Mexico's economic politics
This bit of complex revolutionary, industrial, economic policies might well help make some sense of Mexico's politics.How many Mexicans does it take to drill an oil well?
IT IS bad enough that Mexico’s economy is in deep recession, triggered by its close links to the ailing United States. To make matters worse, the country’s oil industry, its fiscal cash-cow for the past three decades, is declining swiftly... Barring big new finds, the world’s seventh-largest oil producer is forecast to become a net importer by 2017.
The Mexican treasury is ill-prepared for this. Taxes and royalties from Pemex, the state-owned oil monopoly, have accounted for almost two-fifths of federal revenues in recent years, compensating for one of Latin America’s weakest tax regimes... If oil output drops below 2m b/d, as many industry-watchers fear, the government would be forced to cut spending by more than 10%—or jack up taxes correspondingly, to avoid an unsustainable budget deficit. This might threaten economic recovery...
Ever since Lázaro Cárdenas expropriated foreign oil companies in 1938, the state oil monopoly has been seen by many politicians, especially from the formerly ruling Institutional Revolutionary Party (PRI) and its offshoots, as the untouchable bone marrow of Mexican sovereignty...
All this has curbed the country’s ability to capitalise on its geological wealth. Since many oil-exploration projects take longer than the six-year presidential term to bear fruit, the politicians have a powerful incentive to spend oil revenues rather than reinvest them...
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Labels: economics, Mexico, political culture, politics
posted by Ken Wedding @ 6:36 AM
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