Mexico Confronts the Challenges of Global Competition

1. Mexico Confronts the Challenges of Global Competition Diana Villiers Negroponte The Brookings Institution July 8, 2013

2. Ancient Civilization • Olmec– oldest people to inhabit the Gulf Coast • Mayan – civilization dominated by the arts and trade. • Zapotec – Use of metals in Oaxaca. • Aztec empire – warriors for one hundred years; capital city, Tenochtitlan, is modern day Mexico City

4. Spanish Colonial Period 1452-1821 • 15th Century arrival of the Spaniards • Power of the Catholic church • Dominance of the Spanish conquistas and later their families • Marriage to Spanish family, but not to indigenous. Mestizajeis slow • Patriarchal families – jobs based on allegiance to patriarch

6. Revolution & Nationalism • 1910 Revolution against the old order of President Porfirio Diaz – landed class, church property; • Decade long civil war – heroes; • Pancho Villa’s incursion into Colombus, AZ; • 1917 Resistance to General Pershing’s incursion and 1917 Constitution • 1938 Nationalization of the petroleum reserves and enshrinement in Article 27 of the Mexican Constitution;

8. Post Revolutionary Mexico 1928 –2000 • Emergence of the PartidoRevolucionarioInstitucional(PRI); • Appointed President for 6 years; • Corporatist government: • Army • Campesinos (peasants) • Trade Unions • Business leaders • Controlled press – cooption of critics • Communal ownership of land

9. The Modernization of Mexico • 1982 – President Miguel del a Madrid applies to join GATT; • 1989 – President Carlos Salinas de Gortari proposes a North American Free Trade Agreement; • 1993 – PRI candidate killed on campaign trail and succeeded by Dr. Ernesto Zedillo, Min. of Education – allows the PAN to win mid-term elections; • 2000 – PRI looses to the Partido de AcciónNacional (PAN).

11. Early Signs of Democratic Change • Elections freer; • Press no longer tied to the government; • Corporations less committed to one party; • Alternation in power; • Slow growth of civil society, particularly environmental movements • BUT: PEMEX untouched, role of Church untouched. Corporatist parties still hold allegiance to the PRI

12. TODAY • Congress independent, critical, but struggles to achieve consensus; • Business privatized, but still highly concentrated; • Trade Unions remain strong and sometimes destructive – particularly electricity and education; • Energy – Cantarell field has diminished source of oil – what next?

13. Challenges facing Mexico Today • Education: bottom of PISA scores; average length of school day, number of days in school; teachers who don’t show up; • Energy: increasing imports of natural gas from the U.S. to provide necessary energy; • Productivity: measured by per capita income; • Growth = sluggish • The Informal Sector

14. Priority of Education Countries with the Highest Productivity are Countries where Education Levels have grown consistently; 3 stages of educational development: expand coverage of basic education (1-6) extend to middle & higher levels; access to all with capacity to participate then quality of ed. Mexico 4.5 years until 1970. Now 8.5 years. Need to reach 13 years like Canada, Russia; Each additional year in school = 10% more earning power; Person with High School degree has 34% higher income than someone who finished Junior High (secundaria).

16. Energy Challenges • Production from Cantarell: 2004=2.136 mbd. 2008=1.047 mbd. 2012=400,000 mbd. • National Energy Strategy goal for 2012-2016 = 3.354 mbd – from where? • Underlying problems: corruption, failure to invest in finding new reserves, production sharing with private firms prohibited by constitution; • Transboundary Oil Agreement to explore and extract from deep waters on the Mexican/US border.

18. Optimism or Pessimism? • New President, Enrique Peña Nieto with expert team in economy, energy and foreign affairs; • Willingness to confront the concentrated wealth of the communications, telephone barons; • Committed to opening all market sectors through TPP and Alliance of the Pacific • BUT – insecurity remains a deep problem.

19. Thank you for your attention!