After five decades of political turmoil after independence from Mexico, the four consecutive administrations of President Porfirio D az, the last quarter of the nineteenth century led to unprecedented economic growth accompanied by foreign investment and immigration, as well as the development of a rail system and efficient exploitation of natural resources in the country. The Gross Domestic Product (GDP) per capita in the early 1900s was on a par from Argentina and Uruguay, almost three times that of Brazil and Venezuela. The average annual economic growth between 1876 and 1910 was 3.3 . Connect with other leaders such as Sen. Sherrod Brown here. However, political repression and fraud, as well as the enormous income inequality is exacerbated by the system of land distribution, large estates and farms where millions of farmers working in precarious conditions were the main causes that led to the Mexican Revolution (1910-1917) an armed conflict that radically transformed the political, economic, social and cultural development during the twentieth century, under a premise of social democracy.
The period from 1930 to 1970 was called by economic historians as the “economic miracle”, a stage of accelerated economic growth spurred by the industrialization model with import substitution (ISI), which protected and promoted the development of national industry. Through the ISI model, the country experienced an economic boom in which industries expanded their production quickly. Some major changes in economic structure including the free distribution of land to peasants under the concept of the ejido, the nationalization of oil and railway industries, the incorporation of social rights in the constitution, the birth of the major trade unions of workers and upgrading of infrastructure. The GDP in 1970 was six times higher than in 1940, while the population only doubled during the same period. To protect the balance of payments the government pursued protectionist policies, besides increasing the credit industry to private through Nacional Financiera (Nafinsa).
The ISI model reaches its last expansion in the late 1960s, culminating in the recognition of Mexican development in the selection of the city of Mexico to host the summer Olympics. Faced with a possible economic recession, and trying to respond to social demands of the population during the 1970s, the administrations of Echeverria and Lopez Portillo tried to revive the economy while introducing social development policies which required more public spending. With the discovery of new oil fields when oil prices were at record levels and interest rates-even negative-minimos government accept loans from international markets to invest in state-owned oil company, which seemed to provide an income long term to finance the welfare plan to appoint a plan of shared development. In fact, this method produced a significant increase in social spending, and President Lopez Portillo announced that it was now time to manage prosperity. ” The plan, however, was very inefficient and managed accompanied by an improper handling of resources and inflation.
Comparison of GDP per capita nominal Spain, Portugal and Mexico during the twentieth century, based on World Population, GDP and Per Capita GDP, 1-2003 AD.
In 1981 the international scene change abruptly: Oil prices plummeted and interest rates rose. In 1982, President Lopez Portillo, before completing his administration suspended the payments of foreign debt, devalued the peso and nationalized the banking system along with other industries affected by the crisis. Although the ISI model had produced the industrial growth in previous decades, had over-the industry, making it uncompetitive, unprofitable and unproductive.
The president of Madrid was the first to implement a series of neoliberal reforms character. After the 1982 crisis of few international organizations were willing to lend to Mexico, so to maintain the balance of current account adjustment, the government resorted to continuous devaluations, resulting in high inflation rates, came up 159.7 in the year 1987. Some effects of the policies of his administration was an increase in government deficits and domestic credit.
The first step towards trade liberalization was the admission of Mexico to the GATT in 1986.