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Memorandum on the political economy of Mexico (Preliminary draft) Alberto Diaz-Cayeros Stanford University Center for Democracy, Development and Rule of Law (CDDRL) Prepared for the conference "La nueva economía política de América Latina: Estado, política y sociedad durante el Commodity Boom", Santiago de Chile, Agosto 14-15, 2013. 1. Introduction. Scholarship on the political economy of Mexico has gone through important shifts during the past two decades, primarily reflecting the thrust of scholarly debates in US academia. This is driven primarily by aspects related to the sociology of the profession. The scholarship has nonetheless also been home grown, in the sense that even though an increasing number of faculty based in Mexican institutions have graduated from US based academic programs, their students at home have produced scholarship firmly rooted in Mexico. There has been a relative decline of broad encompassing studies seeking to explain, for example, the overall performance of the Mexican national economy within the shifting international context; or the political economy of labor, industrial restructuring or social security reform; or the overall social impacts of the radical transformations brought about by economic reform and globalization. In its place, scholarship has been characterized by tackling narrow and specific issues. Despite restriction in the set of issues and topics addressed, there has been a vibrant debate regarding, for example, the new landscape of policy making, the role of money in electoral processes, the transformation of social policy, or the resurgence of violence, to name a few issues that have commanded attention and produced excellent scholarship. This shift to a narrower scope has been a positive influence for the relevance of the social sciences in contemporary debates. Our guiding memorandum criticizes the importing of “alien theories and methods” as unlikely to better inform policymakers and practitioners. In the Mexican context such assertion is not warranted. The importing of methods and theories from the US has been salutary for the development of the social sciences. Both the institutional turn (which by the way is very much at the core of a distinctly Latin American approach in social sciences that has taken hold in the last two decades for the study of elections, political parties and parliamentary processes) and the experimental turn (imported from economics) have broadened the appeal of social scientific work among policy makers, politicians and even the informed public. Recent developments in scholarship have in fact enhanced, rather than hindered, a more context sensitive approach to studying public policy problems – at least in the realm of scholarship devoted to understanding issues such as poverty relief, clientelism, local government, and electoral competition in Mexico, which are some of the areas where I will concentrate these notes. This notes provide a highly selective account of some of the areas of scholarship that I believe offer the most promise for the future. Recent scholarship in these areas has not only enhanced our understanding of Mexico but has the potential of providing relevant insights into the functioning of social, political and economic processes in other Latin American countries. I have kept the structure proposed by the guiding memorandum, highlighting the scholarship related to patterns of democratic politics, dependency and development, state formation and rule of law, inequality and identity, and international linkages. At the end of the memorandum I also provide some thoughts regarding a couple of additional themes that scholarship on the political economy of Mexico has been addressing in recent years and that may deserve a more comparative perspective for inclusion in our overall project. 2. Specific issue areas. Before addressing specific issue areas, I must note that the last few decades have not produced any long lasting political economy treatise in the lines of Hansen's Politics of Mexico's Development, or Cornelius' Politics of the Migrant Poor. This reflects a trend for social science scholarship on Mexico to be more likely to be published in peer reviewed journals (based in the US), rather than in the form of books. Nonetheless, there are important books produced on the political economy of Mexico by solid scholars, written with a larger audience in mind, mostly within Mexico, than the typical monograph published by a US University Press. Those works include notable examples of work carried out by journalists, pundits and researchers, many times based at think tanks, including authors such as Carlos Elizondo, Luis Rubio, Maria Amparo Casar, Ricardo Raphael, David Recondo, Fernando Escalante, Denise Dresser, Juan Pardinas, Jesus Silva Herzog-Marquez, Luis Carlos Ugalde, Federico Reyes Heroles or the late Alonso Lujambio. General magazines such as Nexos or Este Pais have become outlets for scholarly research and contemporary debates, allowing the inclusion of voices of younger scholars. It is not uncommon to find articles in those magazines that include statistical analysis or theoretical discussions more likely to be found in specialized journals such as Foro Internacional or Politica y Gobierno. Furthermore, economists have become more engaged in policy discussions, particularly in topics such as poverty and economic growth. The work of Gerardo Esquivel, Santiago Levy, John Scott, Luis Felipe Lopez Calva or Nora Lustig, to name some notable examples, falls clearly within a political economy tradition familiar to political scientists, even though it is firmly grounded in microeconomic theory and statistical analysis. In what follows, however, I will emphasize primarily contributions by political scientists that have become particularly visible because they were published and written in English engaging scholars in comparative politics as well as Latinamericanists throughout the world. 1. Patterns of democratic politics. Mexico witnessed without any doubt a transition to democracy sometime in the 1990s (most likely in 1997), and became a consolidated democracy by 2006. Withstanding the pressures of the polarized and sharply divided election of that year confirmed that democratic elections are the only game in town, both at the federal and all the other levels of government. While much attention has been given to the peculiar institutional rule that forbids reelection, and to the study of electoral rules and their effects on representation in the legislature, perhaps the most original and interesting scholarship of the last few years is related to gaining a better understanding of the linkages and exchanges between voters and politicians (and the parties in government to which they belong). This literature has addressed questions of accountability, credit claiming and the conditions under which it has or has not been possible for the country to eliminate clientelism as the preferred mode of political exchange. The landmark book Voting for Autocracy by Beatriz Magaloni provides a perspective of the Mexican democratic transition grounded in a perspective based on individual voter behavior. In contrast to previous work on democratization in Mexico, the work provides an account that suggests how institutional rules, macroeconomic management, or the insulation of electoral processes from political influences with the creation of Electoral Boards all follow a logic based on calculations done by politicians and voters in the electoral arena. The understanding of party hegemony provided by Magaloni has been applied to the study of Africa, Eastern Europe and the Middle East. A particularly important area of research that has opened up in recent years relates to clientelism and social policy. A critical thrust for this literature was provided by the transformation of social policy in Mexico towards Conditional Cash Transfer programs, namely the Progresa – Oportunidades interventions. That literature has explored the way in which social services are provided by the Mexican state in areas such as health, education, or local physical infrastructure. Initially concerned with issues of distributive politics (Juan Molinar and Jeffrey Weldon, Denise Dresser, Jonathan Fox), this literature has moved on to provide sophisticated statistical analyses of public good provision (Matt Cleary, Markus Kurtz), to some of the most fascinating examples of randomized information interventions seeking to empower citizens to demand better use of public funds (Ana de la O). 2. Dependency and Development. Perhaps the greatest developmental challenge in Mexico is the profound connection between natural resources, government revenue and income inequality, particularly for the top incomes. This classic dependencia theme has been studied by scholars from various angles, although there has not yet been a comprehensive synthesis that fully explains how the limited fiscal burden of the Mexican economy, its dependence on oil revenue, the missing Wicksellian connection through the benefit principle in taxes, and the generation of enormous wealth for a small minority is causally related. There have been some efforts to explain the political economy of oil in Mexico, which continues to be the main source of revenue generation for the federal government, and due to the high dependence of states and municipalities on federal transfers, also of those other levels of government. Much emphasis has been placed on the role of the powerful union in hindering efforts at privatization (Rossana Fuentes-Berain), and some recent scholarship has explored the contractual aspects related to the dilemmas faced by management in this complex sector (Flores-Macias). There has also been some inquiry into the legislative coalitions that have successfully blocked efforts at energy reform (Gilles Serra). But arguably the most important contribution to the study of the oil industry in Mexico has been in a line of research that explores the role of rents and the capture of those rents by elites as a mechanism that creates a democratic deficit (Haber, Maurer and Razo explore this theme in a historical perspective, while Carlos Elizondo provides a good account of the contemporary dilemmas). In contrast to the debates in many other Latin American countries, the mining industry in Mexico has received very little attention. This is somewhat surprising given that several of the top fortunes in the country have been built on the basis of copper and silver extraction during the recent commodity boom. The royalty regime of mining in Mexico is completely anachronistic, and there is no study yet that allows us to understand the kind of state capture that allowed such powerful interests to remain virtually untaxed. 3. State formation and rule of law A lot of recent attention was places in the last few years to the issue of the strength or weakness of the Mexican state. In the face of the mounting challenges of Drug Traffic Organizations and the difficulties faced in establishing clear practices of rule of law, some scholars began debating whether Mexico could be considered a failing state (Rand Corporation). To a large extent this was a sterile debate, because Mexico is in fact a very strong state, emerging from the postrevolutionary period with a capacity to deploy enormous amounts of resources to provide public goods and services. The issue is not whether Mexico had a process of state formation that led to a weak statement but rather to understand the specific reasons why recent federal and local administrations have had little capacity to protect their citizens from common crime and more recently the challenge of DTOs. On the question of Drug trafficking, many scholars are seeking to understand the causes and consequences of the surge in homicides and violence in large areas in the country. The debate has involved both economists and political scientist working in true dialogue and collaboration. Two notable contributions are the work by Melissa Dell which has established that politically aligned mayors are more likely to contribute to the federal efforts to fight DTOs, but that those efforts have led to important disruptions in economic activity; the work by Oiendrilla Dube and her co-authors on the spillover effects of the expiration of the Weapons Assault Ban on violence in Mexico; work by Eduardo Guerrero seeking to understand the spiral of violence; and a steady flow of new papers that use sophisticated econometric techniques, Geographic Information Systems and advances in survey research to study sensitive issues, such as list experiments, to study the presence and behavior of criminal organizations in Mexico. A very related stream of work relates to the challenge of police reform and the establishment of the rule of law. Although a large number of the contributions in this area have been dominated by lawyers, who tend to emphasize formalistic aspects of the legal code and procedure (most notably the shift to oral trials and the use of an accusatorial instead of an inquisitional system of justice) there are important studies looking into police in varying municipal contexts (Allison Rowland), comparative studies of police reform (Bailey) and a very prominent agenda on human rights and the criminal justice system. 4. Inequality and identity Mexico remains a country of extreme poverty, despite the strides made by social policies including the design of Conditional Cash Transfer programs like Progresa and Oportunidades. Exclusion, discrimination and disenfranchisement remain an issue for the poor, particularly when coupled with indigenous identity. Although these streams of scholarship have been dominated by sociologists and anthropologists, there has been a renewed interest in understanding indigenous movements, their quest for autonomy, and the study of the traditional governance institutions under which they rule themselves (Allison Benton, Todd Eisenstadt). A separate literature has developed in which the main goal has been to describe poverty and inequality, and the role of informality in labor markets, particularly in urban settings. This political economy literature has been dominated by a debate spearheaded by economists, including Santiago Levy and Miguel Szekeli, who have also taken responsibilities as public officials in charge of social policy programs during the last decade. 5. International linkages The most important international linkage in Mexico scholarship is necessarily the attention devoted to the United States. Among the various topics that may be noted, the most prominent in terms of the sheer volume of scholarship is, without any doubt, migration. Within the migration literature on Mexico, perhaps one of the most interesting strands is one that links the study of migratory behavior with the collective remittances, particularly in the context of the so called 3x1 program. In the case of NAFTA, the early assessments of the political economy of the agreement and its consequences for Mexico (Gustavo Vega, Luis Rubio) have not led to specific analysis of the political conditions that have prevented further deepening of the agreement or its expansion into other realms. Good accounts exist as to why there is support for free trade in what constituted perhaps the most important shift in public opinion of the last decades (Alejandro Moreno, Andy Baker, Beatriz Magaloni and Vidal Romero). But there has not been enough work on the regional dimensions of the support or opposition to free trade or the institutional structures that have buttressed the current state of affairs in the US-Mexico commercial relations. 3. Some neglected areas. An important set of issues that have not been included in the previous discussion involves the changing role of the Mexican countryside, and the role of rebellion and protest in both urban and rural settings. Although those topics have tended to be addressed by sociologists, anthropologists and demographers in the past, there is an emerging scholarship produced by political economists that merits attention. On the area of agrarian change, since the 1990s Mexico engaged in a radical transformation of rural institutions, and more relevant from the point of view of this memorandum, the articulation of agrarian interests and the state was profoundly transformed. The PAN administrations sought to dismantle the traditional corporatist mechanisms of representation and co-optation. Although their project of transforming Mexican "peasants" into "farmers" did not quite succeed, the political behavior or rural dwellers has shifted dramatically, becoming a more volatile and changing electorate. The institutional regime of land tenure was liberalized, although there is little understanding of what changes occurred on the ground. And agribusiness has become a thriving sector of the rural economy, to some extent propelled by the opportunities and challenges poised by NAFTA. Apart from the work of De Janvry, Sadoulet and their co-authors, there is little research regarding the political economy of these transformations. There was an initial surge of studies regarding the privatization aspect of land tenure, and there is some work on food security. But this area requires far more work, particularly in what regards a forward looking perspective of the changes expected to come in the near future. A second area that received an enormous amount of attention in the 1990s was the issue of rebellion and protest in the countryside, obviously triggered by the Zapatista uprising. The fine work of anthropologists like Lynn Stevens, Carlos Tello or Hector Diaz Polanco helped clarify in the early years where these social movements came from and how to assess the responses by the Mexican state to these challenges. And the work of Guillermo Trejo has superbly demonstrated the links between religious competition, social organization and resources as key aspects to understand the rebellion. But after the brilliant work of Trejo, we know very little about how rural protest, organization and unrest has evolved since 1995. this leads to the third neglected area, related to the opportunities of Mexican youth and the shifts in the social fabric in urban settings. Ricardo Raphael's ethnographic work on the changing roles of gender and the social advancement of young men and women in Northern Mexico (in El Otro Mexico) is one of the few works that has lucidly demonstrated how profound the transformation has been. Anthropologists have analyzed the social movement of APPO in Oaxaca as a new form of social participation that uses media like radio stations, art collectives and other artistic venues as spaces of articulation of the networks of disenfranchised and disempowered youth in marginal urban settings. But we know preciously little about the way in which school dropouts, or in general youth with blocked opportunities for social mobility have become a source of recruits for Drug Trade Organizations and other forms of organized crime; or have revitalized the social fabric and civic community of cities facing the challenges of violence, police corruption and incompetent local governments. 4. Conclusion By way of conclusion, I want to note that the study of the political economy (of development) in Mexico is alive and well. Mexico Scholars (both Mexicans and foreign Mexicanistas) have engaged the larger trends in US scholarship and have successfully published in the major international journals of their disciplines. They have regular exchanges with scholars throughout North America, and participate actively in professional meetings with their peers. There has clearly been a shift away from a theoretical to a more empirically oriented social science, where the methods and approaches of economics have taken precedence. But this has been a positive development in terms of the use of sophisticated statistical methodologies for testing hypotheses, providing inferences, and generating a more cumulative process of knowledge creation and exchange. There has been a sacrifice of a broader engagement of scholarly developments in Europe, particularly in what regards understanding business groups and interests, and their engagement with the state. Another neglected area relates to workers and their skill formation and other processes in the workplace that may have historically deep and path dependent origins. The study of corporatism, unions, and other organized interests seems to have been replaced by a rather atomized and individually focused analysis of voters, politicians and the institutional arenas where they formally interact. And given the physical proximity to the US, the Mexico scholarship tends to be unaware of many developments in both the substantive issues and the scholarship of Latin America. The wealth of statistical information generated by governments (in the form of budget data, voting records, official registration records, and government sponsored surveys) has substituted the generation of novel datasets generated by individual scholars. This has enhanced replicability of the studies but has limited the scope of hypotheses to be tested to areas related primarily to social program evaluation, with a certain neglect of studies more embedded in social processes, networks, and relationships. Professional Journals seem to reward more the publication of work performed with high analytic standards and "off the shelf" datasets, which requires little fieldwork or area expertise, even though it may have limited interest among Latinamericanists or Mexico specialists, There has been little connection between anthropological work studying rural areas, fringe or marginal movements in cities, or indigenous communitarian life and the political science or economics professions. But despite these misgivings, the scholarly trend has been a very positive one. Work on Mexico is no longer insular or protected by the cloak of Mexican exceptionalism. Political economists are well versed in the basic theoretical and methodological debates in development economics, which, by the way, has gone thorough an important shift in favor of less ideological and more locally and empirically grounded research agendas. Economists have become less conceited and political scientists more capable of communicating with them, which has allowed for a productive exchange in which we have learned a lot from each other. REFERENCES (very incomplete!) Serra, Gilles. 2011. Why is Pemex so Hard to Modernize? An Analytical Framework Based on Congressional Politics. CIDE working paper presented at the Politica y Gobierno Seminar, September 8. Flores-Macias. 2010. Explaining the behavior of state-owned enterprises : Mexico's Pemex in comparative perspective. Ph.D. Dissertation. MIT Department of Economics. Elizondo, Carlos. 2011. Por eso estamos como estamos: la economía política de un crecimiento mediocre. México: Random House Mondadori. Haber, Maurer and Razo. 2003. he Politics of Property Rights: Political Instability, Credible Commitments, and Economic Growth in Mexico, 1876-1929. Cambridge: Cambridge University Press. De la O, Ana. 2013. Do conditional cash transfers affect electoral behavior? Evidence from a randomized experiment in Mexico. American Journal of Political Science. 57(1): 1-14. Díaz-Cayeros, Alberto, Federico Estévez, and Beatriz Magaloni. 2007. “Strategies of Vote Buying: Social Transfers, Democracy and Welfare in Mexico.” Unpublished manuscript. Stanford University. Larreguy, Horacio, 2012. Monitoring Political Brokers: Evidence from Clientelistic Networks in Mexico. Working paper. MIT. lain de Janvry, Marco Gonzalez-Navarro, Elisabeth Sadoulet, Are land reforms granting complete property rights politically risky? Electoral outcomes of Mexico's certification program, Journal of Development Economics, Lustig, Nora, Lopez-Calva, Luis F., Ortiz-Juarez, Eduardo. 2013. Declining Inequality in Latin America in the 2000s: The Cases of Argentina, Brazil, and Mexico. World Development. 44(April). 129-141. Lopez-Calva, L. F., & Lustig, N. (Eds.) (2010). Declining inequality in Latin America: A decade of progress?. Washington, DC: Brookings Institution and UNDP. Levy, Santiago. 2010. Good Intentions, Bad Outcomes: Social Policy, Informality, and Economic Growth in Mexico. Brookings Institution Press. Levy, Santiago and Walton, Michael. 2009. No Growth Without Equity?: Inequality, Interests, and Competition in Mexico. Washington: Palgrave Macmillan and World Bank. Levy, Santiago. 2006. Progress Against Poverty: Sustaining Mexicos ProgresaOportunidads program. Brookings Institution Press.