Differing Effects of the Global Financial Crisis: Why Mexico Has Been Harder Hit than Other Large Latin American Countries

Abstract

In this article, we argue that the economic and financial crisis that began in Mexico in 2008 has not been primarily caused by the US crisis that began in 2007, as many have argued. As we will show, years of misguided economic policies at the national level have been at the heart of the Mexican crisis. On the one hand, the dominance of foreign banks in the country's financial system and the minimal presence of the public banks have greatly limited the range of counter‐cyclical policy options available to authorities. On the other hand, in the face of the crisis, Mexico has continuously applied deflationary Washington Consensus policies that have deepened the economic contraction. This article will focus on Mexico's individual problems, which offer important lessons for other Latin American countries with a shared recent history of Washington Consensus policies.

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“…First, because most Latin American literature about sociospatial segregation focuses on the poorest and most vulnerable social groups. Secondly, it was because of the role that this socio-economic group played during the recent debt-fuelled housing production boom and the privatisation of urban development (Vidal, Marshall and Correa, 2011) as well as the vulnerability that comes with extreme debt and the weakening of the state's role in housing production in a context of political and economic uncertainty (López-Calva and Ortiz-Juárez, 2013).…”

“…In the early 1990s, as part of the North American Free Trade Agreement (NAFTA), there were important changes in Mexican economic, political, housing, and planning policies (Zanetta, 2004;Moreno-Brid, Pérez-Caldente and Ruíz-Nápoles, 2005;Vidal, Marshall and Correa, 2011). Since the early 2000s, financial institutions and government agencies have promoted strategies for Mexicans to reach middle-class status through home and car ownership.…”

“…In the late 1980s and early 1990s, after years of economic crises, uncertainty, and political turmoil, Mexico embraced an economic and political model which was largely defined by the neoliberal policies promoted by global economic institutions commonly identified as the Washington Consensus (Williamson, 1990;Zanetta, 2004;Walker, 2013). During the late 1980s and early 1990s, there were important changes to planning, housing, land tenure, and financial policies in Mexico (Puebla, 2002;Vidal, Marshall and Correa, 2011;Monkkonen, 2012).…”

La crisis financiera internacional de 2008 y algunos de sus efectos económicos sobre México

“…A partir al menos de la segunda mitad del siglo XX, la economía mexicana ha registrado una vinculación significativa con la estadounidense debido a la vecindad geográfica. El gran tamaño y la cercanía del mercado estadounidense lo hacen muy atractivo para las exportaciones mexicanas (Hernández, 2010), aunque ello también genera dependencia por la vía del comercio entre los dos países: si la economía estadounidense no anda bien, afecta de forma negativa las exportaciones de México y, como consecuencia, también su crecimiento, y crea una situación que, sobre todo en el corto plazo, es más difícil para México que para otros países (Vidal et. al., 2011).…”

From macro-level policies to microlevel practices

“…In the late 1980s and early 1990s, after years of economic crises, uncertainty, and political turmoil, Mexico embraced an economic and political model which was largely defined by the neoliberal policies promoted by global economic institutions commonly identified as the Washington Consensus (Williamson, 1990;Zanetta, 2004;Walker, 2013). During the late 1980s and early 1990s, there were important changes to planning, housing, land tenure, and financial policies in Mexico (Puebla, 2002;Vidal, Marshall and Correa, 2011;Monkkonen, 2012). The new policies were aligned with the World Bank's vision in which governments were "advised to abandon their role as producers of housing to adopt an enabling role of managing the housing sector as a whole" (The World Bank, 1993, p.1).…”