Discussion of Dr Marcos’ Paper

Mrs Navarrete gave a brief overview of the historical development of the Mexican economy which led to the current situation. Sustained development began in 1940, and could be divided into three phases. A first phase, lasting from 1940 to 1955, was characterised by inflationary development, with an average annual growth of GNP of 6 per cent, while prices went up by 11 per cent per year on the average. Development was essentially balanced among sectors, with industry growing at 7 per cent per year. New land was irrigated and soil redistributed. The basis for the steel industry was laid during that time. Unemployment decreased. Development was financed essentially by internal resources, and the foreign debt was low. Two devaluations occurred in 1947 and 1954. In the last few years of the first phase, there was increasing concentration of profits, and the first signs of unequal income distribution began to appear. But in spite of these disturbing elements, taken overall, the first phase represented successful development. A second phase lasted from 1956 to 1972. The main goal during that time was to stabilise development and reduce inflationary pressure. GNP rose by 6.5 per cent and prices by 4.5 per cent per year on the average. Multinational corporations entered such industries as food processing and pharmaceuticals. The employment rate diminished. The basic failing of this phase was that investment in agriculture was discontinued, which was to create difficulties later.