ABSTRACT
For reasons which are too well known to detain us, the economic development of Japan is seen as a success story. To be sure, the problems of slow growth and no growth, of deflation and recession, of the 1990s – sometimes termed the “lost decade” – and so on have taken the shine off, but even so Japan remains an economic colossus. Its population enjoys an enviably high standard of living, an equitable distribution of incomes, and, no less, of “life chances.” The same cannot be said of Mexico where growth has been uneven; income inequalities are real and considerable, poverty and illiteracy combine to make citizenship a charade for many. Undoubtedly there have been successes, particularly in respect of economic growth from 1940 to 1970 or so when Mexico enjoyed its own miracle. Average annual growth was 6 percent of GDP, inflation was low, and there was a degree of social progress. But then the miracle came unstuck and when it did there were sharp-eyed observers to note that the failure was deeply rooted in the very terms of success in the miracle years. The tone of the commentary was that “chickens had come home to roost.” 1 The miracle was not quite so miraculous as it had once seemed. 2 The story has taken yet another twist as Mexico more recently has come to be viewed again as a success story, this time in the management of economic adjustment and structural reform. Inflation was under control, capital and foreign investment returned, and output growth has increased. 3 Once again not everyone is convinced of the extent and sustainability of Mexico’s achievement. Cypher 4 is trenchant in his critique of what he terms an economic pathology:
Mexico’s neoliberal export-led development model, imposed slowly and haltingly during President de la Madrid’s sexenio (1982–1988), and with a single-minded vengeance in that of President Salinas (1988–1994) survived the devastating impact of the “peso crisis” of 1994–1995. Survival, however, came at an extraordinarily high price, and was achieved not through any process that would indicate the underlying vigor of the neoliberal free trade model. On the contrary, the then unprecedented mega-loan orchestrated by the US Treasury and the IMF fortuitously combined with a rapid run-up of US imports from Mexico – the destination of 84 percent of Mexico’s exports. It was the long US expansion of 1991–1998 (which happened to accelerate in 1995–1997) that explains the survival of the “Mexican model.” In addition, underwriting the dominant forces of the mega-loan (which returned credibility and loan capital to Mexico) and the boom in exports to the expanding US market were the twin pillars of pathology:
Narco-capitalism which, while its growth cannot be measured with any precision, unquestionably played a pivotal role as stabilizer – now serving as a primary foreign-exchange earner.
Emigration, Mexico’s saddest export, also served to bolster foreign-exchange earnings when the macroeconomic situation was at its nadir in 1995 and early 1996. 5
