Economic orthodoxy and political change in Mexico: The stabilization and adjustment policies of the De La Madrid administration

This chapter focuses on the economic policy choices leading up to the point, and on the political forces that shaped them. It presents the political and economic struggles of earlier decades—particularly the way the reformist policies of the 1970s altered the political balances established during Mexico’s long era of “stabilizing development”. The chapter describes the main policy changes implemented under de la Madrid and discusses some conflicting interpretations of the political relations underlying them. It offers some brief reflections on the long-term effects of the policies on the political system. Initiatives to increase Mexico’s low tax rates, an important component of the earlier stabilizing development model, were blocked under Echeverria by strong behind-the-scenes pressure from business elites. Many industrialists profited substantially, for example, from the subsidized inputs and lucrative contracts provided by the expanding state enterprise sector. Progress was more limited in the public enterprise sector, where the giant firms proved highly resistant to rationalization or reduction.