ABSTRACT

The main elements of Mexico's financial reform under President Carlos Salinas are: financial globalisation, political democratisation, institutional change and financial collapse. Mexico's financial reform under President Salinas shows how policy decisions are determined by the convergence between two different, though interrelated, sets of variables: international trends in policy-making and domestic political institutions. Each one of the reforms to the financial system illustrate how external dependency and internal autonomy brought about policy reform under President Salinas. Mexico's financial reform was an example of how financial globalisation and policy consensus conditioned the state's response to the 1980s economic decline and to the set-back in the 1988 presidential elections. Mexico's financial reform represented a genuine institutional change. The financial system was heavily controlled by the state prior to the reform under President Salinas. However, the failure of the reform to address the issue of domestic savings created an over-dependence on capital inflows.