Before Neoliberalism: Mexico’s Corporations Enter the Global Stage, 1970–93
AHA Session 6
Conference on Latin American History 1
Friday, January 2, 2015: 1:00 PM-3:00 PM
Liberty Suite 5 (Sheraton New York, Third Floor)
Chair:
Noel Maurer, Harvard University
Session Abstract
While notions of globalization typically involve free trade, the Mexican experience shows how some firms from developing nations were actively globalizing before their governments signed accords to lower tariffs and stimulate investment. In the 1990s, the North American Free Trade Agreement (NAFTA) between the United States, Canada, and Mexico generated copious press about Mexico’s “emergence” into the global economy. Together with Mexico’s admission into the Organisation for Economic Cooperation and Development a few months later, NAFTA’s January 1994 activation supposedly heralded massive foreign investment and an erosion of trade barriers that would make Mexico globally competitive. Over the subsequent twenty years, debate has largely centered on how far NAFTA fulfilled its promises and whether it benefited the few or the many. This panel asks different questions: How globalized was Mexico’s reputedly state-driven economy before NAFTA, in terms of both foreign presence within its borders and Mexican presence overseas? Was a country known for its nationalist-populist leadership in the 1970s and economic stagnation in the 1980s a more welcoming and dynamic business landscape than commonly remembered?
Examining the sectors of beer, cement, banking, and tobacco, this panel finds that NAFTA was much less of a watershed than commonly claimed. Some Mexican firms were already well-poised to take advantage of the agreement, since they had strengthened their domestic position and begun to export long before 1994. Breweries had developed business practices and structures that made them appealing to US investor partners when the US brewers fall on hard times; in turn, to take one example, Corona became the number-two imported beer in the USA by 1988. Cement producer Cemex developed from being one player among many in the early 1970s into a global heavyweight with plants in the USA and Spain by 1992. Within the financial sector, internationalization began in the 1960s, and after the bank nationalization of 1982 brokerages developed a parallel banking system that handled treasury bills and petro-bonds and attracted foreign investors to the Mexican stock exchange; such practices trained senior brokers to become the bankers of the 1990s, once the banks were reprivatized. Finally, and in tune with a trend whereby Big Tobacco compensated for falling sales in the USA and Europe by targeting “Third World” consumers, local cigarette-makers welcomed foreign investment, streamlined their businesses, and helped develop Mexico into a lucrative market by the recovery of the early 1990s.
As well as charting the evolution of these industries, the panel explores the involvement of the state. Sources suggest that by Mexico’s 1986 accession to the World Trade Organization political leaders were cultivating large businesses – in some cases fostering monopolies and duopolies – on the assumption that such firms would be better equipped to compete in the global economy. Certainly, the wave of privatizations begun in the late 1980s facilitated the rise of Mexico’s banks and cigarette makers. But less overt factors, such as protective tariffs, tax breaks, tolerance of monopolistic practice and other governmental favors might also be considered.
