Mexico has been undergoing rapid economic growth since NAFTA (the North American Free Trade Agreement) went into effect in 1994. But as Becker explains, the very recent economic reforms in education, energy, and telecommunications, and also in the political structure of the country, could do a lot to accelerate Mexico’s transition from a developing to a developed country. Mexico has a large population (almost 120 million) and Mexicans are famously hard working (in California if you want to say that a person works too hard you say he works like a Mexican). It has been handicapped, however, by, among other things, a very poor education system, a state monopoly of oil production, and monopolistic conditions in telecommunications, and all these are drags on growth that the new reforms aim to eliminate. (There also tax and banking reforms, though these don’t seem to be amounting to much.)
How successful will the reforms be? How much real impact will they have? I don’t think anyone can know at this point. Implementation is everything, and, as of now, is lagging. The aim of the education reform, for example, seems quite modest--increasing the percentage of Mexicans with a high school education from 36 to 40 percent—yet may not be achieved because of resistance by high school teachers and their powerful union; and the reform may spend itself on correcting the most extreme malfunctions, such as passing teaching jobs by inheritance, which may not however be the most serious ones. The attempts of the United States at educational reform seem to have been largely a flop; how likely is it that Mexico’s will be more effective? I have no idea.
As for energy (which means oil), it will be opened to competition, but the huge government oil company, Pemex, will continue to be government-owned. Will it have the power to block effective competition from private companies? Who knows. And there is concern that oil production doesn’t do a great deal for an economy because it doesn’t provide widespread employment.
As for telecommunications, I would expect more competition to produce a more efficient telecommunications system, but I don’t have a clear idea of what contribution an improvement in telecommunications makes to economic output. That presumably depends on how great the improvement is.
I don’t see anything in the Mexican administration’s reform program concerning drug violence. There is an extraordinary level of drug violence in Mexico resulting from what amounts to warfare among the numerous drug cartels, and it is abetted by widespread public corruption. The drug wars, which appear to kill about 10,000 Mexicans a year, must be a drag on economic output. The annual number of murders in Mexico is almost twice the number of U.S. murders, even though the U.S. population is more than two and a half times the Mexican population.