public spending drastically, stimulate exports, and...