ECONOMIC MODELS OF MEXICO (INDEPENDENCE - HISTORY - 2025

The economic models of Mexico refer to the various systems of economy for which this country has gone throughout its history. In political economy, an economic model is the set of production and social relations that occur in an economic structure, whether they are directed by the State, they can be self-regulating, they are mixed or they are oriented by market guidelines.

From the vision of development that was had during the Mexican Revolution, where previously established canons were changed, it has been marching from model to model without finding the appropriate one to lay the foundations for long-term development.

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While developed countries have allowed their development models to penetrate their culture for decades, in Mexico the vision of development has changed from time to time.

Lack of long-term vision

From the Revolution to the present there has been no long-term economic vision. If you compare it, the US from its independence to the present has preserved the same model, based on the basic principles of economic liberalism.

What the Mexican economic models have had in common has been a bad relationship between economic and political power, forgetting the central foundation of development theory, which is to sustain it in vision.

It is very difficult to achieve results when from time to time the vision changes and with it the incentives, rules of the game, programs, laws and public policies.

Mexican economic models since the 19th century

- Large landowner model (1821-1854)

With the arrival of independence, the indigenous people obtained rights. However, they were also stripped of their territories and evicted to inhospitable areas, leaving them in a situation of inferiority with respect to the rest of the population.

Thus the latifundia were formed, which later originated the haciendas as a form of organization and property of production, strengthening a class system, by bringing together the land in very few hands.

The industry was basically artisanal, manufacturing textiles and ceramics in a dispersed way and in small quantities, due to the few communication channels.

The war of independence put Mexico in a fragile fiscal reality. The cataclysm of their economic activities during the war became a burden for independent Mexico.

The combination of low income with debt was a great weakness for the state. This generated a period of economic stagnation until the middle of the 19th century.

- Oligarchical model (1854-1910)

This model incited the overexploitation of the majority of the inhabitants. President Porfirio Díaz consolidated a scenario of inequality and land ownership concentrated in a few hands.

There was a setback in agriculture, generating shortages in food production, making the situation so serious that it was even necessary to import.

Uncultivated lands and colonization laws were published in order to hasten the colonization of virgin lands and propagate the privatization of agrarian property.

Demarcation companies appeared with which millions of hectares were delimited. Thus, millions of hectares were transferred from indigenous communities to large landowners.

Likewise, copper and salt mine operations were granted to individuals. All of this laid the foundations for the armed uprising of 1910.

On the other hand, the processes began to form a modern economic profile, increasing foreign investment to modernize the industry.

- Land reform model (1910 to 1934)

Two important plans stood out. The San Luis plan, promoted by Francisco Madero, addressed the agrarian problem by seeking to improve the situation of the peasants, the development of banks, public education, foreign policy and commercial relations.

On the other hand, the Ayala plan promulgated by Emiliano Zapata essentially expressed the return of the usurped properties to the peasant and the people.

When the Revolution triumphed it was when the agrarian reforms established in the Ayala plan were endorsed. The Agrarian Law was created to reestablish the lands deprived of the peoples, thus repairing an injustice.

The Mexican Revolution drastically changed the productive design of the country by favoring the disappearance of large unproductive properties and enhancing the production capacity of raw materials with small production units.

In 1926 the Colonization Law was issued, regulating the subdivision of private properties, thus eliminating large estates and creating small properties.

- Model of populism (1934 to 1940)

At this stage, the reconstructive period of the Revolution is extended under a tense international environment, due to the depression and economic recession in the United States.

However, important advances were obtained where the constitutional principle of the State on natural resources was strengthened, as well as progress in the processes of agrarian reform and peasant and worker organization.

The State managed to increase its intervention in the strategic sectors of the economy, establishing a set of public entities for their control and development.

The Agrarian Code is promulgated, which decreed the abatement of the latifundia and satisfied the interests of the rural groups of the nation, who founded the Central National Campesina.

It is in this period that economic planning processes of institutional life begin to be observed.

- Import substitution model (1940-1955)

This economic strategy was based on a development design aimed at substituting imports for consumer goods.

The implementation of this model was a response to the shortage of imported products due to the collapse of world trade due to World War II.

This was reinforced by a greater participation of the State, implementing policies for industrial development, the allocation of public spending to provide infrastructure, provision of subsidized materials and tax incentives. The Mexican State has assigned itself the task of promoting economic development

In addition, a foreign trade policy represented by prior import permits, tariff protection and import control, promoting exports.

- Stabilizing development model (1955-1982)

The objective was to keep the economy in harmony with the social order in order to preserve a growth model by promoting the industrial sector, although neglecting the agricultural sector.

This economic model was based on Keynes's approaches, where the State is more interventionist to solve the difficulties of economic imbalances.

There was a growth rate of gross domestic product above 6% per year. Wages registered real increases, inflation was controlled and jobs were created.

However, the government became the main consumer, causing a lack of competitiveness in production and a distortion of the market, as well as a reduction in the quality of products.

Due to the strategy of only supporting commercial agriculture and the industrial sector, the exodus from the countryside to the city accelerated, leaving food production behind.

- Shared development model (1970-1976)

This model sought to correct the negative consequences of the previous economic model. His proposal was that all productive actors participate: State, workers and entrepreneurs.

This strategy made it possible to provide the country with a communications network, industrial infrastructure, increases in credit and irrigated lands, schools, hospitals, universities, which raised the well-being of the population's middle class.

However, it also gave rise to obstacles that complicated the future capacity of the economy to develop harmoniously, leading to distortions in the distribution of income between factors, regions and people.

Likewise, the continuous and sharp contrast between subsistence and capitalized agriculture affected income distribution.

Social backwardness worsened, economic, financial and food dependency increased, industry competitiveness worsened, and balance of payments difficulties arose.

- Model alliance for production (1976-1982)

Its objective was to align the industry towards the conquest of foreign markets and to satisfy the basic consumption of the population.

It sought to strongly reduce the problem of the domestic market and unemployment, favoring productive efficiency with the use of oil resources as a lever for development. This resulted in an increase in the competitive capacity of products abroad and a reduction in inflation.

A program is promoted to be applied to the productive sectors, with the objective of satisfying the needs of the population, reactivating the economy, promoting production and satisfying the demand for employment.

A public investment of 19.3% was assigned to rural development and the agricultural sector, higher than the 13.5% of the period 1965-1976.

- Neoliberal model (1982–2018)

In this model, the role of people is privileged to determine economic results, the efficiency of the competitive market and avoid distortions caused by government intervention in the market.

This led to the proposal of an international economic policy that advocated free trade, privatization, the mobility of financial capital, growth guided by exports, and macroeconomic austerity policies.

The economic liberation is promoted in order to receive investments that would serve for the socioeconomic development of the different sectors of the country, executing the North American Free Trade Agreement.

In addition, there was an increasingly meager participation of the government in productive investments, while reducing bureaucracy by closing non-required government offices.

Regarding the agricultural distribution, after 75 years of implementation, the agrarian reform was finalized in 1992 by presidential resolution.

- Neo-developmentalism (present)

President López Obrador has highlighted the convenience of rebuilding the relationship between economic and political power to grow healthier, breaking the vicious cycle of regulation-contract-corruption.

This is where this model comes from, which has been called neo-developmentalism, increasing the role of the government to level regional imbalances and boost exports.

An attempt is made to promote the internal market by increasing the purchasing power of the poorest population. In addition, it seeks to increase investment in infrastructure and provide more support to the agricultural sector.

According to the government, these expenses will be financed by reducing corruption in the public administration. In order to placate the financial markets, fiscal discipline and the independence of the Central Bank have been confirmed.

References

1. Carlos Alberto Martínez (2019). Models of economic development in Mexico. The Economist. Taken from: eleconomista.com.mx.
2. Diego Castañeda (2018). Economic growth in Mexico between 1821-1850. Nexus. Taken from: economia.nexos.com.mx.
3. Andy Robinson (2018). Mexico changes its economic model. The vanguard. Taken from:vanaguardia.com.
4. Eduardo M. Graillet Juárez (2012). The Economic Models in Mexico, their Policies and Development Instruments in the Agricultural Sector. Veracruz University. Taken from: uv.mx.
5. Wikipedia (2019). Economy of Independent Mexico. Taken from: es.wikipedia.org.
6. Wikipedia (2019). Economy of mexico. Taken from: es.wikipedia.org.