Volume 46 Number 180,
January - March 2015
The "Great Transformation" of the Mexican Miracle.
20 Years After NAFTA: From Adoption to Adaptation
Rolando Cordera *
Date received: August 1, 2014. Date accepted: November 27, 2014

An evaluation of the North American Free Trade Agreement (NAFTA) should not reduce it to merely the source of all our problems, or, on the contrary, their panacea. Even so, we must not forget that the economic and social performance of Mexico in these past years is an example of the historical experience of a drastic institutional change that did not produce its promised outcome. Moreover, it did not allow the structures and potentialities that a country needs to remain a democratic nation-state to develop in the midst of a profound shift towards internationalization.

Keywords: Trade openness, asymmetric structural change, social vulnerability, poverty, reconfiguration of power.


To a historian or a tango dancer, twenty years might seem like nothing. And they would have their reasons. However, the past two decades, or rather three, constitute a significant social and economic time period for us and demarcate an era of historical development that has yet to come to a close: more than a generation of Mexicans has been born and grown up under the influx of institutional changes decided years ago and our political and economic evolution has shifted and contradicted itself in ways that, in principle, can be traced back to these choices.

Antonio Gazol was right to warn us about the analytical error and, I would add, political danger of reducing NAFTA to the source of all our misfortunes or, on the contrary, their panacea, the sort of quantum leap into modernity and prosperity that its proponents promised and, in some cases, still insist on. As he proposed in an excellent text, "On the 'Faults' of NAFTA," published in the "El Correo del Sur" supplement of La Jornada de Morelos, the agreement should be viewed as part of an "economic policy derived from a concept of society and the economy known as neoliberalism" (Gazol, 2014).

This doctrinaire approach, which became the universal political and ideological formula that distinguished this age, and of whose implications we warned far in advance (Cordera and Tello, 1981), was adopted before the administration of President Carlos Salinas de Gortari gave the agreement a starring role in its strategy for structural change and, of course, before it was signed in 1994.

We should not forget that even before the agreement, institutional changes of undeniable depth and scope were implemented, such as the reforms made to Article 27 of the Constitution and the re-privatization of the banking system, which was nationalized in 1982, not to mention changes to oil and electrical power laws, the frenzied sale of public companies and tireless preaching on the magic of the market as a synonym for modernity, etc.

This essay aims to analyze the dynamic relationship between the path to structural change proposed by the Salinas de Gortari administration and NAFTA. It will then study the economic outcomes and political challenges that resulted, with a focus on the social vulnerability and poverty that have emerged. Finally, this work will analyze the agreement and internationalization, as well as the broad consequences of the agreement for power configurations.


NAFTA soon became the hallmark of the structural change strategy undertaken years before it entered into force, as well as one of the instruments par excellence to support the vast agitprop operation deployed by the government in its insistence on not only building a path to growth that diverged from the previous path, but also a hegemony that could effectively take over for, and more than a few would say displace, the strategy inherited from the Mexican Revolution in its stage of State-directed industrial development.

As such, the agreement cannot be evaluated in isolation, except, perhaps, for an initial analytic approach. Nor can we ignore the grand intentions outlined in its preamble, which Gazol specifically referenced in his essay.

By way of a quick and brief summary, we could say that the export success achieved in the period beginning with the signing of the agreement is in sharp contrast with the low degree of national integration these same exports managed and, in general, the overall national productive structure. It could thus be said that we have not yet overcome this strict dependence on the economic growth rate with respect to import capacity and, in any event, the recurring external payment crises that characterized the industrialist era and led to the 1982 crisis have been avoided or mitigated principally due to a sustained decrease in this growth over time, bringing the country to "stabilizing stagnation," the prevailing historical path in recent years.

The same could be said of the notable increase in foreign direct investment (FDI) in the early years of the agreement: both the amount and behavior of this investment should be viewed in the context of lower economic growth rates and the decrease of formal employment, both features of the time period. In addition, little of this investment has been allocated for technology transfers or to drive innovation.

Moreover, as Gazol ascertains, the agreement does not explicitly acknowledge the "evident asymmetry between the parties… (nor) does it envisage any mechanism to reduce it or, at the very least, to not increase it." This recognition should have been the baseline for the agreement, to create an authentic tool for development, for Mexico, of course, but also for the region as a whole, to itself become a region of integration. Instead, what has occurred is marked productive disintegration in Mexico and hastily assembled regional integration with no clear course or direction.

The agreement also implies express renouncement of using public sector purchases as an instrument to promote growth and diversify industrialization, as the very process of development would require. As we know, another item was relinquished as well, as FDI would not be tied to performance goals in the realm of productive integration or technology transfers.

Little to no attention has been paid to the widely accepted fact that the state's capacity to orient and regulate external flows, in our case attracted by the growth of the North American market, has proved fundamental in other strategies of external openness that aim to achieve internal development, as demonstrated by China and Korea.

In that sense, as Federico Novelo (2012) has repeatedly indicated, the agreement expressly introduced such limitations. However, this odd way of assuming these limitations did not originate, at least not directly, from either the "best practices" of free or managed trade, or from the very theorems that supposedly or really inspired them.

Essentially, these limits have derived from the conviction, or the "reconversion," if you will, of the ruling elite of the State and business that the institutional change encompassed in NAFTA should reflect, while also contributing to the reproduction of, a profound cultural, ideological and political change (although with regards to the last, the authoritarian dogma of the post-revolutionary State was missing until the end). Then-Secretary of Planning and Budget, Ernesto Zedillo, summarized this in a clear condemnation of industrial policy. This disapproval was made popular by his colleague in the cabinet, Dr. Jaime Serra Puche (in 1992), with the saying, "the best industrial policy is no industrial policy."

Undoubtedly, structural change did come about, and with that, profound institutional shifts, both constitutional and otherwise. The ways in which people thought about and did business, engaged in consumption and made saving and investing decisions also evolved significantly.

In addition, the economy had to progressively acquire a different political format, moving farther away from the model used to impose structural change and pushing the country towards foreign relations ever more distant from those of the Mexican age of industrialism. As such, criteria for sovereignty were explicitly assumed to be central components of decisions made by the national State and later on, sovereignty came to be seen and understood, in the best of cases, as a variable that depended on the market, competitiveness and globalization.

Now, the political realm brings together and reproduces undeniable political plurality, although its productivity in terms of governance or social welfare has been questioned time and again. The way or ways in which the new political system has, with little fanfare, adjusted to the evaluation criteria and broad range of development options and alternatives offered by the agreement and its interpretations both within and outside of the country, are powerful indicators, although perhaps not measurable, of how institutional change has penetrated the power structure.

Although perhaps imperceptible, the power structure had already showed signs of change since the 1970s, in the same way in which this change was received by society and the political figures to whom, in the words of Rafael Segovia, representative democracy was "granted."

To date, democratic policy has been deployed with notable discipline in the framework of the explicit and implicit restrictions contained in the agreement, but especially in the economic strategy adopted at the height of the 1980s crisis. In this sense, in the context of economic policy, despite the aforementioned plurality, a peculiar "sense of belonging" of the political powers imbued the parameters and restrictions that the economic shift at the end of the century brought with it.


Figure 1. Trade Openness in Mexico. 1895-2012

Source: Created by the author based on the INEGI National Accounts System. Various years.



The results of the processes described above, along with others outside the scope of this essay, have strongly impacted the profile of this age and will undeniably continue to condition the present and all of its possibilities. Exports have increased ten-fold with a shift towards more manufactures and less oil. Imports have also grown rapidly.

Regions in the center north of Mexico and on the border with the United States saw logarithmic population growth and experienced rapid industrialization, especially based on the maquiladora industry.

On the other hand, gross domestic product (GDP) growth fell and was lower than the 30 years prior. Between 1933 and 1981, the economy grew 6.13% on average annually. Between 1994 and 1999, this rate was 2.24%, and the same figure for 2000 to 2008.

Capital formation was reduced from coefficients above 25% in the 1960s to barely above 20% in the following period. The choice to lower public investment made in 1982 as part of external adjustments was maintained throughout the entire time period, with no compensation or replacement for the private Mexican and foreign investment that was expected thanks to the structural changes and NAFTA.


Figure 2. Import Growth 1980-2013

Source: Created by the author based on the INEGI National Accounts System. Various years.



Figure 3. Growth and Characterization of Exports, 1980-2013

Source: Created by the author based on the INEGI National Accounts System. Various years.



Figure 4. GDP Growth, 1922-2013

Source: Created by the author based on the INEGI National Accounts System. Various years.



Figure 5. Gross Fixed Capital Formation, 1970-2012

Source: Created by the author based on the INEGI National Accounts System. Various years.


The oft-heralded "demographic bonus," where youth and young adults dominate the population pyramid and dynamics, has been diluted with informal employment, emigration to the North and youth unemployment, which frequently leads young people down a crueler path than an informal job: organized crime. The dissonance between the demographics and the economy, always present as a probability and commonly expressed in imbalances in employment and the overall labor market, has led to an open and bellicose divorce between an economy that has effectively been transformed, and demographics that have also been transformed, but whose transformations have not brought about the chance for employment, education and health, which this biological shift so needs.

We have become accustomed to social vulnerability. Poverty now ails practically half of the population, and is hardly affected by the programs supposedly meant to overcome it. A culture of social apathy now prevails, which accepts wealth and income concentration and stagnation, not to mention deteriorating standards of living and welfare for the majority of the population, as facts of life.


Figure 6. Demographic Bonus in Mexico, 1950-2050

Source: Created by the author based on INEGI Population Censuses and Conapo Population Projections. Various years.



Figure 7. Multidimensional Poverty 2012
Source: Coneval 2013.


Between 2000 and 2010, the labor force increased by 10 million people, but only 3 million obtained formal jobs, while 4.3 million worked informally and the rest were unemployed. As a society of workers, whose relationships and dreams almost entirely depend on the market and money, Mexico has still not managed to create conditions for overall improvement within these parameters.

In 2001, 10.30% of the employed population earned incomes equivalent to five or less minimum wages (MW); in 2013, only 8.4% were at that income level, while 65% of employed people earned income equal to or less than three minimum wages.


Figure 8. Employed Population by Income Level, 2001-2013

Source: Created by the author based on ENOE from INEGI. Various years.


The above figure depicts slow and "mediocre" growth, which, as has been said, is evidence of a lethal divorce with the other fundamental and grand change of the era: the demographics that turned us from the "country of children" into the country of youth and young adults who no longer embody the demographic bonus but rather its waste in unemployment, informal jobs, poor education, emigration and a life of crime. Specifically, employment behaved as follows in the first decade of the twenty-first century.


Figure 9. Employed Population by Income Level, 2001-2013

Source: Samaniego, 2011.


Both these results and Mexico's social and economic performance over these "30 painful" years are a clear example of the historical experience of a drastic institutional change that did not bear the promised fruit. Nor has it brought about the structures and support the country needs to remain a nation State in the midst of globalization.

In fact, it could now be said that the minimum technical and institutional conditions required so that the new round of structural reforms produces positive social and economic outcomes have not been clearly established, nor have they been solidly supported by political and social mechanisms and relations able to gather and direct the power these reforms will supposedly unleash.

The "reform of all reforms" that was proclaimed as the inflection point to embark on a new journey after the lost decade of the 1980s did not come about and in its place, the country seems to, rather precipitously and thoughtlessly, have opted for a path of successive reforms of "n" generations, which by their very nature cannot ensure the rise of new accumulation patterns on which any aspiration to recover the historical trajectory lost in the last decade of the twentieth century would have to be based.

These years have not seen development because growth has been insufficient and social and income redistribution were left out of the strategy and policies, but these topics were also ignored by social movements and demands. The "Great Mexican Transformation," in the words of Polanyi (1992), led to relative historical stagnation rather than jumpstarting the economy and reinforcing social cohesion as the result of democracy and community welfare.


Symbolic and cultural creations, together with the new power configurations that the plurality and globalization of our new political economy has adopted, are here and now. Their result is both the cause and consequence of NAFTA. They have determined our perspectives and the design of options and alternatives to follow a path different than the one reviewed.

For better or worse, the agreement has given all that it had to give, as Gazol (2014) wrote, but the thousands of kilometers of the border are still there, as is the intense and, not so infrequently tense, relationship with the United States. As such, some questions to ask ourselves in our current circumstances might include the following. Is this relationship governed by inertia? By market forces? By whom? How? Where is it going? Or, will it not be governed at all? The governing elite may have answers to address this situation from an economic, political and social perspective to reverse the "Great Transformation."

Jorge Castañeda (2014) gave an early answer: "Despite the disappointing outcome of the agreement, perhaps Mexico needs more FTA and not less." However, "more FTA and not less," leaves room for various meanings and implications, many of which are contradictory if we incorporate the complicated political and social situations of both societies into the proposal. The future of effective integration expressly sought with the objective of a common North American market, for example, cannot be separated from the challenges looming ahead in the issue of the Mexican social situation, which is extremely affected by the current United States crisis (Cordera, 2010: 32).

Moreover, in the midst of the widespread turmoil that has come with the Great Recession, Mexico, Canada and the United States are exploring other means of commercial and financial integration, which turns the current state of globalization into a disjointed panorama in which the role of integrationist viewpoints, such as those that would accompany a more or less linear projection of the current NAFTA, are still unclear.

Besides discussing whether more or less of the agreement is better, what Mexico urgently needs is a new development track, one that would allow us to internalize the earnings of foreign trade that came with liberalization and the partial, but effective, extension of "associated capitalism" launched in the 1970s, for the energy, maquiladora and automobile industries.

The challenge lies in nationalizing globalization to manage its "trilemmas," as Rodrik has called them. Thus the essential importance of sovereignty and democracy. In a nutshell, we would have to admit to committing a sin of omission on two fundamental aspects:

  1. For a developing country, exports are not the end in and of themselves, but rather they should serve to increase import capacity.
  2. These imports will only be of service to development if they are part of a national industrialization project. Finally, as Romano Prodi would say: there is no lasting export success without a strong domestic market, and there is no domestic market without some industrial policy.

Some of the salient topics on the agenda for this new course would be, to mention a few, the relationship between industrial policy and openness (Tello, 2007: 738) and what type of State will play a role in this new developmentalism to achieve equality and growth. It is time to free the imagination of macroeconomic policy so that openness works in our favor, as Moreno-Brid (2013) recently suggested.


We must review our mental and economic habits with regards to global integration, adopted at the end of the century with activism and audacity, but with profound strategic reflection. We must conceive of creative ways to ensure that equality coexists with democracy, as the guiding light towards new structural changes and the process of integrating Mexico with the new globalized world in the wake of the crisis. It is time to think about the agenda to reverse the "Great Transformation" of the Mexican miracle. Now, more than ever, Polanyi's thinking should inspire greater social justice and reverse austerity and stagnation in a world without growth, but a world yearning to put an end to inequalities in democratic regimes.


Castañeda, Jorge (2014), "Más TLC y no menos", Nexos, no. 433, January, pp. 32.

Cordera, Rolando (2010), México frente a la crisis. Hacia un nuevo curso de desarrollo, Mexico, UNAM.

Cordera, Rolando and Carlos Tello (1981), La disputa por la nación. Perspectivas y opciones del desarrollo, Mexico, Siglo XXI Editores.

Gazol, Antonio (2014), "Sobres las culpas del TLCAN", in "El Correo del Sur" (supplement), La Jornada de Morelos, January 12, (consulted November 20), available at: <http://periodicocorreodelsur.com/sobre-las-culpas-del-tlcan/>

Moreno-Brid, Juan Carlos (2013), "Política macroeconómica para el desarrollo", Economía UNAM, no. 30, Mexico, September-December.

Novelo, Federico (2012), "El contexto internacional", in Ricardo Becerra (coord.), Equidad social y parlamentarismo. Balance de treinta años, Mexico, Instituto de Estudios para la Transición Democrática y Siglo XXI Editores, pp. 39-66.

Polanyi, Karl (1992), La gran transformación. Crítica del liberalismo económico, Mexico, Fondo de Cultura Económica.

Rodrik, Dani (2012), La paradoja de la globalización. Democracia y el futuro de la economía mundial, Spain, Antoni Bosch editor.

Serra Puche, Jaime (1992), Conferencia. Universidad Iberoamericana. March 19,1992.

Tello, Carlos (2007), Estado y desarrollo económico: México 1920-2006, Mexico, Faculty of Economics, UNAM.

* Faculty of Economics at the UNAM, Mexico. E-mail address: rolandocordera@mac.com

1 A previous version was presented at the seminar, "20 Years of the North American Free Trade Agreement: Old Problems, New Challenges," held at the Post-Graduate Studies Department, Faculty of Economics, UNAM, January 23 and 24, 2014.

Published in Mexico, 2012-2017 © D.R. Universidad Nacional Autónoma de México (UNAM).
PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 48, Number 191, October-December 2017 is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
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