Mexico’s Second Revolution

MEXICO CITY – Mexico, a stagnant and violence-plagued country in recent years, finally began to overcome its malaise in 2013, thanks to an activist president and a coalition of political parties determined to move the country forward. But, alongside substantive changes, there is considerable uncertainty and hyperbole. It could hardly be otherwise.

The situation resembles that of 20 years ago – almost to the day. When the North American Free Trade Agreement (NAFTA) among Mexico, Canada, and the United States entered into force on January 1, 1994, it seemed that Mexico was poised for a true takeoff. But a series of events – the Zapatista uprising in Chiapas, the assassinations of a presidential candidate and the incoming president’s chief aide, and the collapse of the currency – shook Mexico that year, underscoring the depth of the challenges it faced.

NAFTA brought with it a spectacular increase in Mexican exports, as well as a dramatic shift in their composition. But it proved to be a great disappointment in terms of foreign investment inflows and economic growth, which has averaged 2.6% per year over the last two decades – slower than Peru, Chile, Colombia, Brazil, and Uruguay. As a result, Mexico’s income gap with the US and Canada has barely narrowed.

Thus, President Enrique Peña Nieto’s task since taking office one year ago has been to ensure that the promise of major change in Mexico finally translates into sustained economic growth, improved living standards, and faster convergence with the US and Canada.