Mexico and the World Bank

Louis Proyect lnp3 at
Tue Dec 3 08:50:26 MST 2002

(posted to pen-l by Marty Hart-Landsberg)

Thanks to Lou for posting an excerpt from my new MR article on Mexico.
Thought I would share three quotes from a 2001 World Bank volume
[Mexico: A Comprehensive Development Agenda for the New Era] that was
put together to offer Fox some advice on how to promote Mexican
development.  Helps to highlight the usefulness of World Bank advice.

The first quote deals with what the World Bank thinks is a terrible
infrastructure problem.  The Bank report says:

"Bringing Mexicos infrastructure to an adequate level will also require
a major change in the way infrastructure-related sectors are owned and
regulated.  Over the past two decades, the country rightly sought to
substitute private for pubic infrastructure investment.  This suited
well the fiscal austerity needs of the time, especially since the 1990s.
However the private sectors response did not materialize as fully as had
been expected, and Mexico effectively began to accelerate the rate of
depreciation of its capital stock (and total public investment fell from
over 10 percent of GDP in the early 1980s tp about 2 percent today; in
the same period, total investment fell from about 25 percent to below 20
percent).  Even if it (mistakenly wished to, the government can no
longer afford to fill that rapidly growing infrastructure gap . . .
Instead, the solution lies in private funding and better regulation."
[p. 10]

The World Bank report also addresses the fact that almost half of
workers are now employed in the informal sector.  The report offers the
following suggestions for dealing with this problem:

"What needs to be done? The current system of severance payments;
collective bargaining and industry-binding contracts; obligatory union
memberships; compulsory profit sharing; restrictions to temporary,
fixed-term and apprenticeship contracts; requirements for
seniority-based promotions; registration of firm-provided training
programs; and liability for subcontractors employees should all be
phased out." [p. 16]

Significantly, the World Bank also recognizes that there are group
specific problems that cannot simply be solved by making labor markets
more efficient.  More specifically they are worried about women and even
more the indigenous population.  According to the bank:

". . . about 1 in 10 Mexicans defines himself or herself as indigenous
and holds and responds to, essentially, a different set of economic
values, whereby assets (especially land) are nontradeable sources of
group identify, community benefit is held in higher regard than
individual profit maximization, traditional social governance bodies are
trusted over those dictated by the countrys laws, social organization is
based on prestige and civic duty, and the language of preference (and
frequently the only language) is not Spanish." [pp. 16-17]

The World Bank goes on to suggest that it is these values that must be
changed to ensure Mexican development.

With analysis and advice like this, no wonder the standard of living of
Mexican working people is continually being forced downward.

Marty Hart-Landsberg

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