The Possibilities and Limits of
Richard A. Nuccio
The origins of Mexico's acute contemporary political and economic crises lie in the 1960s.It was during that decade that the economic model of import-substitution industrialization being followed by Mexico gave early indicators of having exhausted its usefulness. Part of the inadequacy of the model lay in its neglect of the rural areas, where the majority of Mexicans at one point lived and where productive activities might have helped feed Mexico's increasing numbers and slowed the rush of population to the cities.
Another part lay in an intrinsic failure of the model everywhere it was applied in Latin America: the creation of an inefficient industrial structure that produced low-quality goods competitive only in an internal market protected by high tariffs.This model led to the dead end in Mexico, as in many countries, of substituting imports of even more expensive capital goods and, at times, raw materials for the earlier imports of finished and intermediate goods. Poor-quality products, desirable only in the protected domestic market, never earned the foreign exchange as exports to pay for the imports of capital goods. Foreign borrowing became the only way to fill the resulting foreign exchange gap.
Moreover, only the relatively privileged upper and middle classes could afford Mexican-produced, high-priced luxuries such as stoves, washers and dryers, and refrigerators.This small market of wealthier Mexicans, constituting perhaps 15 percent of the population, lived in the major cities.A vicious cycle began. Protected industries located close to their major markets in the cities drew labor from the countryside into increasingly crowded urban centers. Government policies kept agricultural prices low to supply inexpensive foodstuffs to the urban working class. Low agricultural prices drove even more peasants into urban areas and producers out of basic commodities such as beans and corn and into____________________