Econ is Fun… Not Scary!!!. Indigenous Economy Aztecs Central Mexico- Valley of Mexico Rich Soil Temperate Climate Plentiful water Raised fields with canals.

Econ is Fun…Not Scary!!!

Indigenous EconomyAztecs

• Central Mexico- Valley of Mexico

• Rich Soil• Temperate Climate• Plentiful water• Raised fields with

canals• Plentiful agricultural

output• Payment of tribute

to rulers

Mayans• Southern Region• Slash and Burn

Colonial Period• Spanish arrived in 1519 • Took Aztec Capitol

(Tenochtitlán) in 1521• Hoped for GOLD but found

SILVER … • The Conquest was called “encuentro”

• In 1590s Carlos V allowed for an expansion of slavery

(mostly Africans)• Slaves used for:

– Mining– Highland centers– Sugar cane cultivation

(Caribbean Coast)– Cattle ranching (Pacific

Coast)

Post Independence• The war that led to the

independence led to a fall in per capita

• This was due to the collapse of trade and silver mining

• The Mexican economy didn’t overcome this until after 1880

• The independence freed the Mexicans from Spain but the economy was as if the Spanish were still in control

• Economic output stagnated

OMG! Independence! But the Spanish didn’t acknowledge it till 1812 even if we got it in 1810…

The Porfiriato• The beginning of “Modern Mexican” (1876-1911)

Economy • The reign of President Porfirio Diaz• Opened economy to foreign investment• Encouraged use of railroads and telegraphs

• A BOOM in per capita

• But started social tension given the unequal distribution of gains

• Led to: tension, nationalism and xenophobia• Domestic-oriented production thrived• Key Mexican exports: hehquen, copper, lead, zinc- all of

which added to economy, offsetting a drop in silver prices

• Oil exports also increased

The Revolution and Aftermath

• Mexican Revolution (1910-1920) took a heavy toll on the economy

• Ranches, haciendas, railroad coaches, tracks, and factories were all affected negatively

• Domestic production and distribution stopped with uncertainty, fighting and no financing.

• The powers that be clung to oil export taxes for revenues

• Mexico benefited from the high oil taxes and minerals during WWI, but not as well as it should have since they were also in war

• When prices collapsed in 1919 Mexico also suffered

• Immigration to US became big for more peaceful lives and a “better” economy

Poncho Villa was nifty

Roaring 20s and the Depression• 20s economy picked up

• But because of internal fighting was not able to appreciate as much

• In 1930s US economoy crashed, taking Mexico with it

• Mexico tried to move the world away from the gold standard and to the silver standard but it didn’t work too well

• They then began to domestically produce formerly imported goods. Known as import substituting industrialization (ISI)

• Became encouraged by the state, while the government tried to encourage the production of domestic substitutes for imports

Oil Nationalization• Mexico was in crisis in 1937 due to the

Depression and the rise of social tension

• Poorly managed Mexican fiscal policy led to virtual bankruptcy

• Finance Minister Eduardo Suarez helped pull the economy back up with his Keynesian polices, such as: levying income taxes and corporate taxes and pursuing an innovative government bond scheme with the US.

Keynesian Economist

The state, according to Keynesian

economics, can stimulate economic growth and improve

stability in the private sector - interest rates,

taxation and public projects.

I am happy and British!

WWII And Post War GrowthISI Period and Its Problems

• Increased demand for primary products (minerals)

• Mexico was with US and Allies• Making the ISI deeper• US needed more laborers so Mexico gave

up theirs in the Bracero Program(1942-1964)

• Designed to bring in experienced farmers from Mexico to US

• PRI (Party of Institutional Revolution) ensured economic growth by providing substantial protection to new industries through tariffs and other broader measures and subsidized credit through development banks

• Monterrey Group provided a powerful private sector industrial base

• In 1964 The Bracero Program was replaced with the start of the maquiladora program- imports processed in Mexico and exported

MEXICO ECONOMIC MIRICLE!!!– 1954-1966 more urban areas

– Built micro economy stabilizing developmentAND it lasted till the 1970s!

• But in 1976 the economy was in a crisis AGAIN!• Led to the peso being worth less

• This changed when large oil reserves were announced in 1978

• When oil prices fell in 1980 interest rates increased

Seem familiar ???(cough… US

penny…)

1982 Crisis and Subsequent Market Polices

• On August 13, 1982 the international financial world was rocked by the announcement by Finance Minister Silva Herzog that Mexico would be unable to meet international debt obligations!

• Now Mexico, along with other countries of Latin America, had no international funding

• So they went to IFIs (international financial institutions), The World Bank and International Monetary Funding (IMF)

• This was then referred to the Lost Decade

Evil #

• Added to the poverty in these areas

• More immigration to US

• People thought that the oil reserves would fix everything

• Plans that helped bring it all under control:– Negotiable agreements with:

• CTM union labor• Businessmen through various groups• And the government led by the PRI

1994: A Momentous Year• Jan 1, 1994: the day

NAFATA came into effect, the launching of the Zapatistas’ revolt in south Chiapas

• Zapatistas protested NAFTA and neo-liberal reforms

• NAFTA eliminated barriers to trade goods and services, foreign government and capital flows and other rules

F.Y.IThe North American Free Trade

Agreement is a trilateral trade bloc in North America created by the governments of the

United States, Canada, and Mexico. The agreements were signed in December 1993 by the leaders of the three countries but did not come into effect until January 1, 1994

when Jean Chrétien was in office in Canada.

Brian Mulroney of Canada, Carlos Salinas de Gortari of Mexico, and Bill Clinton of the United States

AN EXTRA BONUS!!

• http://www.storyofstuff.com/

Running time- 20:40