One market for all?

• Author: Forde, D.H.
• Position: Mexico's expected entry in the North American Free Trade Agreement

WITH THE CREATION OF THE NORTH AMERICAN FREE TRADE AGREEMENT, MEXICO, CANADA AND THE UNITED STATES NOW FACE THE CHALLENGE OF BALANCING THEIR DISPARATE ECONOMIES AND DEVELOPMENT PERSPECTIVES

WHEN CHARLES I, King of Spain, asked Hernando Cortes what sort of country he had found, the Conquistador responded by throwing a crumpled piece of paper on the table. This portrayal of a land of peaks and valleys proved to be an accurate description of Mexico, whose topography is one of mountains and canyons, and whose politics and economics have been a series of peaks and troughs.

Throughout its existence Mexico has been plagued by revolutions and revolutionaries who have toppled governments, destabilizing the country and relegating it to a place among the poorest countries in the Western Hemisphere. From 1810 to 1812, popular uprisings threatened Spanish rule. In 1821, General Agustin Iturbide freed the country and became its first Emperor, only to be overthrown shortly after. In 1836, settlers in Texas declared independence from Mexico, and in a war with the United States that lasted from 1846 to 1848 California, Texas, Arizona and New Mexico seceded. War with the United States was by no means the nation's final conflict--in 1864 Maximillian, Archduke of Austria, was installed by the French as Emperor, and from 1910 to 1920 the Mexican Revolution brought further turmoil.

The founding of the ruling Institutional Revolutionary Party or PRI in 1929 marked the beginning of a period of relative stability and growth, and put Mexico on a steady upward, though economically erratic, course. The PRI embraced a set of social and economic reforms based principally on educating the masses. This commitment was underscored by the earmarking of almost 20 percent of the annual budget for education. Mexico has a long tradition in higher education. The National University in Mexico City was chartered in 1551, nearly a hundred years before Harvard University was founded, and over the years fine universities and technical institutions were established at Monterrey, Saltillo, Oaxaca, Guadalajara, Morelia, Hermosillo, and in other cities.

In 1934, the government created a new agency, Nacional Financiera, to invest private and government capital in infant industries, but by 1965 only $25 million had been expended for copper, cement, steel, textiles, paper, fertilizers, and other factories. Following the lead of other Latin American countries, the Mexican government tightened its grip on the country's vital resources by systematically nationalizing key industries--from banking and airlines, to food and petrochemicals. The most important of these was the petroleum industry, which was nationalized in 1938 and remains firmly under government control today.

Until World War II, Mexico relied mainly on agriculture for its basic food supply and exports. Corn was the staple crop, but it was cultivated primarily for local consumption. Wheat production was second, followed by cotton, coffee, beans, and cane sugar. Natural resources included petroleum, silver, gold, lead, zinc, and timber. With the exception of crude oil, none of these industries was sufficiently developed to satisfy even local consumption. In fact, Mexico imported virtually half of the steel it needed until the early 1980s.

Shortly after the end of World War II, with the economy still in a state of malaise, the central government instituted a national program of rapid industrialization through import substitution...