Another missed opportunity – El Financiero

Unfortunately, our country has been characterized by losing opportunities to consolidate the growth of its economy and become a developed country.

Today, we could be seeing one pass by that, if taken advantage of, would probably have meant an economic takeoff for Mexico as many do not imagine.

But, before we get to the present, let’s recount some of those occasions that we have missed.

Perhaps the first of these occurred in the context of the end of stabilizing development. Our country reached average economic growth rates of around 6 percent per year in the 1960s.

The growth was so remarkable that the behavior of the economy at that time was called “the Mexican miracle”. What was remarkable was that this growth also occurred in a context of very low inflation.

There was also a process of urbanization and industrialization that allowed raising the living standards of an important part of the population and at the same time generating a growing middle class.

Mexico could have continued on that path and with the growth of the middle class could have also modernized its political institutions. It did not do so and at the end of the 1960s a social crisis of great proportions was created that was expressed in the student movement of 1968 and that had as a response a greater closedness of the political system.

In economic terms, in the 1970s, instead of giving continuity to the stabilizing development strategy, the new government, headed by Luis Echeverría, produced an enormous disorder in public finances and excessive indebtedness that led to a balance of payments crisis as well as an inflationary eruption and the first devaluation of the peso against the dollar in 22 years, which occurred in 1976. A next missed opportunity occurred at the end of the 1970s.

We were barely coming out of the crisis that meant the end of Luis Echeverría’s six-year term when important discoveries of oil reserves were made in our country, in an international context in which oil prices were going up.

The expression of then President López Portillo in the sense that now we had to learn to manage abundance is a reflection of the mentality that existed in those years.

Instead of taking advantage of the oil surpluses to be able to generate a solid economic base and robust public finances, not dependent on oil income, there was waste, corruption, excessive indebtedness and a disorder in economic strategies, so the economy ended up collapsing when in In 1981 the price of oil fell and a new crisis began that even led the country to suspend foreign debt payments.

After that, there was a new devaluation of the peso and later the nationalization of private banking, again generating a financial crisis of great proportions in 1982.

The next time that Mexico had an important opportunity to grow occurred in the 1990s after the signing of the North American Free Trade Agreement (NAFTA). However, the lack of order in the political transitions of our country, as well as the personal conduct of public finances, once again led to a balance of payments crisis in 1994 and an economic fall in 1995, which caused the bankruptcy of almost the entire banking system. With all this, exports continued to grow by virtue of the trade agreement signed and the success of a series of sectors that took advantage of that moment with an undervalued peso.

However, a vision was lacking to be able to generate growth that was not exclusive but that would reach a significant part of the population. The economy recovered only in the export enclaves and it was not possible to boost all sectors.

One more of the lost opportunities presented itself at the beginning of this century. To the surprise of many, there was a political alternation in the Executive Power in Mexico that once again attracted international attention for its ability to modernize its political system without generating conflicts and uncertainties.

The Government of Vicente Fox was able to give a new boost to the modernization of the country in all areas and take advantage of the export drive that our economy had. However, the so-called “Democratic Bonus”, as that privileged attention that Mexico received was called, lasted very little and the economy again entered a recession.

During the six-year term of Enrique Peña Nieto, an important sequence of reforms was undertaken again, highlighting that of the energy sector, which for the first time allowed private investment in areas where it was prohibited in the past, such as hydrocarbons or electricity. There was the possibility of turning our country into a power in sectors that took advantage of our geographical location and the new legal framework. Unfortunately, the Peña government lost margins of action in the face of multiple evidence of corruption and in the face of the possibility that there could be no continuity in the programs due to a probable victory of the left in 2018, as indeed happened.

We come to the present.

In the context of the geopolitical conflict between China and the United States, the COVID-19 pandemic occurred, which led multiple sectors to suffer from serious supply problems. This led many global companies to rethink the location of their operations and an important movement of investment towards our country from companies installed in China could have been generated if appropriate conditions had been offered to attract these factories.

We ended the crisis resulting from the pandemic when a war broke out in Europe that again threatens globalization and for the same reason could eventually lead North American companies and companies of other nationalities installed in China to look for places closer and less exposed than the East.

However, according to what is observed in the international environment, the fact that Mexico is not carrying out an active promotion of investments and offering incentives for them to land in the country may lead to this circumstance once again becoming an opportunity. lost and joins the very diverse ones that we have let pass by in our history.