NAFTA, partie 4

                Although the economy continues to improve as the millennium and the Zedillo administration draw to their closes, the effects of the 1994 crisis have yet to fade from the Mexican economy.

    Throughout the last two centuries, various earnest attempts were made to steer Mexico toward industrialization and modernization.  Despite these intentions, limited progress was achieved, at least by US standards.  The 1800s were intermittently afflicted with invasions and wars fought with Spain, the US and France on Mexican soil.  Between wars, political instability, debt crisis, power struggles and gross inequity among social classes hindered the capacity for growth.  The relationship between Mexico and the US in this century was laced with hostility and moments of peaceful cooperation.  Despite frictions, there is no doubt that the economies of the two countries have been inextricably entwined for the past two centuries.  However, while Mexico was preoccupied defending its territory and struggling for political stability, the US was well on its way to industrialization.  Trade practice during the 1800s was seasoned with vestiges of Spanish imperialism and its customs, relatively unregulated trade along the untamed Mexico-Texas border, and demands of European immigrants for duty-free goods from their homelands.  At the close of the 18^th century, a protectionist stance was formulated and adopted as national policy.   Nevertheless, this policy was rather inconsistently applied and foreign entrepreneurs, mostly from the US, were granted ample concessions and incentives to accelerate the industrialization process. 

    At the turn of the 20^th century, US business and capital dominated the Mexican economy.  Growth and development were once again deterred by the onset on civil discontent that evolved into the Mexican Revolution.  In subsequent years, inconsistency, corruption, and unpredictability with respect to trade policies, populist tendencies, nationalism and protectionism from one administration to another created the atmosphere of uncertainty and mistrust that investors despise.  Although protectionism worked to launch emerging industries, lasting adherence to this policy eventually resulted in underdevelopment and backwardness; hence, the diminishing competitiveness of Mexican industry.  In addition, repeated rounds of deficit crisis and currency devaluations destabilized the economy causing wariness among investors and capital flight.  The 1980s were virtually deprived of economic growth. Run-away inflation and a huge foreign trade deficit further aggravated the situation.  These accumulated economic ills induced Mexico into abandoning protectionism in favor of free-market economics and subsequently entering the NAFTA with the US and Canada.  Although NAFTA promises development and improved standard of living in ten to twenty years, the pain of transition has characterized the short run.  In addition, another currency crisis; provoked by reckless monetary decisions at the end of 1994; caused economic upheaval, shambled investors, and reduced Mexico's ability to exploit NAFTA for sustained real growth.    The following years (approaching 2000) have seen recession, social unrest, capital flight of cautious national and foreign investors, and a somewhat rocky and partial recovery of GDP.  Despite these setbacks, the alliance and economic integration of Mexico, the US and Canada has continued and continues to grow.