ABSTRACT
Mexico has been trying to solve some interrelated and persistent problems. This chapter discusses each of these concerns before turning to an analysis of concurrent external circumstances. An examination of external forces is useful in assessing the degree to which they are likely to constrain Mexico’s policy options, offer hope for change, or provide policy lessons. Mexico has a much closer economic relationship to the United States (US) than to other Latin American countries. The US is dominant in trade, in tourism, and in movements of capital and labor. The experience of the faster-growing Asian countries is pertinent if not immediately helpful for Mexico. Most conducted their economic policy more prudently in the 1970s. They were more cautious about inflation and foreign borrowing, and have smaller budget deficits, more realistic exchange rates and more export-oriented economies.
