Mexico

   
 

Executive Summary

Significant reform progress in recent years
Considering Mexico’s experience with military and corporatist autocratic rule, the country has made significant progress over the last two decades with regard to electoral competition and its overall regulatory environment, including market-oriented reforms. Economic and political elites, as well as an increasing share of the middle-class, are technically well qualified, and have gained knowledge on how best to organize the country’s political, economic and social frameworks. Mexican policymakers at both the national and regional levels are well trained, internationally experienced and often equipped with high-level qualifications from Western universities. Mexico’s tertiary education system is increasingly competitive internationally as are several major firms, including an increasing number in the manufacturing sector.
Significant structural problems
At the same time, Mexico suffers from structural problems that are uncommon among other OECD countries. These challenges mainly relate to the extremely unequal distribution of social benefits and services among the population, such as security and social opportunities. The resulting cleavages between geographic regions, rural and urban areas, and social classes are among the most pressing barriers to further socioeconomic progress. In addition, uneven state capacity, both geographically and across policy sectors, often undermines the effective and coherent implementation of policies.
Slow GDP growth with persistent poverty
In comparison to most other OECD countries, Mexico’s GDP growth over the last decade was rather slow, the socioeconomic situation was marked by considerable inflation, the lowest tax-to-GDP ratio of any OECD country, and persistently high levels of poverty and inequality. The renegotiation of NAFTA constituted the main challenge in 2018 given the country’s dependence on U.S. markets. Doubts were reduced following the trilateral agreement reached between Mexico, the United States and Canada (USMCA) in the fall of 2018. In addition to USMCA, Mexico renewed the free trade agreement with the European Union.
Microeconomic weaknesses hamper growth
Despite these positive signs, the microeconomic picture is less positive. There is a lack of competition in key domestic sectors, while the labor force remains low-skilled, and the economy is heavily export-oriented and tied completely to the U.S. economy.
Focus on multilateral agreements
Internationally, Mexico has been oriented toward multilateral arrangements, in economic and political terms, and is committed to the SDGs and the Paris Agreement, and cooperation with international financial institutions. However, Mexico lacks the capacity and influence to promote its own global governance initiatives.
Advances are unevenly distributed
Within the last generation, Mexico has made significant progress with regard to strengthening political competition and ensuring macroeconomic stability. These major achievements were accompanied by an increase in educational attainment among economic and political elites as well as segments of the middle and lower classes. However, the benefits of economic and social modernization have been unevenly distributed, and high disparities between regions and social groups remain. In this context, the pace of economic development has been too slow in recent years. In addition, Mexico has experienced a serious deterioration in domestic security due to failures in the rule of law, including systemic violence and corruption. The outgoing government failed to address these challenges.
Initial promise, but
late-term roadblocks
Early in its tenure, President Peña Nieto’s government had considerable success in collaborating with other parties in Congress to introduce major reforms in the energy, education and telecommunications sectors, which had long been on the political agenda. Moreover, the administration declared its commitment to improving transparency and combating corruption. However, nearing the end of Nieto’s term in office, the results of these ambitious reform projects are sobering. On the one hand, major reform proposals hit significant roadblocks during the implementation phase and the adoption of required secondary legislation has stalled. On the other hand, the government has handled major societal crises poorly, such as the forced disappearance and likely murder of 43 student. Its feckless response to several high-level corruption scandals has called into question the government’s commitment to transparency and accountability.
Declining public approval, rising distrust
While the beginning of Peña Nieto’s term in 2012 had been hailed as “Mexico’s moment,” widespread public dissatisfaction over slow economic growth, chronic poverty and inequality, rampant corruption scandals, and rising violent crime led to historically low approval ratings for the president, and increasing distrust in political parties and the government.
Rejection of status
quo at polls
The elections on 1 July 2018 led to considerable changes in the political landscape. The PRI candidate for the presidential elections, José Antonio Meade, achieved only a distant third place, the candidate of the unusual left-right PRD-PAN alliance, Ricardo Anaya, was also defeated. The clear winner was Andrés Manuel López Obrador of MORENA with 53% of the popular vote, leaving Peña Nieto a “lame duck” for the last months of his presidential term. The election outcome represents a clear rejection of the status quo. For the last quarter century, this status quo has maintained the country’s centrist vision of politics and openness to globalization, which many Mexicans feel has not served them.
Citations:
Greene, K. (2018). Mexico’s Party System Under Stress. Journal of Democracy 29, 4, October: 31-42.
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