ABSTRACT

Mexico has struggled with problems of economic stagnation and domestic adjustments while physical and human resources have suffered much damage. With new and adverse external shocks, more attempts at stabilization, debt reschedulings and debt service relief negotiation, Mexico faces the task of not just resuming growth—as is so glibly stated in many circles—but becoming seriously concerned with the question of renewing development. Opening up the economy and lowering the customs barriers provides incentives for new investments and technological change to make Mexican industry internationally competitive. Mexico must formulate a new financial strategy. Inflation has seriously eroded the domestic savings rate and stabilization has pushed up the real rate of interest so high that investment has become highly risky if not unprofitable. Mexican development strategy must be reframed in the context of both a more interactive world economy and a more mutually beneficial relationship with its major economic partner to the north.