The political economy of NAFTA in Mexico: Critical conglomerates in comparative perspective

In 1990 Mexican President Carlos Salinas announced that Mexico would pursue a free trade agreement with the United States. This decision capped eight years of dramatic change in Mexico's macro-economic course. Throughout the 1980s Mexico shifted from its traditional, protected market, import substitution industrialization (ISI) strategy to an open market, export-led strategy. Why? This dissertation addresses this puzzle.; The main hypothesis is that the Mexican "state," in an attempt to regain lost legitimacy and control, played the leadership role in recreating the Mexican macro-economy. The null hypothesis is that the state was not the leader of Mexico's dramatic shift. The key alternative hypothesis examined is that the Mexican "market," confronted with a crumbling national consensus, a depressed and unpredictable domestic economy, and an encroaching global economy, played the leadership role. While additional alternative hypotheses are explored, it is argued that the "mid-range," state-market approach developed in the writings of state theorists, Marxists, and comparative historians is central to the question at hand. Mexico's dramatic macro-economic shift fits squarely into the country's post-revolutionary, state-market realities. This study's generalizations concern politically important, state-market theory.; By examining general evidence and critical cases with respect to "Mexico's NAFTA decision," the leadership and followership of the Mexican state and market are illustrated. These cases, Alfa, Vitro, and Desc, are the conglomerates which most likely would have been out in front of the liberalization shift which culminated in the North American Free Trade Agreement (NAFTA). They have been examined over the crucial period between the debt crisis/bank nationalization (1982) and the decision to pursue NAFTA (1990), though historical context is provided. Both the running and episodic records have been consulted and elite interviews have been conducted to determine how the state and these conglomerates used their tools to adjust to the political-economic crisis. This dissertation helps explain why Mexico moved in a dramatic, new, macro-economic direction.