"IS MEXICO THE ONE THAT WILL CAUSE THE COLLAPSE OF AMERICA??"

To understand Mexico and USA current situation and approaches is it necesary to take a look to the HISTORY OF THE MEXICAN ECONOMY...

Since the mid-1980´s, Mexico has undergone an economic transformation in record time, a feat that few other developing countries can claim. The change in Mexico´s economy from state control to an open market is both a tribute to President Carlos Salinas de Gortari and his predecesor, Miguel de la Madrid, and a reminder of the county´s all-too-recent financial woes. To apreciate how far Mexico has come in less than ten years, a quick review of the country´s turbulent past is in order, as well as a preview of what challenges may lie ahead for Mexico.

* THE ERA OF STATE CONROL
Ever since the mexican revolution of 1917, the Partido Revolucionario Institucional PRI has dominated the political landscape. As the facto ruling party of Mexico, PRI has controlled both federal and state government for decades through financing party activities and the media.

*ECONOMIC RECOVERY IN THE 1990´S
 In 1985, President De la Madrid began the painful process of rebuilding the Mexican economy, this time based on a market orientation, not state control.
When Carlos Salinas replaced him in 1988m the new PRI sponsored president continued tearing down the old statist foundations.
Thanks to the reforms of de la Madrid and Salinas, more than 80% of the 1,155 state-run Mexican enterprises have been sold, merged or closed to date.
The Salinas Administration has directed government agencies and the remaining state enterprises to stop discriminating against foreign vendors.

In addition, price controls and technical specifications favoring domestic suppliers and cartels are being dismantled.

*THE CORRUPTION THAT REMAINS
Of course president Salinas and his successor must also transform the political process to make these economic reforms last. It´s virtually impossible to run an open-market oriented economy if business face arbitrary decisions by local regulators.

*NAFTA AND BEYOND
When Carlos Salinas steps down as president in 1994, he wants the North America Free Trade Agreement signed by all three member countries. The mexican current account deficit topped US$20 billion in 1992 and was expected to exceed US$24 billion by 1993. So far, a steadt fow of foreign capital has sufficiently covered most of the gap.

What is true about NAFTA and out of it is that any company considering a move to Mexico must balance the risks and rewards-based on long-term bottom line, not latest free trade. Whit or whitout NAFTA, Mexico will still be plagued by potholed highways, commomplace corruption, enviromental messes and a history of deep state invovement in the economy.

USA can be afraid of mexico´s internal movements, but US companies, particulary automobile manufactures, have been drawn to Mexico for decades for capturing lower wages in maquiladoras and using mexican labor to assemble produts for export by adding value in the country before reexport to the USA.

By: Laurence Hecht and Peter Morici
Hardvard Business Review