Globalization without Equity: the Case of Mexico
Summary of a meeting with Rolando Cordera Campos, Professor at the National Autonomous University of Mexico (UNAM) and Founding Board Member of Nexos.
Rolando Cordera argued that Mexico's greater integration into the global economy has not benefited the majority of Mexicans and has produced a growth rate much less than that which Mexico sustained from the 1950s through 1970s. He maintained that it was vital to look for a way to "Mexicanize" globalization by finding ways to link small and medium-sized businesses in productive chains with large exporting companies and by investing in education and healthcare. Mexico is currently experiencing a boom in its young adult population. This "demographic bonus" presents an opportunity to invest in human capital and seek strategies for re-energizing economic growth.
The Mexican economy has changed substantially over the past two decades. Trade has grown from 15-20% of GDP in the early 1980s to over 50% of GDP today. The export economy used to be overwhelmingly dependant on oil (55.2 % of exports in 1985) and today is highly diversified and primarily manufacturing based (oil now represents only 8.1% of exports). Mexico is increasingly dependent on trade with the United States, and has also become the United States' second leading trade partner.
However, the benefits of globalization have not reached most Mexicans. After rapid growth throughout the 1950s-1970s, Mexico grew at an average rate of only 0.37% between 1980-2000 (IDB statistics). This was due to a slightly negative growth rate in the 1980s and a sluggish growth rate in the 1990s. Currently 50% of the Mexican population earns less than three minimum wages (less than $30 per week). The number of people in the middle classes has shrunk dramatically during the 1980s and 1990s as a result of the slowing economy and the inability of most Mexicans to take advantage of the opportunities of globalization.
To address this, Cordera suggested that Mexico needs to create an industrial policy that allows small and medium-sized businesses, which have been sluggish, to integrate themselves in the productive chain and link themselves with the dynamic large export companies, including the maquiladora sector. In addition, Mexico should invest heavily in education and health to take advantage of its "demographic bonus" and develop a safety net for the poorest sectors of the population.
Although Mexicans have been hopeful about their democratic reforms in recent years, Cordera noted that poor economic performance and persistent inequality may well undermine democratic change. Although political scientists caution us not to expect democracy to produce economic development, average people do expect this from democracy, and a failure to achieve economic progress could mean a loss of faith in democratic politics.
by Andrew Selee