Mexico

Abstract

The economic history of post-conquest Mexico can be divided, somewhat arbitrarily, into six distinct periods. In the first, from the Spanish Conquest in 1519 to 1630, the indigenous population declined by more than 90 percent but productivity increased. In the second period, from 1630 to 1810, per capita output probably fluctuated around a level comparable to that of the thirteen British North American colonies in the early eighteenth century. Upswings occurred due to occasional bursts of activity associated with short-lived bonanzas in the colony's main export industry, silver mining; but the long-term trend was flat. The third period began with the outbreak of the independence wars (1810-1821), which provoked a sharp decline in per capita income led by the collapse of silver mining and external trade, from which the economy did not fully recover until after 1880. Elite political strife, peasant rebellions, and foreign invasions interrupted each short-lived upswing until a military coup brought Porfirio Diaz to power in 1877. The fourth era in Mexican economic history, conventionally called the "Porfiriato" after President Diaz, coincided with the onset of sustained economic growth from the 1870s until the outbreak of the Mexican Revolution in 1911. In this era, political stability and institutional reform, combined with the development of an extensive railroad network and foreign direct investment, led to rapid, export-led economic growth. The fifth period extends from 1911 until 1982. The economy had just managed to recover from the Revolution (1911-1917) in the 1920s, when the Great Depression provoked a shift toward state-led import-substitution industrialization (ISI) that came to be viewed as part of the Revolution's legitimating legacy. This strategy produced high rates of economic growth from the 1930s until the financial and economic crisis of 1982. The sixth and final era began with the 1982 crisis and the decisive shift in 1985-1986 to a market-oriented economic strategy that culminated with the signing of the North American Free Trade Agreement (NAFTA) with Canada and the United States. This treaty went into effect on 1 January 1994. Despite its promise, rates of economic growth achieved in this era averaged well below those of the Porfiriato and ISI periods