We explain what the “Mexican Miracle” was, the economic model of stabilizing development that made it possible and its objectives.
What was the “Mexican Miracle”?
It is known as “Mexican Miracle” or as stabilizing development to an economic model used in Mexico between 1954 and 1970. He aspired to achieve economic stability that would allow sustainable and continued development. It was carried out during the presidencies of Adolfo Ruiz Cortines (1952-1958), Adolfo López Mateos (1958-1964) and Gustavo Díaz Ordaz (1964-1970).
They were liberal measures under the premise that generating greater wealth would be more beneficial for the population than state welfare. It coincided with the transition of rural Mexican society towards a more modern and industrialized one.
The economic philosophy of the “Mexican Miracle” It consisted of the elimination of economic ceilings such as inflation, devaluations or the deficit in the balance of payments. Thus, macroeconomic stability and continued economic growth were achieved, at the expense of investment in social welfare.
Thus, the 18 years of stabilizing development were characterized by sustained economic growth of 6.6% per year, with inflation of 2.2%. This in part due to replacement of traditional agricultural production by modern industrial production, fruit of the expansion of the internal market, urban growth and agrarian reform.
For this also investment in communications infrastructure and in the energy sector was essential: The electricity company was nationalized and a state company was created, awarding the worker a part of the profits presented by the company.
The interesting thing about the Mexican Miracle was that involved vast sectors of society in a common development project: the government guaranteed bankers, workers, businessmen and peasants high rates of profitability if they committed to invest abundantly in the country.
For this, the reduction of taxes and the promise of rescue of bankrupt companies by the State were key measures.
Objectives of the Mexican Miracle
Stabilizing Development set out from the beginning to comply with:
- Raise the standard of living of the population, especially those lower in the pyramid: workers, peasants and the lower middle class.
- Steadily increase the national income and GDP.
- Diversify the economy as fast as possible and as quickly as possible.
- Industrialize the country, emphasizing basic industries.
- Boost protectionist policies of the economy, together with the liberalization of the domestic market.
End of the Mexican Miracle
The “Mexican Miracle” ended in 1970, despite the advances during this historical period. Mexican society began to suffer high inflation levels (with a ceiling of 18%), and industrial production reached a limit with the import substitution policy.
When the existence of a social deficit was revealed, the State increased public spending and stagnated revenues. Thus the foundations were laid for the 1976 crisis: a huge foreign debt, a contraction in private investment, and a devalued currency.