President Zedillo’s reforms stabilized the Mexican economy

 Other  Comments Off on President Zedillo’s reforms stabilized the Mexican economy
Oct 202010

President Ernesto Zedillo (in office from 1994 to 2000) took unprecedented steps that set the stage for Mexico’s 21st century economy. Before discussing Zedillo’s economic reforms, it is useful to review the recent history of Mexico’s economy.

Following the fifty year “Mexican Miracle” of unprecedented economic growth and low inflation, the economy entered some very tough times in the early 1980s. Assuming high oil prices would continue, Mexico borrowed very heavily and could not pay its debts when oil prices plunged in 1981-82 and interest rates rose dramatically. The government suspended debt payments, devalued the peso by 500%, and nationalized the banks. The “lost decade” of the 1980s was an economic disaster, with inflation rates over 100% and economic growth hovering around 1%.

Economic growth improved a bit the early 1990s but President Salinas was forced to introduce strict price controls in an attempt to curb inflation. With a fixed exchange rate, the peso soon became severely overvalued. Then in January 1994, Zapatistas in Chiapas rebelled against the national government. Two month later, PRI Presidential candidate Donaldo Colosio was assassinated in Tijuana. Salinas selected as his replacement, Colosio’s campaign manager and technocrat Ernesto Zedillo, a Yale PhD Economist who had previously been a university professor, Minister of Planning and Budget as well as Minister of Education. Zedillo easily won the relatively fair 1994 election and was called the “accidental president” because he never sought the presidency and never previously held elected office.

Upon assuming office, Zedillo faced an impending severe economic crisis. As was customary, Salinas in his last year had spent very lavishly, severely aggravating the government deficit. The economic crisis of 1995 was characterized by a deep recession, hyperinflation, widespread bankruptcies, serious unemployment and soaring interest rates. He floated the peso which quickly moved from 4.0 to 7.2 to the US dollar.

President Clinton orchestrated a controversial $48 billion bail-out loan which eased the crisis. Conditions of the loan required very stiff and unpopular austerity measures including a 50% income tax hike, reduced public spending, privatizing some state-owned enterprises, and making the Central Bank of Mexico more independent from politics. Zedillo effectively implemented these reforms, knowing they were the best for Mexico’s future though they seriously hurt his public popularity.

The bailout reforms succeeded, the economy stabilized and began to grow, averaging over 5% between 1996 and 2000. Mexico repaid the bailout loan three years before its due date. During the crisis and throughout his term, Zedillo supported and expanded Mexico’s free trade (globalization) agenda.

The Mexican economy is now far more stable than is was in the years prior to the Zedillo reforms. Mexico appears to be completely beyond the self-inflicted economic crises it experienced in the late 20th century. The 2008-09 recession was serious but was completely beyond the control of Mexico. The Mexican economy appears to be recovering nicely in 2010.

Chapters 14 through 20 of Geo-Mexico: the geography and dynamics of modern Mexico discuss the components and characteristics of Mexico’s economy. Buy your copy today to have a handy reference guide to all major aspects of Mexico’s geography!

Relatively few changes following Mexico’s 2010 election

 Updates to Geo-Mexico  Comments Off on Relatively few changes following Mexico’s 2010 election
Jul 062010

The results of the 4 July 2010 elections in 12 of Mexico’s 32 states do not suggest any important new national trends.  The PRI, Partido Revolucionario Insititucional (Institutional Revolutionary Party; magenta on map) won nine of the 12 governorships, but held nine governorships before the election.

State politics, 2010

Mexico's state governorships, 2010. All rights reserved. Click to enlarge.

The most interesting aspect of the election was that the two other main parties, the right-center PAN, Partido Acción Nacional (National Action Party; blue on map) and the leftist PRD, Partido de la Revolución Democrática (Party of the Democratic Revolution; green on map) ran coalition candidates for governor in five states and were victorious in three.   Click here for a list of the winning candidates.

Three states with current PRI governors (Sinaloa, Puebla and Oaxaca) will have new governors from the PAN-PRD coalition. The current PAN governors in Aguascalientes and Tlaxcala, as well as the PRD governor of Zacatecas, will be replaced by new PRI governors.

Though all the results are not yet available, it appears that PRI has maintained its majorities in the state legislatures and the municipal mayor positions contested.  The only exceptions appear to be in Sinaloa, where PAN-PRD won ten mayoral races compared to eight for PRI.  In Chiapas, UPC, Unidos por Chiapas (United for Chiapas) dominated the elections for the state legislature and mayors.

The results of this election and the 2009 election suggest that PRI will be in a better position for the 2012 Presidential election than they were for the 2006 Presidential election, when they did not win even a single state.  Whether they have enough popularity to recapture the Presidency in 2012 remains to be seen.

Perhaps after 2012, Mexico’s north-south political divide will be less marked.

Chapter 12 of Geo-Mexico: the geography and dynamics of modern Mexico takes a close look at Mexico’s political patterns. Buy your copy today, so you have a handy guide to the “back story” behind Mexico’s current affairs.

Preliminary results of state elections, 4 July 2010

 Updates to Geo-Mexico  Comments Off on Preliminary results of state elections, 4 July 2010
Jul 052010

Twelve states held elections for state governor Sunday 4 July 2010.

VotingThe preliminary results show that PRI (in association with various smaller parties) won 9 state governorships, and that PAN-PRD alliance won three.

Mexico’s political parties in order of year of foundation:

  • PRI Partido Revolucionario Insititucional (Institutional Revolutionary Party), founded 1929
  • PAN Partido Acción Nacional (National Action Party), founded 1939
  • PRD Partido de la Revolución Democrática (Party of the Democratic Revolution), founded, 1988
  • PT Partido de Trabajo (Labor Party), founded 1990
  • PVEM Partido Verde Ecologísta de México (Mexico’s Green Party), founded 1991
  • Convergencia por la Democracia (Convergence for Democracy), founded 1999
  • PRV Partido Revolucionario Veracruzano (Veracruz Revolutionary Party), founded 2004
  • Partido Nueva Allianza (New Alliance Party), founded 2005 by the National Union of Educational Workers

Results state-by-state, with name of governor-elect and parties represented

  • Aguascalientes:  Carlos Lozano de la Torre, PRI-PVEM-Nueva Alianza coalition.
  • Puebla: Rafael Moreno Valle,  PAN-PRD-Nueva Alianza-Convergencia coalition
  • Quintana Roo: Roberto Borge Angulo, PRI-PVEM-Nueva Alianza coalition
  • Durango: Jorge Herrera Caldera, PRI
  • Tamaulipas: Egidio Torre Cantú, PRI-PVEM-Nueva Alianza coalition (Torre Cantú is the brother of Rodolfo Torre Cantú, the PRI party candidate for governor who was assassinated a week before the election)
  • Veracruz:  Javier Duarte de Ochoa, PRI-PVEM-PRV coalition
  • Sinaloa, Mario López Valdez, PAN-PRD-PT-Convergencia
  • Tlaxcala: Mariano González Zarur PRI- PVEM
  • Oaxaca: Gabino Cué, PAN-PRD-PT-Convergencia.
  • Zacatecas: Alonso Reyes, PRI-PVEM.
  • Chihuahua: César Duarte, PRI
  • Hidalgo: Francisco Olvera, PRI-PVEM-Nueva Alianza coalition

Chapter 12 of Geo-Mexico: the geography and dynamics of modern Mexico takes a close look at Mexico’s political patterns. Buy your copy today, so you have a handy guide to the “back story” behind Mexico’s current affairs.

Mexico’s North–South political divide

 Updates to Geo-Mexico  Comments Off on Mexico’s North–South political divide
Jun 222010

The Mexican 2006 Presidential election was very close.  Felipe Calderon of the center-right PAN party garnered 35.89% of the vote to barely edge out Lopez Obrador of the leftist PRD party, who got 35.33%.  Roberto Madrazo of the left-center PRI party was a distant third with 22.23% of the vote.

What is amazing is that while the margin of overall victory was very small, only 0.56%, the votes for the two leading candidates were extremely lopsided within Mexico’s 32 states.  In 17 of the 32 states, the winner got over twice as many votes as the other.  In only three states was the spread less than 10%.  Thus, the colors on the election map below are very solid.  Interestingly, the PRI party which had an iron grip on Mexican politics for seven decades up until 2000 did not win in a single state.

It is also very interesting that voting behavior exhibited a strong north-south pattern.  In the 2006 Presidential election, 14 of 17 northern states voted for Calderon of PAN (blue on the map), while 13 of 15 southern states voted for Obrador of PRD (yellow on the map).

It is not surprising that the more conservative, pro Catholic PAN party appealed to the wealthier, more urban northern voters and staunch Catholic voters in western Mexico.  On the other hand, the populist PRD candidate was more appealing to the poorer, more rural southern voters.

2006 Election results

Mexico City is the main exception, while it is the most prosperous place in the country it is also the most progressive and left-leaning.  It recently approved same-sex marriages as well as legalizing marijuana and abortions.

The other exceptions to the north – south divide raise some interesting questions.  Why did so few voters in the northern state Nayarit vote for PAN (18.9%) compared to PRD (41.8%) and PRI (33.7%)?  Similarly, why did Baja California Sur favor PRD (43.1%) so convincingly over PAN (34.4%)?  Interestingly, Yucatan in the PRD dominated southeast voted overwhelming for PAN (46.2%) compared to PRD (15.9%) and PRI (32.9%).  It was closer in the southern state of Puebla where PAN (26.8%) edged out PRD (23.1%).

To explain these few anomalies to the north–south pattern will require a closer look at the political dynamics of these states and the election returns at the municipality level.  It will be interesting to see if this strong north–south divide persists in the 2012 Presidential election.