Economic history of Mexico

As the crown began limiting the encomienda in the mid-sixteenth century to prevent the development of an independent seigneurial class through the New Laws, Spaniards who had become landowners acquired permanent and part-time labor from Indigenous and mixed-race workers.

[25] Great haciendas did not completely dominate the agrarian sector, since there were products that could be efficiently produced by smaller holders and indigenous villages, such as fruits and vegetables, cochineal red dye, and animals that could be raised in confined spaces, such as pigs and chickens.

Yucatán was more easily accessed from Cuba than Mexico City, but it had a dense Maya population so there was a potential labor force to produce products such as sugar, cacao, and later henequen (sisal).

The larger the amount of mercury used in refining, the greater pure silver was extracted from ore. Another important element for the eighteenth-century economic boom was the number of wealthy Mexicans who were involved in multiple enterprises as owners, investors, or creditors.

Only those defined as Spaniards, either peninsular- or American-born of legitimate birth had access to a variety of elite privileges such as civil office holding, ecclesiastical positions, but also entrance of women into convents, which necessitated a significant dowry.

He recommended that the crown press for major changes in the agrarian sector, including the breakup of entailed estates, sale of common lands to individuals, and other instruments to make agriculture more profitable.

In 1810, with the massive revolt led by secular cleric Miguel Hidalgo rapidly expanded into a social upheaval of Indigenous and mixed-race castas that targeted Spaniards (both peninsular-born and American-born) and their properties.

The weakness of the state contrasts with the strength of Roman Catholic Church in Mexico, which was the exclusive religious institution with spiritual power, but it was also a major holder of real estate and source of credit for Mexican elites.

However, according to Hilarie J. Heath, the results were bleak: The early republic has often been called the "Age of Santa Anna," a military hero, participant in the coup ousting emperor Augustín I during Mexico's brief post-independence monarchy.

When the Mexican republic was established in 1824, noble titles were eliminated, however, special privileges (fueros) of two corporate groups, churchmen and the military, remained in force so that there were differential legal rights and access to courts.

Faced with political disruptions, civil wars, unstable currency, and the constant threat of banditry in the countryside, most wealthy Mexicans invested their assets in the only stable productive enterprises that remained viable: large agricultural estates with access to credit from the Catholic Church.

The Church could have loaned money for industrial enterprises, the costs and risks of starting one in the circumstances of bad transportation and lack of consumer spending power or demand meant that agriculture was a more prudent investment.

[75] In October, 1835, the Conservative Party intellectual and statesman Lucas Alaman, the Banco de Avío, a state owned bank was established in order to provide pecuniary aid and machinery to Mexico's industry and agriculture.

The government issued contracts for construction of a new rail line northward to the United States, and in 1873 completed the commercially vital Mexico City–Veracruz railroad, begun in 1837 but disrupted by civil wars and the French invasion from 1850 to 1868.

The family of future Mexican president Francisco I. Madero developed successful enterprises in the Comarca Lagunera region, which spans the states of Coahuila and Durango, where cotton was commercially grown.

Madero sought to interest fellow large landowners in the region in pushing for the construction of a high dam to control periodic flooding along the Nazas River, and increase agricultural production there.

Enterprises sourced their merchandise from abroad, using British, German, Belgian, and Swiss suppliers, but they also sold textiles made in their own factories in Mexico, creating a level of vertical integration.

For the peasants in Morelos, a sugar-growing area close to Mexico City, Madero's slowness to make good on his promise to restore village lands prompted a revolt against the government.

Concessions made to foreign oil during the Porfiriato were a particularly difficult matter in the post-Revolutionary period, but General and President Alvaro Obregón negotiated a settlement in 1923, the Bucareli Treaty, that guaranteed petroleum enterprises already built in Mexico.

Calles stepped in to form in 1929 the Partido Nacional Revolucionario, the precursor to the Institutional Revolutionary Party, helped stabilize the political and economic system, creating a mechanism to manage conflicts and set the stage for more orderly presidential elections.

According to a 2017 study, "Key US and Mexican officials recognized that an IMF program of currency devaluation and austerity would probably fail in its stated objective of reducing Mexico's balance of payments deficit.

Nevertheless, US Treasury and Federal Reserve officials, fearing that a Mexican default might lead to bank failures and subsequent global financial crisis, intervened to an unprecedented degree in the negotiations between the IMF and Mexico.

The United States offered direct financial support and worked through diplomatic channels to insist that Mexico accept an IMF adjustment program, as a way of bailing out US banks.

By mid-1981, Mexico was beset by falling oil prices, higher world interest rates, rising inflation, an overvalued peso, and a deteriorating balance of payments that spurred massive capital flight.

Widespread fears that the government might fail to achieve fiscal balance and have to expand the money supply and raise taxes deterred private investment and encouraged massive capital flight that further increased inflationary pressures.

By 1988 (de la Madrid's final year as President) inflation was at last under control, fiscal and monetary discipline attained, relative price adjustment achieved, structural reform in trade and public-sector management underway, and the economy was bound for recovery.

In April 1989, President Carlos Salinas de Gortari announced his government's national development plan for 1989–94, which called for annual GDP growth of 6 percent and an inflation rate similar to those of Mexico's main trading partners.

The following year, Salinas took his next step toward higher capital inflows by lowering domestic borrowing costs, reprivatizing the banking system, and broaching the idea of a free-trade agreement with the United States.

During 1993 the economy grew by a negligible amount, but growth rebounded to almost 4 percent during 1994, as fiscal and monetary policy were relaxed and foreign investment was bolstered by United States ratification of the North American Free Trade Agreement (NAFTA).

On 1 January 1994, the North American Free Trade Agreement (NAFTA) came into effect and on the same day, the Zapatista Army of National Liberation (EZLN) in Chiapas took several small towns, belying Mexico's assurances that the government created the conditions for stability.

Axe-money from Mexico at the Prehistory Museum of Valencia .
Silver peso mined and minted in colonial Mexico, which became a global currency.
Historical GDP per capita development of Mexico
Mexico bonds
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Diego Rivera Mural of exploitation of Mexico by Spanish conquistadors, Palacio Nacional , Mexico City (1929–1945)
Miner's gear from the colonial period in Mexico on display at the Historical Archive and Museum of Mining in Pachuca , Mexico.
Almadén mercury mine in Spain
Cinnabar mercury amalgam from Almaden
View of the Valley of Mexico by José María Velasco
Indigenous man collecting cochineal with a deer tail by José Antonio de Alzate y Ramírez (1777). Cochineal was New Spain 's most important export product after silver and its production was almost exclusively in the hands of indigenous cultivators
Arrieros in Mexico. Mules were the main way cargo was moved overland, engraving by Carl Nebel
Spanish galleon , the mainstay of transatlantic and transpacific shipping, engraving by Albert Durer
16th c. Seville , Spanish port for the transatlantic trade
Acapulco in 1628, Mexican terminus of the Manila galleon
A single-canvas painting showing the casta system in eighteenth-century Mexico. Spaniards were at the top of the system with mixed-race men and women consigned to the bottom ranks, with both engaging in manual labor.
Gaspar Melchor de Jovellanos , who proposed a major land reform in Spain that also influenced Mexico. Portrait by Francisco de Goya .
Productivity at the Acosta Mine in Mineral del Monte was decimated by the Independence War. The mine was revitalized through new industrial techniques introduced by Cornish miners starting in 1825.
An 8 escudos coin with Agustín and the Imperial Coat of Arms, minted in 1823, before the end of the First Mexican Empire.
Economic stability in the early republic was hindered by a series of successive conflicts, both internal and external. Particularly harmful to the stability of the country was the Spanish attempts to reconquer Mexico .
Lucas Alamán , politician and government official, founder of the Banco de Avío
Founded in 1835, La Constancia Mexicana was the first textile factory in Latin America to employ automatic machinery.
The Constitution incorporated individual laws passed during the Liberal Reforma and touched off an extended conflict between Liberals and Conservatives
Porfirio Díaz , liberal military hero and President of Mexico 1876–1911
A photo of the Metlac railway bridge, an example of engineering achievement that overcame geographical barriers and allowed efficient movement of goods and people. Photo by Guillermo Kahlo .
Map of first Mexican rail line between Veracruz and Mexico City. The creation of a railway network was the key to Mexico's rapid growth in the late nineteenth century
Oil drilling on Mexico's Gulf Coast was a capital-intensive industry
Mining enterprise 1905, Abel Briquet , photographer.
The Moctezuma Brewery, near Orizaba. Beer making was an enterprise introduced by Germans. C. B. Waite , photographer
Building of large-scale infrastructure, such as dams, was part of modernization. Dams allowed for the expansion of irrigated commercial agriculture. Abel Briquet, photographer
French-owned Río Blanco textile factory near Orizaba , the site of a major strike. C. B. Waite , photographer
Revolutionaries outside Cuernavaca 1911. Trains were used to transport men and horses. Trains and tracks were targets in warfare. Photo by Hugo Brehme [ 106 ]
Constitution of 1917 that set a new framework for the Mexican political and economic systems
Álvaro Obregón , General and President of México (1920–1924)
Mexican guest workers arrive in Los Angeles as part of Mexican participation in World War II via the Bracero Program , freeing U.S. labor to fight overseas. Los Angeles, CA, 1942
Map of the Papaloapan River drainage basin before construction of the Cerro de Oro Dam , showing the Miguel Alemán Lake (center)
José López Portillo , President of Mexico 1976–82, whose government borrowed heavily from foreign banks with loans in dollars against future oil revenues, crashed when oil prices dropped.
Mexico inflation rate 1970–2022
Miguel de la Madrid , President of Mexico 1982–88, who dealt with the financial debacle of the 1980s
Parque Fundidora ( Fundidora Park ) with steel mill ruins, east of Monterrey .
Carlos Slim business activities have had a significant impact on Mexico's economy, contributing to economic growth, infrastructure development, and job creation. His influence extends beyond business into areas such as social welfare and public policy, making him a central figure in Mexican business and philanthropy.
Logo for the North American Free Trade Agreement
USD to Mexican peso exchange rate