North American Economic Integration

North American Economic Integration

Theory and Practice

Norris C. Clement, Gustavo del Castillo Vera, James Gerber, William A. Kerr, Alan J. MacFayden, Stanford Shedd, Eduardo Zepeda and Diana Alarcón

This highly accessible book explains the theoretical, historical and political background of the North American Free Trade Agreement (NAFTA), its impact and the debates surrounding its existence. In addition the authors provide a brief introduction to the theory of economic integration as well as a succinct overview of the evolution of the global economy, and the institutions that manage it, in the post World War II period.

Chapter 6: Mexico’s Economic Development

Norris C. Clement, Gustavo del Castillo Vera, James Gerber, William A. Kerr, Alan J. MacFayden, Stanford Shedd, Eduardo Zepeda and Diana Alarcón

Subjects: business and management, international business, economics and finance, international economics


Page 207  6. Mexico's Economic Development  The Mexican economy has been at the forefront of North American economic news since 1982. On many occasions, this prominence was due to the fact that the  country's policy makers were being castigated for gross mismanagement of the economy. On other occasions, it was because Mexico was being held up as a showcase  of International Monetary Fund and World Bank stabilization and structural adjustment policies. What has remained unchanged throughout these contrasting scenarios  is Mexico's inability to recover the historical growth rates that it enjoyed during the 1950s and 1960s. As outlined in Chapter 3 and confirmed in Chapters 4 and 5 is  that this scenario is also consistent with the experience of Mexico's two NAFTA partners. Economic development has been postponed repeatedly as a vicious policy  cycle heaped hardship on the population. A chronology of key post­World War II events in Mexico illustrates this point well:  l l l l l 1950s–1960s Sustained economic growth with low inflation and a stable peso.   1970–77 Rising inflation and external debt culminating in a major peso devaluation in 1976.   1978–81 Rapid economic growth based on oil exports.   1982 External debt crisis triggered by external shocks and economic mismanagement.   1983–85 Refusal to participate in a Third World debtors' cartel. Adoption of strong stabilization policies to become the IMF model ‘adjusting country’.   Page 208  l l l l l l l l l l l l l 1985 Major currency devaluation. Earthquakes in...

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