We explain what the “Mexican miracle” was, the economic model of stabilizing development that made it possible and its objectives.
What was the “Mexican miracle”?
The “Mexican miracle” was the result of an economic model known as “stabilizing development”, applied in Mexico between 1954 and 1970. The model aspired to achieve economic stability that would allow sustainable and continued development. It was carried out during the presidencies of Adolfo Ruiz Cortines (1952-1958), Adolfo López Mateos (1958-1964) and Gustavo Díaz Ordaz (1964-1970).
This model adopted measures under the premise that generating greater wealth would be more beneficial for the population in general than state welfare. It coincided with the transition from a largely rural society to a more modern, urban and industrialized society.
The economic philosophy of the “Mexican miracle” consisted of exchange rate parity, the reduction of inflation and balance in the balance of payments. Industrial promotion through protectionism, added to the control of public spending, achieved macroeconomic stability and continued economic growth, at the expense of investment in social well-being.
Thus, the years of stabilizing development were characterized by sustained economic growth of 6.6% annually, with inflation of 2.2%. This, in part, due to the promotion of modern industrial production and foreign investment, investment in the countryside to promote the commercialization of agricultural production and urban growth with its consequent expansion of the domestic market.
For this too The investment in the infrastructure communications and energy sector: The electricity industry was nationalized and a state company was created that awarded its workers a portion of the profits. A new distribution of agricultural land was also carried out to address the discontent of many farmers.
The Mexican miracle involved broad sectors of society in a national development project: the government guaranteed bankers and businessmen high rates of profitability if they committed to investing abundantly in the country, and offered conditions of prosperity to the middle classes and many workers and peasants, although social inequalities persisted.
Key measures were the reduction of taxes (especially to promote industrial production), the granting of credit and the promise of bailout by the State of companies that could go bankrupt.
Key points
- The “Mexican Miracle” was a period of sustained economic growth that took place in Mexico between 1954 and 1970.
- It was due to the application of the “stabilizing development” model that promoted industry, invested in infrastructure and guaranteed economic stability.
- It was a time of prosperity that transformed Mexico into an industrial, urbanized and diversified economy.
- Its end took place in 1970, when inflation, external debt and social demands began to grow.
Objectives of the Mexican miracle
The stabilizing development was proposed from the beginning to meet the following objectives:
- Raise the standard of living of the population especially the less fortunate: workers, peasants and the middle class.
- Sustained increase in national income and GDP (Gross Domestic Product).
- Diversify the economy as quickly as possible.
- Industrialize the country with particular emphasis on basic industries (such as oil, electricity and steel).
- Achieve balanced regional economic development.
End of the Mexican miracle
The “Mexican miracle” ended in 1970 despite the sustained economic growth and advances in industrialization that were experienced during this historical period. Mexican society began to suffer high levels of inflation and industrial production reached a limit due to the import substitution policy that made it lose competitiveness.
Added to this situation was a significant increase in the population, especially in the cities. Social demands led to an increase in public spending and state debt against national and foreign banks. Thus the foundations of the 1976 crisis were laid: a huge external debt, a contraction of private investment and a devalued currency.
See also:
References
- Delgado de Cantú, GM (2015). History of Mexico. Historical legacy and recent past. Third edition. Pearson.
- Hamnet, B. (2014). History of Mexico. Second edition. Akal.
- von Wobeser, G. (ed.) (2014). History of Mexico. Economic Culture Fund.
- Wikipedia (sf). Mexican miracle. Wikipedia. https://es.wikipedia.org/
