Mexico and the World
Vol. 1, No 4 (Fall 1996)
http://www.profmex.org/mexicoandtheworld/volume1/4fall96/Sjmjw.html

October 13, 1996

On behalf of PROFMEX, I am pleased to present this first issue of the Web journal entitled MEXICO AND THE WORLD. Co-Editor Sergio de la Peña (UNAM) will add his own introduction when he finishes his October-November travels. Although we coincided in Beijing at the “Conference on Global Blocs and the Region of APEC--Asia Pacific Economic Cooperation” sponsored by the PeopleÕs University (China), Doshisha University (Japan) and the worldwide offices of PROFMEX, Sergio went on to compare Mexico´s situations to that of Thailand and India while I went to Singapore, Hong Kong, the Shenghen Special Economic Zone of China, and here to Bombay.

In my travels this past decade to Asia, Eastern Europe, Russia, Africa, and Latin American, I have found myself having to articulate the “Mexican De-Statification Model” in order to answer the many questions about what Mexico has accomplished since 1983 in the way of dismantling state ownership of industry and control over so many facets of life. Because many countries are now seeking also to end statism, they look to the Mexican experiences to learn how and what not to do as well as to do.

The need for this journal, then, has arisen as Mexico has taken its place in the policy-making world by emerging at the cutting-edge of de-statification. Mexico has attempted what many countries have only contemplated doing, hence its experiences are of great interest to policy makers, government officials, and scholars everywhere. Indeed the PROFMEX Worldwide Network for Mexico Policy Research now has representatives in places ranging from Moscow to Beijing, from Bucharest to Cairo, from Kyoto to Santiago de Chile, from Bombay to Havana, and from Toronto to Paris.

During my invited travels around the world to discuss the Mexican experience, the same question arises again and again:

“Given the need for so many countries to escape from statism, do not U.S. and Canadian policymakers and scholars realize that the Mexican Model remains relevant (and increasingly so)?”

This is almost the obverse of the question I am asked frequently in the USA and Canada:

“In light of Mexico’s near financial meltdown of early 1995, why are such countries as China, Egypt, Bolivia, and Romania still interested in the Mexican Model?”

Let me begin to answer U.S. and Canadian skeptics about the Mexican case by clarifying two concepts:

The Mexican Model is one of the world’s leading examples of how statism has been successfully dismantled through the following thirteen actions:

1. privatizing industries and opening the country to foreign investment, thus reducing the State’s share of GDP from above 65 per cent to below 40 per cent (according to my estimates);

2. ending the state-private sector collusion in creating and maintaining inefficient enterprises;

3. reorganizing the banking sector to give the Central Bank independent status and to open commercial banking to the domestic private sector (much of it regionally based) as well as to permit the entry of wholly-owned foreign banks;

4. ending obsolete controls over land ownership in two main ways:

*. eliminating the constitutional requirement that the State continue to create small and unproductive communally-owned farming plots (ejidos) by breaking up large productive holdings;

*. giving to the members of existing ejidos option to decide by majority vote whether to

a) maintain their status of communal ownership,

b) sell their commonly-held lands (hitherto illegal), or

c) enter into joint-production ventures (also hitherto illegal) wherein they pool their plots and labor-power to work with domestic and foreign private managers to gain access to capital, modern equipment, and marketing otherwise unavailable;

5. de-regulating air and trucking cargo transportation as well as de-controlling toll roads, limits on number of gas stations, port cargo services, the fishing and mining industries, etc.;

6. turning non-university public education over to the states, beginning to rewrite the obligatory primary-school textbooks to de-mythologize the idea that government can effectively intervene in all aspects of society and economy, and de-stigmatization of the role of the private sector in national development;

7. attempting to break the corrupt power of labor union leaders and regional politic-economic bosses (caciques), the power behind Mexico’s one-party political system. (Ironically central government power has been needed to force state and local caciques to admit defeat at the polls by opposition parties in Baja California, Chihuahua, Guanajuato, and Jalisco. President Zedillo’s 1995 initiative not to intervene in state and local affairs means that caciques are now better positioned to avoid being forced from power, especially in southern Mexico where they continue to manipulate elections at will.)

8. channeling political dissent into the country’s increasingly competitive electoral arena, marginalizing guerrilla activity through negotiation, and creating an increasingly effective National Human Rights Commission;

9. joining with larger and more modern countries to create the NAFTA (North-American Free Trade Area) free-trade bloc, thus meeting the major challenge of economic globalization;

10. serving as hemispheric linchpin for the immediate development of free trade agreements, thus providing the basis for the free flow of profit-making and tax-paying funds in a large area (the Americas) otherwise befuddled by free-trade rhetoric (See the article in this first issue of the Journal entitled ÒMexico as the Linchpin for Free Trade in the AmericasÓ) ;

11. expanding the international role of Mexico’s CONACYT (Consejo Nacional de Ciencia y Tecnología) to interact with world research, drawing upon and adding to global knowledge about the process of modernization in an era of ÒinstantÓ airplane- and tele-communications.

CONACYT is fostering Mexico-focused policy research, e.g., at PROFMEX centers in Europe, Eastern Europe, Russia, Middle East, India, China, Japan, South America, Central America, and Caribbean as well as North America (more than half of PROFMEX offices are in Canada, Mexico, and the USA).

*. establishing the APEC Regional Policy Research Group;

*. bringing Chinese and Japanese scholars to Mexico;

*. expanding into India comparative analysis (India has greater investment in Baja California than does South Korea);

12. creating (with the USA) the international standard for the flow of non-taxpaying funds devoted to foundation activities of and/or benefiting Not-for-Private-Profit Organizations (NPPOs). Mexico’s success in achieving the potential first international access to funds from the U.S. NPPO sector intrigues leaders of former statist countries who seek funds from grant-making foundations to make up for the State’s shrinking finance of (and shortage of private funding for) health, education, welfare, science, and charity. These are the HEW&SC activities for which a “safety net” must be maintained without profit.

Previous attempts to achieve recognition of NPPO sectors failed in the following cases:

*. U.S.-Germany U.S.-Israel U.S.-Canada

*. U.S.-Russia U.S.-England

That Mexico could achieve what the above countries could not (and that we may next lay the basis for U.S. investors in Mexico to donate part of their profits to Mexican NPPOs) helps defuse the argument that economic globalization means Òselling outÓ the national patrimony.

The U.S.-Mexican NPPO international standard is important because:

*. it is the world’s only cross-border standard (the competing European Union has as many NPPO standards as it has members);

*.it benefits from the fact that the USA is the world’s largest capital market for tax-exempt funds;

*. the eliminates the high legal cost to U.S. foundations seeking to make NPPO grants internationally, a cost inhibiting worldwide action by all but a few dozen U.S. foundations which have the requisite knowledge, experience, and legal staff.

13. achieving the 1995 agreement with the USA and IMF that generated an international balance of payments support package of $50 billion which is more than four times the amount previously available for monetary crises. That the Mexican Model has not been made irrelevant by this $50 billion package is clear to policymakers in Asia, Eastern Europe, and South America where emerging markets are troubled by the flows of “hot money.” The Mexico package had global significance in that it saved from bankruptcy emerging markets in such far-flung places as Hungary, Ukraine, Argentina, and Brazil.

This Mexico-USA-IMF $50 billion package has set a new precedent for resolution of problems caused by hot money, which in its search for short-term profits, is ready to flee and thus destabilize emerging markets at the sign of even slight risk. The Mexican Model has called world attention to the costs of de-statification and the new level of international backing required to offset the nearly instantaneous flow of speculative funds.

In defining and examining the Mexican Model and its meaning for globalization and de-statification, MEXICO AND THE WORLD features articles that examine topics such as the following:

1. Mexican internal economic and social policies;

2. Mexico’s external relations;

3. Mexico’s implicit and explicit interactions with the world;

4. overlap of internal and external matters, for example:

*. foreign investment and its social impact on Mexico;

*. implications for Mexico of decisions, actions, or activities by competing countries and/or by the World Trade Organization;

*. Mexico’s role as purveyor of technology, e.g. PEMEX activity in such countries as Bolivia;

Articles need not be explicitly comparative but contribute to our understanding of the course of recent Mexican development or view the challenges to Mexico as it faces the twenty-first century.

We encourage submissions in Spanish or English from all of the social sciences--including policy science, economics, management, international relations, political science, history, sociology, and geography. Once received in our offices, submissions will be sent to our international editorial board for peer review.

Authors who publish in MEXICO AND THE WORLD retain the copyright of their article and they are encouraged to publish their article in other media, either simultaneously or later. All correspondence and editorial activities are carried out electronically.

We encourage proposals by persons who would like develop as guest editors an issue of the journal on a specific topic. Such proposals should carry a justification for the issue and give the names of the contributors, titles of the articles. If abstracts are not available, please state how each of the articles fits into the theme of the special issue proposed.

Although we are open to submission of articles on all areas of policy, we are especially interested in research that analyzes the roles of the Mexican public and private sectors in the era of NAFTA, the impact of global changes and new production factors in, on, and by Mexico as well as MexicoÕs role in creating and interacting with the emergence of new world trading blocs.

In summary, the purpose of MEXICO AND THE WORLD is to meet the need to investigate and to help understand Mexico's changing global role, especially the leadership that it has assumed in so many fields.

FROM EDITOR: JAMES W. WILKIE