The Other Mexico

SANTIAGO – For once, Mexico is in the news for something good: an election. What a contrast to the usual coverage by international news agencies, which seldom involves anything other than evil drug lords, terrifying shootouts, and grisly pictures of decapitated bodies.

With the ever-present Partido Revolucionario Institucional (PRI), which governed Mexico for seven decades, now due to return to power, one might be tempted to conclude that little has changed in Mexico. That assessment would be wrong.

Support Project Syndicate’s mission

Project Syndicate needs your help to provide readers everywhere equal access to the ideas and debates shaping their lives.

Learn more

Mexico today is a vastly different country from what it was under the PRI old guard. Change began to accelerate during Ernesto Zedillo’s six-year rule, beginning in 1994, and has continued under non-PRI administrations since 2000.

Drug-related violence, for one thing, is not as widespread as the nightly news might lead one to believe. True, 50,000 people have died in President Felipe Calderón’s six-year war against drug traffickers. And true, Mexico’s murder rate, 18 per 100,000 people, is frighteningly high. But Brazil’s is 26 per 100,000, South Africa’s is 32, and Venezuela’s is a whopping 67. And the bulk of homicides in Mexico occur in only four states along the United States border. In Mexico’s south, murder rates are lower than in the US, and comparable to those in Canada or Chile.

In the old Mexico, all institutions were controlled or co-opted by the PRI. That has also changed. Today, Mexico has an independent Supreme Court, an independent elections institute, and an independent Central Bank. Regulators, anti-trust officials, and statistical agencies also enjoy a good deal of autonomy. The press is freer than ever before, even if television giant Televisa continues to give PRI candidates preferential treatment. And civil society is up and running: the student movement #YoSoy132, organized through social media, turned out to be the biggest and most influential surprise of this election campaign.

The economy also has changed, and mostly for the better. The 2008-2009 global financial crisis hit Mexico hard, but the economy has been growing steadily since. The perennial over-borrowing of the old PRI governments is gone, and public finance is on a fairly sound footing. This has allowed the Banco de México to pursue a low-interest-rate policy, which has protected the peso from the sharp overvaluation experienced by the Brazilian real and other Latin American currencies.

Exports have boomed, and the regional value chain that the North American Free Trade Agreement was supposed to bring into being is finally emerging. Mexican exports have reached $1 billion a day, with manufactured goods accounting for more than 80% of the total. Rising costs in China, coupled with Mexico’s location advantage, mean that the Chinese no longer have an overwhelming advantage in the fight for the US market.

Last but not least, demography is helping. Mexican households are projected to average just 1.7 children in 2013-2014, a sharp decrease from previous years. Unemployment, underemployment, and migration pressures will drop. The country’s dependency ratio (the ratio of those not in the labor force to the productive population) is approaching an historic low, providing a demographic window of opportunity.

It is still too early to tell whether the PRI administration of Enrique Peña Nieto will revert to some of the bad habits of yesteryear. But it is clear that he will be governing a vastly changed country. Indeed, with some of the old problems fast receding, other national shortcomings are coming into sharper relief than ever before. Should he choose to tackle them, Peña Nieto will have his work cut out for him.

For starters, Mexico remains a country of monopolies. In the media, telecommunications, and energy, just to mention a few sectors, incumbents continue to wield too much power, charge excessive prices, and provide mediocre services. Private firms have launched a never-ending flow of lawsuits to thwart the efforts of regulators. That must come to an end.

The monopolies are also political. Private and public-sector lobbies have fought attempts at reform in monopolized sectors and in others, including education. It will require a bold leader to take on the political dinosaurs. Yet it has to be done.

And, of course, Peña Nieto will have to devise a strategy to reduce the drug-related violence in Mexico’s north. The issue was strangely absent from the election campaign. It will not be absent when the time comes to govern.

A growing, less violent, more egalitarian, and more democratic Mexico should be great news. If only the world’s news media would report on it.

Read more from our "Back to Mexico's Future" Focal Point.