Mexican Eco Crisis Essay Research Paper Mexico

Mexican Eco Crisis Essay, Research Paper

Mexico has grown to be known as part of North America, rather than Central America, due to its borders and close ties with the U.S. Westward lies the Pacific Ocean and to the east and north, the Gulf of Mexico. It is the third-largest North American country with the second highest population, of more than 100 million people, and its territory spreads over 756,000 square miles. The government is a liberated and unstable federal republic, which is composed of 31 states and a federal district, with Mexico City as the nation’s capital. Mexico City is comprised of the world’s largest network of urban communities and is the most polluted city on earth. The dominant language is Spanish, although Mayan dialects are also spoken. Mexico is a sub-tropical climate, with a mixed terrain of coastal jungles, and a central plateau, which is surrounded by mountain ranges and deserts (jainschigg, 12).

In the period surrounding 1994-5, Mexico suffered from unstable economic conditions. Several factors were catalysts to this Mexican financial crisis. Although there are many contributing factors, there are three main factors that can be attributed to the blame; political turmoil, the devaluation of the peso and the health of the private banking sector (Worldbank.org, n.p). This financial crisis also had an extreme impact on the U.S. and the world. In recent years, many developing countries have experienced financial crises; the Mexican crisis of 1994-5 represents one of the most dramatic ones. The world’s reliance on, and opinion of Mexico, changed in a short period of time.

Towards the end of 1993, after signing the North American Free Trade Agreement, Mexico seemed strong, stable, and poised to enter the developed world. However, in two short years the country would suffer the deepest depression of its history, and the political system would appear to be in shambles.

The Mexican financial system was young and vulnerable, wild swings in expectations and investor confidence, in the reigning political party was common. The deciding factor for investors was panic due to political turmoil, which created concern among foreign lenders, about the safety of their investments. In 1994, investors pulled out due to a host of political shocks that dominated the news wire. The assassination of Luis Donaldo Colosio, the ruling party’s presidential candidate and an uprising in the southern state of Chiapas, hit hard (Jainschigg, 31).

Carlos Salinas de Gortari, president of Mexico between 1987 -93, adopted an economic policy which left Mexico seemingly developed. There were signs of an emerging middle class that were importing automobiles, televisions and other luxury goods. Salinas was also able to reduce the foreign debt payment down to a fraction of the annual budget, and performed the ultimate miracle of lowering Mexico’s inflation rate from 157% to less than 10%. The years between 1987 and 1993 were marked by outstanding growth in exports, which grew by over 100%, while imports quadrupled. Meanwhile, the poor people of Mexico, which account for an estimated 40% of the population, were still waiting for the benefits of this growth (Worldbank.org, n.p.).

This caused unrest, an exploited feeling, and left a sour taste in the mouth of a poor right wing terrorist group known as the “Zapastitas.” On January 1st, 1994, the same day the NAFTA went into effect, this impoverished group of terrorists began a twelve-day uprising in the remote southern high lands of Chiapas. It was in response to the government’s approval of NAFTA. The “zapatistas” did not understand why Mexico wanted to be part of NAFTA, when half of its population was poor. The reality was, the poor were to be exploited while the top 50% benefited from their hard labor. The result of this uprising was 100 dead, and the government at a shaky peace with the zapatistas. The start of a year, that made investors further question Mexico’s stability (Worldbank.org, n.p.).

The nail in the coffin occurred in March, with the assassination of Luis Donaldo Colosio, the presidential candidate of the Institutional Revolutionary Party. He was Salinas’ handpicked successor, and to some, thought of as a strong willed puppet. The PRI, a political party, had ruled Mexico for more than 65 years, and were responsible for the signing of NAFTA and their recent economic reformation. Colosio, along with Salinas, were part of a new generation of PRI leaders, who felt Mexico was ready to move out of the ranks of their third world stigmatism. Their goals were to attract foreign investment, modernize Mexico’s economy, and to some extent its political system (Worldbank.org, n.p.).

Colosio agreed with Salinas on many issues including the unconditional support of NAFTA, which ended tariffs and most trade restrictions between Mexico, the United States, and Canada. They believed this would be a tremendous boost to the Mexican economy, and distinguish it as a developed nation. Obviously, their views and recent success, did not occur without a few toes being stepped upon. The rumor is, the radical views they shared angered powerful people somewhere in the shadow world of PRI politics.

As a replacement of Colosio, Salinas pressed the Party’s old Guard to choose his Education Minister, and Colosio’s campaign manager, Zedillo, a Yale educated technocrat. Zedillo was weak, scared