Mexico Presidential Elections 2012: Pena Nieto or Lopez Obrador Will Inherit a Fiscally Sound Mexico, Thanks to the Policies of Felipe Calderon


It was 2010, and the Brazilian government under Lula da Silva was ramping up public spending,  expanding credit and flooding its economy with public funds, as Dilma Roussef faced a tight race in the elections held in October of the same year. Eventually, Dilma would come out as the clear winner with 55% of the votes against José Serra's 43%. But President Lula left Dilma Roussef with greater fiscal headaches, a  faster inflation, and an overheated economy. Brazil's economy expanded at 7.5% in 2010, but only 2.7% in 2011. And 2012 looks even worse, with huge spending programs launched by Dilma's administration to prop up Brazil's economy (which it will grow at 2%, according to most optimistic projections)

Economic manipulation with electoral purposes is common in Latin America and many other parts of the world. In Mexico, Salinas de Gortari created an atmosphere of economic bonanza just months before the presidential election of 1994 in order to benefit Ernesto Zedillo's candidacy. Zedillo won, but found a country with no funds to pay creditors and in one of the worst economic crisis in recent history. Venezuela's Hugo Chavez does the same every time to get reelected; Argentina is another case in point. 

By contrast, President Calderon has maintained a moderate public spending with solid fiscal accounts and will leave the next president a country with remarkable economic fundamentals and a rapidly improving investment climate that is attracting international investors. Calderon's achievements are not minor: low inflation, low interest rates, a solid and stable Mexican Peso, an expanding manufacturing and industrial base, free trade agreements that have expanded Mexico's markets, record job creation that has halted immigration to the United States down to zero in the past years, a sophisticated labor force that is manufacturing high quality cars, air crafts components, plasma television sets, appliances, mobiles and computers, the rising strength of Mexico's entrepreneurial class with Mexican firms of global reach, successfully established government programs that are supporting thousands of start ups all over the country in one the most complex economies of the world.

As opposed to economic growth fueled by large exports of commodities in most of Latin America, Mexico's growth comes from manufacturing and industrial outputs. This sets Mexico apart in that it has become the only country in the region that is focused on industrialization rather than natural resources, and on skills rather than commodities. In a recent article, the New York Times observed that Mexico is giving regional rivals a run for their money despite the negative press attention given to Mexico's war on drugs, the Times pointed out that “Mexico's economy grew faster than Brazil's, and is set to outpace its larger Latin American rival again in 2012” due to the  fact that   “Mexican factories are exporting record quantities of televisions, cars, computers and appliances, replacing some Chinese imports in the United States and fueling a modest expansion. To top it off, companies like Honda, Mazda, Nissan and other car makers are also investing more this year and the aerospace and electronic industries are receiving more foreign investments. The New York Times is not alone, many in the international press are reporting on Mexico's economic performance amidst a global recessionary economy.

Mexico opened its markets to global competition, made major investments in communications infrastructure throughout the country, attracted foreign investments with business-friendly policies while implementing programs to reduce red tape and facilitate investments and new businesses, like the Zero Base Regulatory Reform, a measure that eliminated inefficient procedures and norms in many industries, more than 16,000 internal regulations and 7,000 rules were replaced with 9 handbooks. Opening a business now takes less than 10 days and most of it can be done online.

Calderon also leaves the new president with the problem of drug violence and corruption and monopolies both private and public that undermines innovation and economic growth. In the fog of the war on drugs, there have been many unnoticed changes, police forces that have been transformed into more professionalized anti-crime units, with improved training, equipment and salaries, which have tripled in many cases. Cooperation with the U.S., Colombia, Spain and other countries has also helped improved our strategies, but a lot more needs to be done. 

The war on drugs has also been subjected to a biased narrative from activist groups who seek solutions like legalization and from leftist opposition parties who tried to profit politically from the tragedy of thousands of Mexicans, they lodged a unsubstantiated complaint against Felipe Calderon at International Criminal Court over offensive against drug cartels. 

More than 50,000 people have been killed during Calderon's years, but it is questionable to say that they were all victims of the war on drugs, any Latin-American country the size of Mexico will normally have tens of thousands of deaths every year, nearly one hundred people were killed during President Zedillo's term. Only the city of Sao Paulo, Brazil registers tens of thousands of deaths annually. In the past five years of Calderon's term, more than 150,000 Brazilians were killed, and more in Colombia and Venezuela Our countries suffer from high crime rates because of long unaddressed core societal issues, like corrupted and negligent judicial structures, lack of city planning and development, lack of education and job opportunities, high poverty rates, lack of efficient and professionalized police forces and Latin American cities lack the security infrastructure that can be found in cities like New York or Chicago. So many people die in our region as a consequence of those state and judicial weaknesses. One will have to question how many of those 50,000 people killed during Calderon's years were specifically victims of the war on drugs and how many die due to a lack of good policemen, bad security procurement by local authorities or a corrupted judicial system. This biased and manipulated narrative around the war on drugs does not help us build a true constructive discussion around public policies against crime.  

The challenges the new president will face will not be small, Mexico needs urgent structural reforms to its judicial system, our police forces, our energy sector, fiscal and financial regulatory changes to enhance our business environment, labor reforms to allow rapid job creation, education, agricultural and political reforms are also needed urgently. But Mexico is set to continue expanding its economy, its industrialization and its commercial influence in the world.