Teaching Comparative Government and Politics

Monday, February 09, 2015

Another case study

The low petroleum prices should remind us that it's not only Mexico that depends upon oil exports. Russia, Iran, and Nigeria also depend upon those exports. How do these low prices affect government and politics in those countries? And how do those prices affect government and politics in China? Is the UK immune to the forces of lower oil prices?

Mexico, which depends largely on oil revenue, cuts public spending

The collapse in global oil prices forced Mexico on Friday to announce large cuts in public spending, threatening several major projects, including the government’s showcase but controversial bullet train out of Mexico City.

Finance Minister Luis Videgaray announced cuts of about $8.5 billion, about 0.7% of Mexico’s gross domestic product. About a third of the Mexican government’s budget comes from oil revenue, and the price-per-barrel of Mexican crude has fallen in recent months from about $100 to $38…

Other sectors taking hits were the mammoth state oil and gas company, Petroleos Mexicanos, to the tune of $4.1 billion, and the unwieldy education ministry. Videgaray said subsidies on housing and seasonal agricultural work would not be affected, although pensions for the elderly would be reduced…

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