Jose G. Vargas-Hernandez

Mexico

 

THE ECONOMIC AND SOCIAL IMPACT OF RECENT DEVELOPMENTS ON RURAL AND AGRICULTURAL POLICIES AND INSTITUTIONS IN MEXICO

 

ABSTRACT

     The aim of this paper is to explain and analyze conditions, implications and impacts that have had rural and agricultural policies and institutions in Mexico on growth and rural welfare under the framework of the neoliberal economic development model during the last sixteen years. By achieving this purpose, we also can identify several disfunctionalities between the existing agricultural economic structure and the implementation process of the recent changes on agricultural policy reforms. We contend that these severe disfunctionalities have been created, induced or at least further deepened by the recent changes on macroeconomic strategy and policies and institutional structure.

 

     Our work hypothesis states that most of the existing disfunctionalities in the rural and agricultural sector in Mexico, have had until now a direct influence on the low levels of effectiveness and productivity of farm economy, and thus, affecting the equity of social development and the stability of the political system.

 

     We start by describing the most outstanding events within a historical perspective and analyzing the implications and impacts of state policy and institutions that led to the consecutive models of rural and agricultural development after the Mexican revolution. The Agrarian Reform distributed land and met partially the challenges of the landless. The import-substitution industrialization (ISI) favored more the manufacturing sector and the urban dwellers and neglected the rural and agricultural sector. Although production of basic grains and other foodstuffs achieved self-sufficiency by the sixties, shortages started to appear during the seventies mainly due to an increasing population and lack of investments in farming. Increasing imports solved the food crisis. The new project called “shared development” failed to attract private investment to the agricultural production. A turning point in rural and agricultural policy after the Mexican crisis of 1982, under the framework of imposed structural adjustment and economic stabilization policies, brought commercial liberalization and international competition to the sector through constitutional reforms of land tenure and the opening of the North American Free Trade Agreement.

 

     We resume the analysis by identifying in the agricultural economic structure of Mexico, the main factors that blockade growth and productivity. We categorize those factors in two types. A first type of factors are grouped is the physical and geographical environment, considered as limiting factors and obstacles that are difficult to change because they are part of the nature endowment. The second set of factors refers to the agricultural and institutional policies that are more dependent on political will. We show that in the case of Mexico they have been erratic. After analyzing the overall impact of these policies and institutions on economic growth, social welfare and equity and political instability, we turn to offer some considerations for the formulation of alternative policies. Finally, we make some concluding remarks.